The discussion revolves around the financial performance of Apple and its impact on the stock market. The speaker believes that Apple's earnings growth is expected to be minimal in the current fiscal year. They mention that the pricing of Apple's products is surprising given the volume growth has been decreasing. The speaker also discusses the potential for a pricing cut or an assessment of demand to increase revenues and margins.
The conversation then shifts to the broader economic context, with the speaker expressing concern about the strength of the consumer and the trajectory of the economy. They believe that the consumer is still incredibly strong, but this might not last as long as some might think. The speaker also mentions that the Federal Reserve (Fed) is likely to continue raising interest rates, which could lead to a decrease in consumer spending.
The speaker also discusses the impact of changes in student loan payments on the consumer's purchasing power. They believe that these changes are having an impact quicker than expected. The speaker is unsure if this impacts the purchase of a new phone.
The conversation then turns to the potential for wage growth to decrease, given the strong economic environment. The speaker believes that the Fed cannot let its foot off the gas in such an environment due to the risk of inflation. They also discuss the risk of inflation being more important than the risk of recession.
Finally, the speaker discusses the resilience of end markets and the path of earnings for various companies. They believe that companies with true cash flow growth and earnings are less likely to be punished by the market.
1. The speaker discusses the new product release from Apple and the context of where the stock sets up.
2. There is not expected to be a lot of earnings growth in the fiscal year that just started.
3. The pricing of Apple's products was surprising because volume growth has been coming down.
4. The speaker expects disappointment regarding revenue, margins, and cash flow.
5. The speaker mentions that the consumer is still incredibly strong right now.
6. The speaker expects a couple more months of balloon support for the consumer in this environment.
7. The speaker mentions that the sources of those balloons coming off are challenging.
8. The speaker mentions that important changes like those in student loan payments are having an impact quicker than expected.
9. The speaker is concerned about the 4%-ish wage growth that has been seen on some level.
10. The speaker mentions that the risk to inflation is more important than the risk of recession.
11. The speaker mentions that the 500-plus basis points of hiking already contributing to recession has been a happy accident rather than a purposeful policy move.
12. The speaker mentions that the consensus is starting to turn higher, driven by some of those big tech stocks.
13. The speaker mentions that capital markets are starting to open up, with some IPOs.
14. The speaker mentions that oil prices are now going higher and higher, and wages are going higher.
15. The speaker mentions that there are discussions with the autos and the union, higher wages for pilots, U.P.s.
16. The speaker mentions that there is this embedded inflation in the system, and the market is pricing in a soft landing.
17. The speaker mentions that it will really be companies that have true cash flow growth and earnings, and those that don't are going to get punished.
18. The speaker mentions that the earnings season coming is going to be one of the most important ones, with consumer demand slowing, costs increasing.