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    AAPL   US0378331005


Delayed Nasdaq  -  04:00:00 2023-03-30 pm EDT
162.36 USD   +0.99%
03:44aElon Musk plans China visit, seeks meeting with premier - sources
02:14aColumn-Markets won't give up the ghost: Mike Dolan
03/30How a massive options trade by a JP Morgan fund can move markets
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

End of easy-cash era is going to hurt

02/01/2023 | 02:09am EDT
FILE PHOTO: The Wall St entrance to the NYSE  is seen in New York

LONDON (Reuters) - The end of the easy-cash era is over and its impact yet to be felt on world markets, hopeful that the pain of aggressive rate hikes and high inflation has passed.

U.S. and UK central banks are unwinding stimulus further by offloading bonds they hold, and the European Central Bank will join them soon. Nomura estimates the balance sheets of the three banks will shrink by $3 trillion this year.

Graphic: Bloated central bank balance sheets start to shrink https://www.reuters.com/graphics/GLOBAL-MARKETS/znpnbkeaypl/chart.png

Tech stocks and crypto currencies look vulnerable. They are among risky assets that soared as cash pumped out by central banks fighting weak inflation in recent years searched for a home.

"When you have unprecedented monetary tightening, the likelihood is that you get issues that are uncovered - that might be something hidden such as liquidity or something more obvious like pressures in the housing market," said Zurich Insurance Group chief market strategist Guy Miller.

We look at some potential pressure points.


Once darlings of the easy-cash era, tech stocks are being shunned by many investors even after a January bounce as higher rates make it more expensive to take punts on the potential earnings growth of early stage or speculative businesses.

When economic uncertainty is high, investors often look for reliable returns from dividends to safeguard portfolios. That makes the likes of tech stalwarts such as Apple, whose shares trade on a dividend yield of less than 1%, look vulnerable.

"We're at a stage where very elevated valuations in markets have collided with much less supportive policy," said James Harries, senior fund manager at Troy Asset Management. "So, the outlook is darkening."

Tech firms are reversing pandemic-era exuberance, cutting jobs after years of hiring sprees. Google owner Alphabet plans to axe about 12,000 workers; Microsoft, Amazon and Meta are firing almost 40,000.

Graphic: Big tech's earnings growth put to the test https://www.reuters.com/graphics/GLOBAL-MARKETS/mypmogzgmpr/chart.png


Concerns about corporate defaults are mounting as rates rise, although recession worries have eased.

S&P Global said Europe had the second-highest default count last year since 2009.

It expects U.S. and European default rates to reach 3.75% and 3.25%, respectively, in September 2023 versus 1.6% and 1.4% a year before, with pessimistic forecasts of 6.0% and 5.5% not "out of the question."

Man GLG portfolio manager Michael Scott said markets have not fully priced in the risk of higher defaults.

Graphic: Corporate default rate may double in 2023 https://www.reuters.com/graphics/GLOBAL-STRESS/dwpkdegzdvm/chart.png


Private debt markets have ballooned since the financial crisis to $1.4 trillion from $250 billion in 2010.

The largely floating-rate nature of the financing appeals to investors, who can reap returns in high single to low double digits, and became popular as plunging rates post-2008 boosted risk assets.

Now, a reality check: higher rates imply a heavier burden for companies as recession looms, casting a shadow over their ability to generate sufficient cash to pay ballooning interest costs.

"What surprises me is that you're almost back to complacency," said Will Nicole, CIO of Private and Alternative Assets at M&G Investments. "We've gone from a position where three months ago everybody was talking about a credit cycle coming through for the first time in decades and now people appear to have forgotten that."

Graphic: Direct lending stellar growth https://www.reuters.com/graphics/GLOBAL-CREDIT/PRIVATE/lbpgggwlnpq/chart.png


Rising borrowing costs roiled crypto markets in 2022. The price of bitcoin plunged 64% and around $1.3 trillion was wiped off the global cryptocurrency market cap.

Bitcoin has rallied recently but caution remains. The collapse of various dominant crypto companies, most notably FTX, left investors shouldering large losses and prompted calls for more regulation.

January brought a fresh wave of job cuts as firms brace for the so-called crypto winter, while the lending unit of Genesis recently filed for U.S. bankruptcy protection, owing creditors at least $3.4 billion.

Graphic: Pain in crypto land https://www.reuters.com/graphics/GLOBAL-MARKETS/lgpdknmayvo/chart.png


Real estate markets, first responders to rate hikes, started cracking last year and 2023 will be tough with U.S. house prices expected to drop 12%.

Fund managers surveyed by BofA see China's troubled real estate sector as the second most likely source of a credit event.

European real estate is reporting distress levels not seen since 2012, according to data from law firm Weil, Gotshal & Manges.

How the sector services its debt is in focus and officials warn European banks risk significant profit hits from sliding house prices.

Real estate investment management firm AEW estimates the UK, France and Germany could face a 24 billion euro debt funding gap through 2025. Luckily, bank balance sheets are better positioned to absorb losses, so few expect a 2008 repeat.

Graphic: Distress in Europe's real estate sector rises https://www.reuters.com/graphics/GLOBAL-STRESS/byprlryzbpe/chart.png

($1 = 0.9192 euros)

(Reporting by Chiara Elisei, Dhara Ranasinghe, Naomi Rovnick, Elizabeth Howcroft and Yoruk Bahceli; Graphics by Kripa Jayaram and Vincent Flasseur; Editing by Dhara Ranasinghe and Christina Fincher)

© Reuters 2023
Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -0.49% 100.89 Delayed Quote.14.35%
AMAZON.COM, INC. 1.75% 102 Delayed Quote.21.43%
APPLE INC. 0.99% 162.36 Delayed Quote.23.74%
BITCOIN (BTC/EUR) -1.56% 25746.8 End-of-day quote.66.13%
BITCOIN (BTC/USD) -1.12% 28037.5 End-of-day quote.68.76%
META PLATFORMS, INC. 1.21% 207.84 Delayed Quote.72.71%
MICROSOFT CORPORATION 1.26% 284.05 Delayed Quote.16.97%
NOMURA CO., LTD. -0.44% 904 Delayed Quote.-5.52%
NOMURA CORPORATION 0.47% 1059 Delayed Quote.3.54%
ZURICH INSURANCE GROUP LTD 0.11% 437.4 Delayed Quote.-1.38%
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Financials (USD)
Sales 2023 389 B - -
Net income 2023 94 213 M - -
Net cash 2023 63 027 M - -
P/E ratio 2023 27,1x
Yield 2023 0,59%
Capitalization 2 569 B 2 569 B -
EV / Sales 2023 6,44x
EV / Sales 2024 5,93x
Nbr of Employees 164 000
Free-Float 99,9%
Duration : Period :
Apple Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends APPLE INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 44
Last Close Price 162,36 $
Average target price 169,10 $
Spread / Average Target 4,15%
EPS Revisions
Managers and Directors
Timothy Donald Cook Chief Executive Officer & Director
Luca Maestri Chief Financial Officer & Senior Vice President
Arthur D. Levinson Independent Chairman
Kevin M. Lynch Vice President-Technology
Timothy Campos Chief Information Officer
Sector and Competitors
1st jan.Capi. (M$)
APPLE INC.23.74%2 568 851
DZS INC.-37.07%248
RTX A/S18.00%166
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