Beaufort Analysis No.241 – An Apple a day keeps the bears at bay

Last week saw Apple shares jump more than 6% to a new record high of $160, triggered by the release of their latest quarterly results. The rally was spurred by the recovery in iPhone sales; in the same period last year, sales declined but third quarter 2017 forecasts were better than expected, predicated on the launch of the new iPhone. Apple’s flagship product, the iPhone, is likely to be unveiled next month, with a rumoured price tag of $1,000. Further investigation of the quarterly results showed the iPad returning to growth for the first time in three years, up 15% in unit sales. Analysts commented that every part of the business is doing well, which comes with high expectations for future growth and an accompanying valuation priced for perfection. Analysts are already predicting that Apple could be the first US company to reach a market value of $1 trillion. Sitting at around $800 billion in value, Apple’s share price would need to spike 25%, which on the back of last week’s results and expectations of sales from the new iPhone, is well within the realms of possibility.

To finish this week’s analysis we have an update on Brexit. To reassure the populace of the UK, the government has insisted that it will pay “no more than it needs to” in its divorce settlement with the EU. This statement was in response to a report published in the Sunday Telegraph that quoted that the UK planned to offer £36 billion; partly as continuing budget contributions, but conditional on the EU abandoning its strict sequencing of the negotiations and going straight to discussing the all important trade deals. It is no surprise that the thought of paying such a substantial amount to the EU, had the most ardent Eurosceptics frothing at the mouth, while the EU reiterated the view that the UK would need to cover all commitments made while it was a member state. Whatever your individual view, there is one thing we can all agree on: this debate will take years and no-one will be wholly satisfied with the result.

In the meantime, we continue to be cognisant of the political maelstroms across the globe, while avoiding any short-term reactions.