Iger: Apple and Disney might have merged if Jobs were still alive

As Apple stock nears its all-time highs, Disney CEO Bob Iger muses in an extract from his new autobiography that the two companies probably would have joined forces by now if the company’s founder Steve jobs were still alive. 

Bob Iger and Steve Jobs were good friends, having served on the boards of each other’s companies for many years. Jobs had been on Disney’s board since 2006 after the company acquired Pixar for $7.4 billion, while Iger has been a board member at Apple since 2011. 

Now, with both companies announcing competing streaming services, Iger has chosen to resign from the Apple board. He had warm words for Apple’s current CEO Tim Cook, his fellow board members, and the company as a whole. But his relationship with Apple could have been closer still, he believes. 

In his upcoming autobiography, an extract of which has been published in Vanity Fair, Iger says: 

“With every success the company has had since Steve’s death, there’s always a moment in the midst of my excitement when I think, I wish Steve could be here for this.” 

“It’s impossible not to have the conversation with him in my head that I wish I could be having in real life. More than that, I believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously.”

Appney? Disple? Could Apple and Disney really have merged? 

While Iger may have dreamed of a union between Apple and Disney, and many analysts speculated over the prospect, it’s highly unlikely that a deal of that sort could go through today. 

Even if Tim Cook likes what he reads in Iger’s autobiography, there would be a huge number of hurdles to overcome. 

Regulatory scrutiny, particularly over tech companies, has increased significantly in recent months. The Trump administration, although business friendly and borderline allergic to red tape, is currently in the midst of an antitrust probe into Apple, along with Google, Facebook and Amazon. 

Apple has a market capitalisation in excess of $1 trillion. Next to this Disney’s $246 billion market cap may seem quaint, but if Apple were to acquire it, it would be the biggest deal in history. It would have thrown up a huge number of issues at a time when the company is already being heavily scrutinised. 

But it’s a deal that would have made sense: Apple has recently announced its own streaming service, but the company has little experience in this realm. Disney’s resources, not to mention its extensive back catalogue of content, could have done a lot to help Apple+ take on Netflix. 

Instead, Disney and Apple are left with rival streaming services – Disney’s is $2 per month dearer than Apple’s, but promises to launch with some of the most loved and successful movies, TV shows, and franchises on the planet. Apple has the money to invest in its own great content, but in this respect it will be playing catch up to Netflix. 

So even though a merger with Apple may have been desirable, the future is looking pretty solid for Disney on its own. Apple+, on the other hand, remains unproven.

Week Ahead: Inflation headlines heavy data week

Week Ahead

Welcome to your guide to the week ahead in the markets.

US & Eurozone inflation 

As markets weigh the prospect of more stimulus from global central banks, hard economic data this week will be eyed for any signs that the premise on which market expectations are based is wrong. 

Friday sees the release of the flash CPI estimate for the Eurozone. Indications so far do not suggest inflation in the bloc is moving higher. The same day the Fed’s preferred inflation gauge, the core PCE measure, is released. Core CPI has been moving up lately but the PCE indicator has remained subdued. 

Brexit 

 After the G7 summit over the weekend, markets are looking to the EU and Britain for where the next move is on Brexit. MPs return on September 5th but there will be plenty of politicking going on behind closed doors before then.  

Australian data 

With Aussie traders looking to the next RBA meeting at the start of September, this week’s download of data will be closely assessed for clues about future rate cuts. Construction work done, building approvals and capital expenditure figures are all set for release in the coming days. 

China PMIs 

After the end of the trading week on Saturday we get the latest manufacturing and services figures out of China. The key question for risk assets is whether the trade war is still biting down on Chinese expansion.  

US data 

A batch of US figures are out including core durable goods (Monday), the second reading of the Q2 GDP print (Tuesday), while on Friday we get the Chicago PMI and University of Michigan consumer sentiment reports.  

Corporate Diary

Earnings season is wrapping up, with just a couple of releases this week.

Aug 26thDollar General
Aug 28thTiffany & Co
Aug 28thHewlett Packard
Aug 29thPernod Ricard
Aug 29thBest Buy
XRay

There are plenty of things to look forward to on XRay this week. You can watch live, or subscribe to view on catch up.

07.15 GMTAug 27thEuropean Morning Call
15.30 GMTAug 27thAsset of the Day: Bullion Billions
15.45 GMTAug 27thAsset of the Day: Oil Outlook
13.00 GMTAug 28thAsset of the Day: Indices Insight
07.00 GMTAug 29thLive Trading Room
Key Economic Events

There are a lot of dates for the diary this week, including US Core Durable Goods and Eurozone Flash CPI.

08.00 GMTAug 26thGerman IFO Business Climate
12.30 GMTAug 26thUS Core Durable Goods
14.00 GMTAug 27thUS CB Consumer Confidence
01.30 GMTAug 28thAustralian Construction Work Done
14.30 GMTAug 28thEIA Weekly Crude Oil Inventories
01.00 GMTAug 29thANZ Business Confidence
01.30 GMTAug 29thAustralia Private Capital Expenditure
12.30 GMTAug 29thUS Q2 GDP (2nd Reading)
09.00 GMTAug 30thEurozone Flash CPI
12.30 GMTAug 30thUS PCE Inflation

Trading frenzy ahead on Russell rebalancing?

Expect a busy trading session thanks to the annual rebalancing of the FTSE Russell US indices. According to The Wall Street Journal, the first few seconds of trading on the day of the reconstitution last year saw around $100 billion in stock trades.

The US benchmarks have been updated to ensure the correct weighting, which means some stocks will be dropped and others added. These stocks can see a flurry of activity, with traders dumping the excluded stocks and snapping up the newest Russell constituents. However, fresh inclusions and exclusions are often easy to predict and telegraphed well in advance.

Fund managers will need to rebalance their portfolios – it is estimated that index funds tracking Russell benchmarks will need readjusting to the tune of $170 billion to keep themselves aligned with the reshuffled indices. $9 trillion is pegged to the US benchmarks in total.

The Russell recon has a bigger impact than other index reshuffles because it happens annually, compared to the quarterly rebalancing undertaken by other indices like the Dow, FTSE and DAX.

Rebalancing is a long process, and today marks the end. The conclusion of the Russell adjustments is often one of the highest volume trading days each year.

Trump’s London calling, US-China trade war worsens, oil smoked

Forex
Morning Note

Global stocks were down by around 6% in May – can we get a better June? The runes are not looking great. 

Futures indicate European shares are lower today as trade tensions continue to mount and investors exhibit greater fear about the global economy and the risk of recession. Asian markets were generally lower after a big selloff on Wall Street on Friday that saw the S&P 500 decline 37 points, or 1.32%, to finish at 2,752.06, below its 200-day moving average. FTSE 100 held the 7150 level, but this is likely to get taken out today. 

Trade fears are heating up 

The trade war is not cooling down; in fact, it looks like the rhetoric is heating up and further escalation seems likely. China is raising tariffs on $60bn of US goods in retaliation for tariffs, coming up with its own blacklist of foreign companies, has accused the US of resorting to ‘intimidation and coercion’, and begun an investigation into FedEx. And the Chinese defence minister says if the US wants a fight, they will ‘fight to the end’. No end in sight, and the chances of a G20 détente are slim.

Futures 

US stock futures were lower along with oil amid growing fears about this trade setup. Nothing like progress has been seen re Mexico, and now the market is dealing with reports that the US has been eyeing slapping tariffs on some Australian imports, As we noted last week, the escalation last week with the attack on Mexico – especially as it represented a weaponization of trade to pursue non-economic policies – represents a major turning point and could bring others into the fray. Again, the EU could come under fire soon. 

PMI day 

Data overnight has been mixed but still indicates slowdown. China’s Caixin PMI read 50.2, unchanged from a month before but a little ahead of expectations. Japan’s PMI has gone negative, moving to 49.8, signalling contraction. Japanese manufacturing output down for 5 months in a row, while new export orders fell for the 6th straight month. Japanese equities were down sharply overnight. UK PMI at 09:30, with the ISM numbers for the US due at 15:00. 

London calling 

Trump heads to the UK today – unfortunately he’s meeting a lame duck PM so we can’t expect much of importance. There will be lots of talk of a trade deal with the US post-Brexit. Harder Brexiteers in the Tory leadership race are likely to be emboldened. Expect the no-deal talk to increase.  

Sterling is sure to be under plenty of pressure until the leadership race is clearer. GBPUSD remains anchored to 1.26 for now, having made fresh multi-month lows last week. However, Friday’s bullish hammer reversal may provide the basis for a short-term rally. Just a hint that the pound is oversold and could be ready for a wee bounce. 

Oil smoked, gold higher 

Oil has taken a beating as markets worry more about a slowdown in global demand than supply constraints. Brent has declined by 10% or so in just a couple of days and is holding on $61, while WTI is clinging to $53. Speculators are liquidating long positions wholesale, with Friday’s COT report showing net longs down by 40k contracts. Net long positioning has fallen by about a fifth (100k contracts or more) since the late April high at 547.4k. 

Stockpiles are at their highest in two years. Speculative long positions continue to be cut. Supply uncertainty is losing out to demand uncertainty. Simply put, with OPEC and co curbing output, there is ample excess capacity in the market should it be needed. 14-day RSI and 20-day CCI suggest oversold and ready for a bounce, but this is like trying to catch a falling knife. 

Gold meanwhile is picking up safe haven bid as this decline is not just about valuations but about big fears for the global economy. The easing off in the US dollar has also supported gold. Having broken $1300 gold was last around $1310, with next target $1324.

FTSE rebalancing etc

Finally, there’s a fair bit of chatter about the FTSE rebalancing – will Marks & Spencer survive in the 100? Will JD Sports be promoted? I wouldn’t get too worked up about it all, even if it’s good sport. EasyJet likely to go – shares have been hammered but the business is tightly run and it’s always been one of the smallest in the FTSE 100. MKS lucky to survive with only the rights issue saving it.

Kier – warning on profits – going from bad to worse after the rights issue flopped.  

Astra – hails Lynparza pancreatic cancer drug trials success 

William Hill – bid rumours are doing the rounds 

Dignity – says it welcomes Treasury/FCA proposals  

CySEC (EU)

Products

  • CFD
  • Share Dealing
  • Strategy Builder

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to EUR20,000
  • Negative Balance Protection

Markets.com, operated by Safecap Investments Limited (“Safecap”) Regulated by CySEC under License no. 092/08 and FSCA under Licence no. 43906.

FSC (GLOBAL)

Products

  • CFD
  • Strategy Builder

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection

Markets.com, operated by TradeTech Markets (BVI) Limited (“TTMBVI”) Regulated by the BVI Financial Services Commission (‘FSC’) under licence no. SIBA/L/14/1067.

FCA (UK)

Products

  • CFD
  • Spread Bets
  • Strategy Builder

  • Client’s funds are kept in segregated bank accounts
  • FSCS Investor Compensation up to GBP85,000
    *depending on criteria and eligibility
  • Negative Balance Protection

Markets.com operated by TradeTech Alpha Limited (“TTA”) Regulated by the Financial Conduct Authority (“FCA”) under licence number 607305.

ASIC (AU)

Products

  • CFD

  • Clients’ funds kept in segregated bank accounts
  • Electronic Verification
  • Negative Balance Protection

Markets.com, operated by Tradetech Markets (Australia) Pty Limited (‘TTMAU”) Holds Australian Financial Services Licence no. 424008 and is regulated in the provision of financial services by the Australian Securities and Investments Commission (“ASIC”).

FSCA (ZA)

Products

  • CFD
  • Strategy Builder

  • Clients’ funds kept in segregated bank accounts
  • Negative Balance Protection

Markets.com, operated by TradeTech Markets (South Africa) (Pty) Limited (“TTMSA”) Regulated by Financial Sector Conduct Authority (‘FSCA’) under the licence no. 46860.

Selecting one of these regulators will display the corresponding information across the entire website. For more information click here.