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Everything You Need To Know About Apple’s Launch Event

#Morning Brew
by Last Updated

“We cannot fathom Pershing’s operational or mathematical investment thesis” — Stifel analysts, in response to hedge fund manager Bill Ackman disclosing a 9.9% ownership stake in Chipotle. To be fair, Ackman’s previous attempts to fix up chain stores (looking at you, JC Penney) didn’t go too well.

Big Picture

  • U.S. markets closed mixed on Wednesday as the Federal Reserve’s Beige Book set a positive tone for the economy but noted possible headwinds ahead of the presidential election

Market Movers

  • Airline stocks took off yesterday—American Airlines, Delta and United all soared 5%—as Delta executives made bullish comments at an industry conference
  • While airlines climbed, grocery store stocks crashed hard after Sprouts Farmers Market issued weak guidance. Whole Foods and Kroger both fell over 5% in sympathy

CORPORATE PRIMER

Apache Struck Gold

…Black gold, that is. Yesterday, Apache Corporation—a petroleum and natural gasexploration and production company—revealed it had discovered at least two billion barrels of oil in a west Texas field…in what would be one of the biggest energy finds of the past decade. Apparently, this stuff still happens. Let’s do the math: two billion barrels at the current WTI oil price of around $46 a barrel equals a grand total of…wait for it…$92 billion. That’s a heck of a lot of the good stuff. On the real, analysts estimate the discovery to be worth anywhere between eight and 80 billion bucks, which is still a lot by any measure. Shares of Apache rose by almost 7% yesterday on the news.

PS4 Had a Launch Too

…And it was epic. Don’t think that Apple was the only tech giant with something to say: Sony dropped two new PS4 consoles yesterday. The new PS4 retails at $299, but it’s 30% smaller than the current model, a tit-for-tat response to Microsoft’s slimming of its Xbox One. Don’t worry, specs-wise, it still packs a similar punch. The new PS4’s shedded weight was transferred over to the new PS4 Pro—which is one serious piece of machinery. Here are the highlights: $399, 4K output capability, a 4.20 teraflop GPU, nearly one kilo heavier and one TB standard hard drive. Sounds like game time to us.

Tesla’s Car Strikes Again

…This time into a tree. It’s as grisly as it sounds: a 53-year-old driving a Tesla Model S electric car in the Netherlands was killed when his car crashed into a tree and subsequently burst into flames. It gets crazier: since emergency respondents worried they would be electrocuted, they didn’t immediately retrieve the driver’s body. After Tesla’s most recent (and currently only) autopilot fatality this past June, speculation quickly abounded over whether this crash had anything to do with autopilot. Last night Tesla confirmed autopilot was not engaged during the crash…just a man and a tree.

WORLD MACRO

JOLTS + Beige Book

…A match made in heaven. Yesterday featured a double shot of macroeconomic news: the latest Fed Beige Book unveiled by the Federal Reserve cited a “moderate” economic expansion, a tight labor market (read: more job openings than hires) and low inflation. Meanwhile, the elegantly-named Job Openings and Labor Turnover Summary (JOLTS) reported job openings reaching all-time highs. With 5.87 million new openings and 5.23 million hires in July, the data may just tip the balance towards a seemingly mythical Fed interest rate hike (don’t quote us). But the Beige Book’s disappointing inflation numbers have businesses on their toes and doesn’t bode well for the rate hike we’re all in eager anticipation for at the Fed’s September policy meeting.

OTHER STORIES

ECONOMIC CALENDAR

APPLE DOES IT AGAIN

…The iPhone, that is. Yesterday, Apple made all sorts of headlines during its keynote event. Tim Cook and co. unveiled new products—like the iPhone 7 and the Apple Watch Series 2—and laid out their features. Just like all the iPhones before it, the 7 is “the best iPhone ever made.” Nice. Here are some of the big highlights:

  • The biggest news? The rumors were true: no more headphone jack in the iPhone 7. Instead, Apple-developed headphones called “AirPods” will connect to the iPhone wirelessly. Sounds great, right? The catch: these headphones will cost you $159. Lovely.
  • The iPhone 7 will no longer feature a clicky physical home button below the touch screen. The new home button will act like the new MacBook trackpads and incorporate the force touch technology introduced in the last iPhone generation. Elegant.
  • Quick sidebar: Apple wasn’t the only company making headlines during the keynote—Nintendo announced Pokémon Go for the Apple Watch and a new Mario game for iOS: Super Mario Run. The Apple-Nintendo partnership gave Nintendo investors a major power-up—shares rose as much as 18% in Tokyo.
  • Back to the products: both the iPhone 7 and Apple Watch Series 2 will be water-resistant, and not just in case of accidents—Apple is actually encouraged users to swim with their Apple Watches. The iPhone 7 will be released next week and the Watch will be released in late October.

INTERVIEW QUESTION OF THE DAY

How do you calculate cost of debt? (Answer)

BUSINESS TERM OF THE DAY

Quadruple Witching — Quadruple Witching refers to an expiration date that includes stock index futures, stock index options, stock options and single stock futures. While stock options contracts and index options expire on the third Friday of every month, all four asset classes expire simultaneously on the third Friday of March, June, September and December.

FOOD FOR THOUGHT

Hanjin Shipping—one of the world’s largest container carriers—is having some major financial and legal troubles. What’s going on? Well, as of now, there’s at least$14 billion worth of cargo stranded at sea. Samsung alone is said to have about $38 million in cargo floating around. Good thing the Galaxy S7 is waterproof.