—— Apple Hits All-Time High; Biden Signs Debt Ceiling Law; U.S. Bull Market May Be Short-Lived; Longest Direct Flights Carry 20% Premium; Ares Launches $8.7B Loan Fund; Apple Unveils Mixed Reality Headset; Tourism Fuels Japan’s Inflation
1. Apple Hits All-Time High
Today, Apple’s stock reached an all-time high of $183.76, surpassing its previous record set on January 3, 2022. Year-to-date, it has gained 41%.
Matthew Maley, Chief Market Strategist at Miller Tabek + Co, believes today’s Apple Worldwide Developers Conference could provide a fresh boost to the stock. However, he noted that Apple’s P/E ratio has exceeded 30 over the past six years, suggesting the stock is expensive and investors should be cautious about chasing it.
Driven by iPhone and services revenue, Apple’s stock has steadily climbed this year, offering investors a safe haven.
Devon Drew, CEO of DFD Partners, said that even at today’s price levels, Apple stock remains high quality. The company is restructuring its cash reserves, and many consumers are expected to upgrade their devices.
Apple’s market cap is gradually approaching the $3 trillion mark.
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2. Biden Signs Debt Ceiling Law
On Saturday, U.S. President Joe Biden signed the debt ceiling bill into law, temporarily suspending the ceiling until January 1, 2025. This will allow the Treasury Department to gradually restore its cash reserves to normal levels.
Bank of America expects that upcoming Treasury auctions will attract a flood of buyers, with total issuance potentially exceeding $1 trillion.
However, this may bring several negative effects — liquidity in the banking system could be squeezed, and short-term loan rates may rise, similar to a 25 basis point rate hike.
Last Thursday, the Treasury announced a $2 billion increase in its upcoming 3-month and 6-month T-bill auctions.
The Treasury has also introduced a new 4-month bill, which is now being issued at large scale.
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3. U.S. Bull Market May Be Short-Lived
Morgan Stanley’s strategy team led by Andrew Sheets predicts that S&P 500 companies’ earnings per share (EPS) could fall by 16% this year, potentially cutting short the recent stock market rally.
Morgan Stanley noted that capital could shift from the stock market to the Treasury market. Additionally, revenue growth and gross margins of U.S. companies may shrink, weighing on stock valuations.
The team expects the S&P 500 to end the year at 3,900 points—below last Friday’s level of 4,282.
Since the low point in October last year, the S&P 500 has risen by 19.7%, nearly entering a technical bull market, mainly fueled by AI enthusiasm.
The Fed has not ended rate hikes, and the economic outlook remains cautious, yet the S&P 500 has nearly rebounded 20%.
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4. Longest Direct Flights Carry 20% Premium
Australia’s Qantas Airways plans to launch direct flights from Sydney to New York and London by the end of 2025, which would become the world’s longest nonstop routes, lasting 20 hours. The project is codenamed “Project Sunrise.”
Qantas believes travelers are willing to pay more for the convenience of skipping layovers and may charge a 20% premium on direct flights.
CFO Vanessa Hudson stated that the company is confident customers will pay more for a more comfortable ultra-long-haul experience.
Qantas has ordered 12 custom Airbus A350 aircraft specifically for these routes. Project Sunrise is projected to generate $264 million in annual revenue.
Qantas believes customers are willing to pay more for a more relaxed journey.
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5. Ares Launches $8.7 Billion Loan Fund
According to SEC filings, private equity firm Ares Management has raised $8.7 billion for its new European direct lending fund.
Launched last year, Ares Capital Europe VI just completed its first fundraising round in recent weeks. The fund will soon begin deploying capital into European investments as it continues raising funds.
Over the past few months, traditional lenders, including banks, have tightened credit, while the $150 billion private credit market continues to grow.
Founded in Los Angeles, Ares announced in April 2021 that it had launched the $11.8 billion Ares Capital Europe V, the largest direct lending fund in Los Angeles at the time. CEO Mike Arougheti believes the new fund could surpass that record.
The economic climate this year is tough, with rising interest rates and an unfriendly fundraising environment.
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6. Apple Unveils Mixed Reality Headset
At its annual Worldwide Developers Conference on Monday, Apple unveiled the highly anticipated mixed reality headset—Vision Pro. However, its steep $3,499 price tag may deter many consumers.
Vision Pro has been in development for seven years and marks Apple’s first new product line since launching the Apple Watch in 2015. It could become Apple’s most ambitious product ever.
The headset will feature its own operating system, visionOS, and an independent app store. The product is expected to launch in the U.S. early next year.
Local governments may need to sell assets other than land or refinance through banks to handle their debt.
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7. Tourism Fuels Japan’s Inflation
According to Japan’s National Tourism Organization, nearly 2 million international tourists visited Japan in April, compared to just 140,000 in the same month last year.
Although still below the pre-pandemic monthly average of 3 million, foreign tourist spending contributed 1.1% out of Japan’s 1.6% GDP growth in Q1.
The revival of tourism and chronic labor shortages have added considerable inflationary pressure—average national wages rose 1.3% in March, and spending at restaurants and bars increased by 13%.
With the yen’s recent sharp depreciation, now is a good time to travel to Japan.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.