In today’s top stories, we look at unrest at Apple’s largest iPhone factory in China, the firms that benefitted from Black Friday sales, and the impact stagflation is having on stocks at this time of year. Bank of America analysts share their top 10 trades for 2023, and Richard Bernstein Advisors looks outside of the US for alpha.
Apple's troubles in China
Discontent over harsh lockdown measures escalated into violent protest at Apple [AAPL] supplier Foxconn’s [2354.TW] Zhengzhou factory. Zhengzhou is the world’s largest iPhone factory, and the unrest is costing Apple an estimated $1bn per week in lost iPhone sales going into the crucial Black Friday shopping weekend. Forecasts now suggest that the production shortfall of iPhone Pro units could now total 6 million. Apple’s shares fell 2.0% on Friday.
Bank of America's top 10 trades for 2023
30-year US treasury bonds are at the top Bank of America analysts’ list of top 10 trades for 2023. Michael Hartnett’s team also predict a steeper curve “as recession begins and markets anticipate Fed flipping from hikes to cuts" and say traders should make moves accordingly. The team is short on tech stocks and the USD, and long on China, European banks, gold, and global industrials.
Stagflation weighs on anticipated stock rally
Investors are waiting to see whether the traditional bullish end-of-year stock run will outweigh negative macroeconomic factors this year, with much riding on the US Federal Reserve’s December rates decision. While the Dow is on the verge of breaking out of its bear market, having risen nearly 20% since late September, stagflation fears weigh heavily on investor sentiment. A 0.5% hike is expected in December, which would be a lower rise than seen previously this year and would encourage investors.
Black Friday shoppers flock to Walmart
Captify data suggests Walmart overtook Amazon as the top destination for Black Friday discount shopping this year. Black Friday searches for Walmart products surged 386% year-over-year. Data from Adobe suggests consumers spent a record $9.12bn online this year, a 2.33% year-over-year increase. Buy now, pay later firms also saw a boost of activity, with these types of payments increasing 78% over the previous week, and 81% year-over-year. Amazon’s share price fell a total of 0.78% across last week.
Looking beyond the US
Investment management firm Richard Bernstein Advisors (RBA) has highlighted the strength of investment opportunities available outside the US. A research note from RBA highlighted the UK as an attractive avenue for investors, with the UK’s stock market outperforming the S&P 500 and Nasdaq Composite despite recent political turmoil. Other countries with low exposure to technology, consumer discretionary and communication are also favoured.