📱 Apple's big iPhone call

What’s going on here?

Apple is reportedly planning to recharge its device lineup with major design changes, in hopes of juicing sales.

What does this mean?

Apple has a long reputation of growth-sparking innovation, but its iPhone’s been on low battery this year. Sales of the device rose by just 1% in 2024, compared to 14% in 2021 – so it’s no wonder the company is making some new calls now. Its plans are said to include a thinner, cheaper iPhone with a less-expensive, simpler camera system, as well as a sleek, foldable version that would be bigger than the new iPhone 16 Pro Max when open. Apple’s also planning to make a bigger folding device, intended to serve as a laptop, with a screen that can span 19 inches. Packing its AI features into everything, the company’s hoping to both reel in new users and entice existing ones to upgrade.

Why should I care?

For markets: Apple polishers.

Apple’s legions of loyal fans have been keeping the cash flowing. But for investors, the stock has become expensive. This year, the firm’s share price has rallied about 30% – much more than its 10% increase in profit. And it’s a similar story for the S&P 500: the index’s price has gained around 28%, but its profits are up only 8%. Typically, stocks are more attractive when profit growth is speedier than price growth. And that’s not the case for Apple or the broader market at the moment, which is a reason to be wary.

The bigger picture: Betting big.

US tech and AI are the apple of the market’s eye, with the advancements widely expected to change everyday life around the world. But AI doesn’t come cheap: companies are spending hundreds of billions of dollars to acquire new chips and build massive, equipment-filled data centers. And there’s no guarantee that the technology will fetch returns sizable enough to justify those expenses.

What’s going on here?

Retail sales in China were worse than even the gloomiest of predictions last month, despite loads of government stimulus designed to get folks spending again.

What does this mean?

China’s thrown everything but the kitchen sink at its economy. The country’s been slashing borrowing costs, easing housing rules, restructuring local debt, rolling out tax breaks, and propping up its stock market. But so far, the results haven’t been all they were cracked up to be. Sure, factory output has gained momentum, and the property market’s been showing signs of life. But this weakness in retail sales hints at the bigger problem: getting Chinese shoppers to spend money. And with potential trade wars threatening the country’s exports, boosting consumer activity at home is officially the top priority.

Why should I care?

For markets: Bad news for the economy, great news for bondholders.

China’s weak data sent its 10-year government bond yields to a record low Monday, as investors swapped riskier stocks for safer assets. It’s a textbook reminder of bonds’ superpower: they thrive when growth stumbles and deflation fears creep in – an environment that’s usually tricky for shares.

The bigger picture: Consumers to the rescue.

When trade disputes and geopolitical tensions cause exports to sputter, policymakers look to the country’s own residents to drive growth. And the US is a pro at this game: its highly incentivized, powerhouse consumer market has kept its economy – and its stock market – flourishing. But there’s a catch: soaring government debt levels mean those shoppers need to deliver real, lasting economic growth – else the interest payments on all that borrowed money could become a serious headache down the line.