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Apple is the ‘poster child’ for trade tensions and if its stock bounces, so could market

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With the trade war raging, some traders believe when Apple bounces back, so will the market.

Not only is Apple in the cross hairs of trade friction between the U.S. and China, but it has a rather influential position as a Dow stock, and part of both the S&P 500 and Nasdaq. Apple’s 1.6% gain Tuesday added 20 points to the Dow’s 208 point gain.

Apple was higher Tuesday with the overall market, but its more than 10% decline since President Donald Trump’s first tweet May 5 about the latest round of tariffs has largely been due to trade. Apple stock has also been negatively impacted by some lawsuits including the Supreme Court ruling against it Monday on a suit involving an antitrust case against its App Store.

“While many US companies are impacted by this latest trade tension, the ‘poster child’ for the US/China UFC battle continues to be Apple in the eyes of the Street as shares were down another 6% with fears running rampant on the Street that these latest tariffs could significantly increase the cost of iPhones globally and have a major negative impact on Street numbers across the board, ” writes Wedbush analyst Dan Ives Tuesday.

Apple is closely tied to China as both a marketplace for its iPhone and other products, and as part of its supply chain, with its Foxconn iPhone factory.

“If Apple itself bounces, it’s going to help a lot of companies,” said Frank Cappelleri, executive director at Instinet. “When one of the biggest stocks moves in one direction, it’s going to have a lot of sentiment and sympathy along with it. It’s obviously oversold.”

But Cappelleri said one day of a bounce does not decide a big move or mean there’s new life in momentum names. Rather, it will be important to watch how its stock behaves over the weeks or months of the trade war.

JP Morgan analysts, who rate Apple an overweight, say the company is more likely to absorb new tariff costs than pass them to consumers. But the company could need as much as a 14% price increase on iPhones to offset tariffs. Bank of America Merrill Lynch analysts said Apple’s iPhone cost could rise by as much as 20% if it moved its iPhone manufacturing to the U.S.

Trump raised tariffs on $200 billion in Chinese imports to 25% from 10% last Friday. Ives said those tariffs would boost the cost of making iPhones by 2 to 3%, but if the remaining $325 billion in Chinese goods are put under tariffs that would be a much bigger impact of 10% or more.

WATCH: U.S.-China trade war would hurt Apple’s sales all over the world



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Weight Watchers new children’s app, Kurbo, faces backlash

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Kurbo app

Scott Mlyn | CNBC

Do your homework! Clean your room! Count your Weight Watchers points?

Weight Watchers, which now calls itself WW, this week introduced a new app called Kurbo by WW to “help kids and teens ages 8-17 reach a healthier weight.” WW last year acquired Kurbo, a digital health start-up whose system is based on Stanford University’s pediatric obesity program.

Adolescents track their food in Kurbo’s free app. A green, yellow, or red light grades what and how much of a food they eat. They can also consult with a digital coach for a fee, starting at $69 per month.

“This is a scientifically proven way to get kids to eat healthier and move more, so we’re excited to get it into as many hands as possible,” WW’s Chief Scientific Officer Gary Foster told CNBC.

Some WW loyalists applaud the move, saying the company has transformed their lives and hope it can transform children’s lives, too. But nutritionists worry Kurbo promotes an unhealthy relationship with food during an especially impressionable time.

“I really do appreciate the idea that parents are signing up their children in ways that are largely well-intended, but what we know is that preoccupation with food and righteousness around food does not create healthy relationships with food,” said Anna Sweeney, dietitian and owner of Whole Life Nutrition Counseling in Concord, Massachusetts. “It does not leave people feeling good or competent in eating.”

Kurbo: lifestyle or diet?

When you sign up for Kurbo, you enter your name, height, weight and gender. You then choose a goal: eat healthier, lose weight, make parents happy, get stronger and fitter, have more energy, boost my confidence or feel better in my clothes.

Abby Langer, a dietitian who owns her own practice in Toronto, Canada, said she wanted to “barf” when she heard “make parents happy” was an option. Foster said Kurbo is meant to be a “family-based approach” and that parents should not single out one child. Instead, he said parents need to set the example and involve the entire family.

“Kids who are overweight know they’re overweight and already feel bad about it,” Langer said. “Giving this app to a kid is like saying there’s something wrong with you.”

Once you select a goal, you rank how important the goal is to you on a scale of 0 “not important” to ten “super important” and how confident you are that you can reach your goal from 0 “not confident” to to “super confident.”

Your profile page charts your body mass index (BMI), a formula based on your weight and height. You can check how many green, yellow and red foods you’ve eaten during the week. While it’s not quite counting points, it’s not that far from it.

Foster dismisses the idea that Kurbo is a diet, which he defines as a program like keto or paleo that labels certain foods as bad and encourages people to avoid them. Diets, he said, lead to short-term behavior change, whereas WW focuses on establishing healthy patterns.

Linda Tucker, a food and body image coach, thinks the light system is “problematic” because it “loses nuance.” She understands the intention to make it simple. Kurbo’s program does not require kids to track calories or fat, but “they’re still saying these foods are better than these foods without any context.”

“It’s not realistic, and it’s not a healthy way to teach anyone about food, especially children,” said Tucker, who owns her own practice in Portland, Oregon.

Helping or hurting

Some WW members praised the company for introducing a program to help children and teens.

About 13.7 million of U.S. children and adolescents — or nearly one-fifth — are obese, according to the Centers for Disease Control and Prevention. The CDC defines obesity as a BMI at or above the 95th percentile for a child’s gender and age group. A ten-year-old boy who weighs 102 pounds at 4 feet 8 inches tall would be considered obese.

Even that is controversial, with some health professionals arguing that BMI is an arbitrary and inaccurate measurement. However, people who are considered obese face a higher risk for health conditions like high blood pressure and Type 2 diabetes, according to the CDC.

“The reality is, the data are very clear that we have a science-based solution to help kids who are struggling with overweight and obesity, and we can do it very well with our digital app,” Foster said.

Kurbo’s website features “success stories” showing before-and-after images, as well as how many pounds users lost. Foster said the WW team heard from parents and adolescents who wanted to see pictures of kids “who have been successful.” He said the photos are intended to be “inspirational.” Some disagree.

“If Kurbo wants to create healthy body image and healthy habits for teens, I’m all for that,” Tucker said. “The problem is when you introduce the idea of weight loss, everything becomes poison.”

Kurbo does not rely on traditional health-care experts. Its coaches include people with degrees in economics, tourism management and communications, which nutritionists balk at. Foster said Kurbo’s coaches are “highly trained and highly effective.”

“If we want to live our purpose of making wellness accessible to all and doing it outside an academic medical center, we’re not going to be able to hire pediatricians, dietitians, exercise physiologists and psychologists,” he said. “What we do well is take science and scale it, measure the impact to make sure we’re living up to our purpose.”



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Arctic wildfires emit more CO2 in June than Sweden does in an entire year

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Smoke billows from a fire outside Ljusdal, Sweden in July, 2018. Sweden is fighting its most serious wildfires in decades, including blazes above the Arctic Circle, prompting the government to seek help from the military, hundreds of volunteers and other European nations.

Maja Suslin | TT | AP

Smoke from massive fires in the Arctic has blanketed nearby cities and could travel thousands of kilometers to other parts of the world, raising concerns among scientists about poor air quality and exacerbated global warming.

The ongoing Arctic fires this year have been particularly severe in Siberia and Alaska. In Russia, flames engulfed more than 7 million acres in Siberia and beyond in August, forcing President Vladimir Putin to send military transport planes and helicopters across the country to put out the fires.

In Alaska, more than 2.4 million acres have burned over the past three months, inundating nearby cities with smoke and forcing temporary hospitals to open for clean air access.

Now, a cloud of smoke and soot bigger than the European Union is moving from Siberia into the Arctic, according to the World Meteorological Organization. It is forecast to reach Alaska, where fires have scorched an area larger than the wildfire damage in California last year.

Scientists say the smoke plumes, filled with megatons of tiny, harmful particles, could travel to other areas of the world and cause serious respiratory problems for people.

“What happens in the Arctic doesn’t stay in the Arctic,” said Liz Hoy, a researcher at NASA’s space flight center, which has tracked the blazes from satellites.

“This year, it’s an incredible amount of burning, and the smoke affects air quality thousands of miles away from the Arctic region. The warming there will translate to the East Coast [of the U.S.], contribute to sea level rise and affect people all over.”

The fires in northern Russia, Alaska, Greenland and Canada released a record 50 megatons of CO2 in June — equivalent to Sweden’s total annual emissions and more than the past eight Junes combined — and 79 megatons in July, according to NASA.

Preliminary data also shows that July 2019, the hottest month on record, has also registered the highest CO2in the last 10 years.

In Russia, NASA satellite imagery shows a thick smoke plume from fires that extends across more than 4.5 million square kilometers of central and northern Asia, blocking sunlight and impacting air quality.

“People ask, how do wildfires in Alaska and Siberia impact me back in Seattle or Minneapolis? The immediate concern is the transport of smoke, which travels thousands of miles,” said Brian Brettschneider, a climatologist at the University of Alaska Fairbanks.

“That affects people far removed from where these fires are. It affects air travel, and the carbon emissions from fires burning negatively impacts everyone.”

Nearly 400 fires have burned in Alaska so far in 2019, forcing residents in Fairbanks to open up hospitals for clean air, and lock themselves in their homes during the hot summer months.

“In Fairbanks, we had smoke thick enough to substantially reduce visibility for 25 days. That’s a lot of smoke. Some of the worst days were pretty choking,” said Rick Tolman, a researcher who lives in Fairbanks.

“It’s a big concern for people with existing respiratory issues,” he continued. “The smoke from these fires travels so far and can produce significant air quality problems in areas far from the fires. With the intensity of the fires increasing, it’s wreaking havoc.”

Smoke and soot from the wildfires also absorbs solar energy, further warming the earth. The Arctic is warming at more than twice the rate of the rest of the world. In August, for instance, record ice melt in Greenland over one day irreversibly raised sea levels by 0.1 millimeters across the world.

Mark Parrington, a scientist in the Copernicus Atmosphere Monitoring Service, said that higher than usual temperatures and dry soil has made great conditions for unusually intense, hot blazes. The latitude, intensity and duration of the fires have set them apart from what is typically observed in the region.

“The fires burn for so long. Over the last two months, it’s unusual to see this scale. Generally, fires in Alaska last for a few days to two weeks. But this is now two months of burning,” Parrington said.

The worst fires move north of forests and impact Arctic tundra and permafrost layers, which accumulate organic matter over thousands of years, Parrington said. When those areas are burned, it releases thousands of years worth of carbon and methane into the atmosphere.

“From a climate point of view, these fires are exponentially worse,” Brettschneider said.

Besides health and environmental concerns, there’s an economic toll too.

The higher frequency of fires, and exponential warming in the Arctic, will contribute to sea level rise, which threatens to destroy property value in coastal regions, displace residents and impact global markets.

In Alaska this year, over $150 million was spent on suppression and protection efforts against wildfires burning closer to populated areas, according to researchers.

Typically resources are not used to combat wildfires, since they are a natural part of the boreal ecosystem. However, this year’s unprecedented wildfire season has changed that, as fires burn hotter, more frequently, and deeper into the ground, destroying trees and their ability to reproduce.

“It is important to understand that fires aren’t only a result of climate change, but also are impacting climate change,” said Anton Beneslavsky, a Greenpeace Russia activist.

“If we talk about mitigating climate change, we need to urgently pay attention to the wildfire issue,” he said.



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5 things to know before the stock market opens August 16, 2019

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1. Dow to jump 250 points at the open after a wild week

U.S. stock futures were pointing to a 250-point gain for the Dow Jones Industrial Average at the Friday open, capping a wild week on Wall Street. The Dow bounced up 100 points Thursday, a day after losing 800 points, or 3%, in the worst session of 2019. Encouraging data on the strength of the U.S. consumer, despite concerns about a global economic slowdown, won the day. Also bolstering investor sentiment, Beijing officials softened their trade war rhetoric. However, the Dow was 2.7% lower on the week ahead of Friday trading.

2. Bond yields higher after hitting multiyear lows this week

With stocks tracking higher, bond prices were lower on Friday. After dipping below 2% for the first time ever, the 30-year Treasury yield was back above that level Friday morning. Yields move inversely to bond prices. The 2-year and 10-year yield spread, which briefly inverted and flashed a recession signal earlier this week, remained back to normal, with the 2-year Treasury yielding less than the 10-year. On Thursday, the 10-year slipped below 1.5% to a three-year low.

3. Ray Dalio: China could use Treasurys as a trade weapon

Ray Dalio, Bridgewater Associates Founder, President & CIO.

Anjali Sundaram | CNBC

Bridgewater Associates’ Ray Dalio told CNBC on Friday he would not rule out China using its Treasury holdings to gain an upper hand against the U.S. on trade. The founder of the world’s largest hedge fund also said the U.S. economy is taking a turn for the worse, with a 40% chance of recession before next year’s presidential election. However, economists boosted their forecasts for U.S. gross domestic product growth in the third quarter to a median of 2.1% after a batch of better-than-expected data. That’s according to the CNBC/Moody’s Analytics Rapid Update.

4. Trump urges Xi to meet with Hong Kong protesters

Passengers and anti-government protesters gather at the Hong Kong international airport during a sit-in demonstration. In response to violence in which a woman was shot in the eye with a projectile during confrontations between protesters and police, anti-government protesters occupied Hong Kong’s International airport and forced the cancellation of all flights.

Miguel Candela | SOPA Images | Getty Images

Mass pro-democracy protests were expected this weekend in Hong Kong, which has been emerging as another flash point between Beijing and Washington. President Donald Trump, taking with reporters Thursday evening, urged Chinese President Xi Jinping to meet with the demonstrators to defuse weeks of tensions in the Chinese territory. China’s ambassador to London said Beijing could use its power to stop the protests should they get out of hand. Trump also said the September trade talks with China were still on.

5. GE shares bounce after worst day in 11 years

Larry Culp, CEO, General Electric

Scott Mlyn | CNBC

Shares of General Electric were 2% higher in premarket trading Friday, after tanking 11% in their worst decline in more than a decade. In a Thursday evening SEC filing, GE revealed that CEO Larry Culp bought nearly $2 million worth of company stock after Madoff whistleblower Harry Markopolos issued a report, calling GE “a bigger fraud than Enron.” Markopolos said a hedge fund paid him to conduct the research on GE, but he would not name the fund. Leslie Seidman, a GE board director and audit committee chair, also pushed back, telling CNBC that the Markopolos report “does not reflect the GE that I know.”

CNBC’s before the bell news roundup

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