No rest for the wicked this weekend as we have big news from China.
Just a week after downgrading their GDP projections to as low as 6.5% (a 13% reduction from 7.5%), China now CLAIMS Exports in February jumped 48.3% while Imports fell 20.5%. The change isn't reflected on this chart, which shows the 3.3% fall in January exports but it looks like we're back to the days of Fake Chinese Data Reports – not that those days were ever really gone in the first place.
Amazingly, this incredible turnaroun in imports comes just one day after Commerce Minister Gao Hucheng said:
"The domestic and foreign trade environments this year have not improved markedly. To fulfill the foreign trade growth target, efforts should be made to implement existing policies. To achieve this goal will be an uphill battle and great efforts must be made.""
So gold stars to his entire staff for completely fixing the problem within 24 hours of his speech! Gao had stressed that a multi-pronged strategy must be adopted: the country should strengthen support for businesses in the process of industrial upgrading, produce higher-value products, focus on innovation-driven competitiveness and encourage the development of new export models like e-commerce. And then they did it all in just one day!
Meanwhile, imports slumped 20.5% from a year earlier in February, surpassing the 19.9% fall in January and exceeding market expectations of a 10% decrease. The February slide was the fourth consecutive month of lower year-over-year imports. The import decline was partly due to the sharp fall in prices for key commodities such as oil and metals. Crude-oil imports fell 46% in value but were up 11% in volume. Iron-ore imports showed a similar trend, losing 39% in value but gaining 11% in volume. That's key for our CLF investment as iron-ore volume is picking up – a hopeful sign (if we can believe the numbers).
In other unbelievable number news – it turns out Japan overestimated their GDP growth by 33% and has revised their Q4 estimate down from a so-so 2.2% to an anemic 1.5%. The third straight quarter of falling investment indicates companies remain reluctant to plow their record cash holdings into the economy as they work off inventories that swelled after the tax hike. Exports added to growth as large manufacturers continued to benefit from the weak yen while import costs rose, adding to pressure on many smaller companies.
Even with the Yen down 20% for year, Japan's exports rose just 5.6% last year – not really getting the bang for the buck they had hoped for on Abenomics. Business investment fell 0.1 percent from the previous three-month period, the third straight quarter of decline. “There is no doubt Japan’s economy has already hit bottom,” said Atsushi Takeda, an economist at Itochu Corp. “At the same time, this data does suggest the strength of rebound won’t be impressive.”
Here's a chart that says it all ahead of AAPL's announcement today:
Table 1: Worldwide Smartphone Sales to End Users by Vendor in 4Q14 (Thousands of Units)
Source: Gartner (March 2015)
*Lenovo’s merger with Motorola was completed on October 30th 2014 and the results for Lenovoinclude sales of mobile phones by Lenovo and Motorola.
That's AAPL jumping from a 15.4% in overall 2014 sales so if we take out Q4 from AAPL we had just 120M in the first 3 quarters and that's 40M per Q vs 75M in Q4 – that puts the jump (87.5%) in better perspective, doesn't it? Samsung was essentially flat for the Q, as were other phone makers so the bottom line here is AAPL captured pretty much ALL of the growth in the smart-phone market in Q4.
I'll tell you something interesting I noticed this weekend. We at PSW cater to HNW individuals and we got some usage statistics for devices that showed that, over the last 4 days, an article we were tracking got 65,724 views (80%) from iOS devices and just 20,479 from Android. That's despite the fact that Andriod has 80% of the market and iOS just 15.4 at last count.
So, despite the "dominance" of Andriod – if I have to choose a platform to write an app for, who would it be? The same seems to be going on in the commerce world in general as iOS users outspend Android users 10:1. On the other hand, I did poll my HNW kids and their friends and NOT ONE of them (13ish) had any desire for an iWatch, so AAPL has an uphill climb selling to a generation that was raised with a phone in their hands instead of a watch on their wrist.
We'll see if AAPL can save the markets today at 1pm – the live event broadcast is here.
“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.” — John Kenneth Galbraith
