The Daily Update - Leaks: Trump’s “Amorality” and Cook’s Bigger and Pricier Apples

The Daily Update - Leaks: Trump’s “Amorality” and Cook’s Bigger and Pricier Apples

With the number of recent leaks, the Trump Administration and Apple Inc could both seemingly give Thames Water a run for their money. The suspicion within the White house has now gone so far as to persuade Vice President Mike Pence to offer undergoing a lie detector test to prove he’s not the author of the anonymous New York Times piece. The scathing op-ed highlighted the “adults in the room” making a “quiet resistance” against Trump’s “amorality” and lack of “any discernible first principles that guide his decision making”; it publicised “the internal workings of a chaotic and divided administration and to defend the choice to nevertheless work within it” to further the “bright spots” of the administration’s accomplishments in “deregulation, historic tax reform”... The hype is almost enough for one to forget Trump faces the threat of Special Counsel Mueller’s investigation.

The Daily Update - Apple US taxes and borrowing in 2018

With the US Government 3-day shutdown resolved earlier this week, at least until the 8th of February, we revisited various facets of the Tax Cuts and Jobs Act of 2017 (TCJA) now a month on from its signing into law. Preliminary estimates from the Congressional Budget Office (CBO) forecast it to add a further $1 trillion to national debt over 10 years (even after macroeconomic feedback effects). This is in addition to the $10tn increase from the baseline forecast and existing $20tn in national debt. How many government shutdowns we shall see in the next decade as US national debt potentially grows to ~$31tn is anyone’s guess.

The Daily Update - Budget, tax reform and Apple

Congress should shortly pass a bill to temporarily circumvent the debt ceiling. Subsequently, they will deal with the budget, which is very likely to be late. Tax reform, like the repeal of Obamacare, is much too complicated to get done anytime soon, so the budget could be in limbo for the rest of the year. Or Congress would have to pass something that did not incorporate tax reform. The problem is that the Republicans, despite having control of Congress for many years, currently have no viable plans either for health care or tax reform.

The Daily Update - A boot that doesn't fit our investment model

1st March 2067 is the distant maturity of the latest €5bn bond issuance from Italy. Even in the wake of European immediate concerns, talk of the ECB reducing QE and Italian banks fears not to mention the Deutsche Bank furore - subscriptions for this first ever 50 year bond from ‘Il Bel Paese’ were 3.7x oversubscribed. €18.5bn of investor money was keen (or at least reluctantly persuaded) to bet on Italy’s ultra-long-term creditworthiness at underwhelming spread of 52 basis points over Bunds. Not us.

Wealthy Nations Daily Update - Apple and Buybacks Performance

Buyback season apparently continues unperturbed with Apple yesterday completing a $12bn bond issuance. Apart from a $1.5bn green bond (for environmental and public relation purposes) much of the debt will fund buybacks at current ‘knockdown prices’ taking advantage of shares trading between $90-$100 this year - more than 25% below their peak of around $130 in mid-2015. The favourable timing also takes advantage of a lull in the recently agitated bond markets whist tapping into its hankering for AAA and high AA rated credit at a time when historically few other companies are doing so. Year-to-date US debt sales are at the lowest levels in over two decades. Hence Apple received over $28bn of orders across nine tranches on what is the second largest bond sale of the year (second only to AB InBev’s $46bn fund raising for the acquisition of SABMiller).

Wealthy Nations Daily Update - Apple

Marmite, wannabe Presidential candidate, you either love him or hate him, Donald Trump, is in the news again this time his target is Apple. Mr Trump wants to force manufacturing back to the US. “Make America great again”, “We’re going to get things coming. We’re gonna get Apple to start building their damn computers and things in this country instead of in other countries”, he said in a speech at Liberty University in Virginia.

Wealthy Nations Daily Update - Technology Companies

In the present era one might expect to pay a hefty premium to invest in technology companies, especially market leading household names such as Apple and Alibaba; each flagship innovators and consumer gravitons in their respective superpower nations. However bonds from both of these, over the course of the past 11 months, have seemed to offer relative value according to our models; Alibaba when they first issued in November last year (and more so following the negative China and EM sentiment in Q2) and Apple after their 2043 issue fell from a price of USD 108.7 in late January to May when we picked some up at USD 91.8.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.