Apple Sells Off

The stock market ended Friday mixed as the Nasdaq was the biggest sore spot, falling 0.59%. As I highlighted in previous articles, Apple (AAPL) usually falls right before the unveiling of its new phone. The 1.63% decline on Friday added to the Nasdaq’s woes. The stock is now down 3.30% off its all-time closing high. It will likely drag the market lower early next week. The biggest uncertainty for the September 12th release will be the pricing of the new devices. There is expected to be 3 new devices unveiled with the high-end device potentially costing $1,000+. Apple has been great at getting customers to pay more money for smartphones with better features. The question will be if that finesse will be able to be repeated. The number of new devices for sale has diminishing returns. The question is how many buyers will switch from the Plus version of the devices to the new higher end. Samsung has done this by offering the Note 8 which is over $900. That costs about $300 more than the Galaxy S8 and the Galaxy S8 Plus. The extra features in the Note 8 are the S pen and the extra camera lens which allows for portrait pictures. If Apple can future differentiate the high-end device, it will generate additional profits. If it can’t, the new device could be a flop. While Apple has a great track record, it faces the same risk Samsung has seen. Many tech reviewers are saying it’s better to go with the Galaxy than the Note because the premium price isn’t worth it.

Debt Ceiling Raised

The big news on Friday was that the government raised the debt ceiling for 3 months and voted for $15 billion in disaster relief for hurricane Harvey and Irma victims. The vote in the House was 316-90 with all the no votes coming from Republicans. This is what was expected as the President decided to work with the Democrats instead of the Freedom Caucus. I think a big reason for this was FEMA running out of money. I would have been a big PR blunder for the President to try to eke out small spending cuts at the risk of not getting the people in Florida and Texas the relief they need. There’s a possibility more money for disaster relief will be on the table when the December deadline comes about, but it won’t be of dire need which means I don’t think it will be so easy to get the debt ceiling permanently rescinded by using hurricane relief as an add-on. We will revisit this topic in about 2 months when the discussions heat up.