The new ‘market bellwether’ at the moment is Apple; less so Amazon. If you’ve been around investing for awhile; you’ll remember when this phrase: ‘what’s good for General Motors is good for the country, and for the market’.

Let’s nibble a bit on Apple:

Apple (AAPL) historically has struggled to get a premium market multiple because it is perceived as a one-product company with shrinking margins. First of all it has never really been true in recent years (even the Mac segment has lots of room to grow within the consumer and business space). Second, the new iPhone ‘X-pensive’ has a higher margin that supported the improved price performance. New designs often have a lower margin; but ironically simply pushing the majority of buyers into the 256 GB model (by not having a 128 GB interim level) dramatically increases Apple’s profit margins on the ’10’. 
 

Little noticed, Apple Services segment increased by 33% (that’s huge), and the integration with AR and AI is barely touching the surface so far (and that is not a swipe at Microsoft’s ‘Surface’, a good product in a different space). I think we can debate whether Apple has a string of innovations further down the road (they likely do and will); and to us (aside trading moves) it’s been a ‘hold’ since the last entry (57/share split-adjusted) for investors. 

So what’s the rub? That it’s a bellwether and the broad market is hardly yet willing to recognize that Apple represents slightly over 25% of capitalization of the entire S&P 500 Index. That ties the fortunes of that one company to a market that is long-in-the-tooth by any measure. However it also provides a ‘cover’ to mask the rotational distributions that have gone-on for months. 

There’s another ‘mask’, actually a shadow. It’s likely next week’s coming ‘topic du jour’  which will be an argument about a purported ‘defect’ in the new iPhone 10. Apple will say it’s ‘normal; customers will disagree; and the result will be a lack of research of what they have bought with iPhone X. How so? 

iPhone X is an OLED display. There will be reports that ‘burn-in’ or freezing is occurring; and Apple will say that’s not a defect and warranty will not cover it, so just turn down the brightness and also avoid static object display for a long time without turning off (hard to do since the home page IS essentially a static image).