Idle Rambling On A Wednesday Night -- December 12, 2018

Updates

December 13, 2018: only hours after posting the note below regarding an upbeat article about Apple, Inc., I see that the lead story in today's WSJ is an Apple, Inc. story. Whoo-hoo. As my wife would say, "I'm always ahead of the curve." LOL. Purely serendipity. The screenshot:

The link to the story. Apple will build a new campus in Austin, TX, The company will invest $1 billion in a new facility and will open new offices in Seattle, San Diego, and Culver City, CA.

In Austin, where the iPhone maker already employs more than 6,000 people, the new 133-acre campus will initially accommodate 5,000 additional employees, with the capacity to grow to 15,000, with new jobs covering engineering, research and development, operations, finance, sales and customer support.

Apple said it added 6,000 jobs in the U.S. this year, bringing its American workforce to 90,000, and is on track to create 20,000 jobs in the country by 2023.
The company plans to invest $10 billion in U.S. data centers over the next five years, including $4.5 billion this year and next.

Original Post

I can't believe what a great mood I'm in. There is so much happening in the shale sector it's impossible to keep up. A reader just sent me a pipeline story out of the Bakken but I will post it in the morning. Too many short choppy posts today.

These are the stories that fascinate me right now:

• the incredible wells in the Bakken;
• Apple iPhones; and,
• Macron (France)

I haven't followed the equity market (Dow, NYSE, S&P 500, etc) for weeks now. I literally have no idea what it is doing. I have the feeling "it's different this time." but then I've learned over the years, "it never is (different)." My hunch is that the market will re-set, and then we will go from there. Drudge headlines suggest that a majority of CEOs think there will be a recession by 2020, and perhaps as "early" as next year. Someone has been predicting a recession since 2012, it seems, so eventually .... even a stopped clock has the right time twice a day. For an investor with a long horizon, a recession is simply a buying opportunity.

The Apple iPhone story is very, very interesting. Apple has, for a "limited time," slashed the price of the iPhone XR from $749 to $499 -- a savings of $250 on a $750 phone. My initial reaction was that this was bad news for Apple. I am not so sure. I am questioning my initial impression. Cutting the price of a new phone was unprecedented, especially during the holiday season. Certainly Apple would prefer not cutting prices at all, but now that they have, it is interesting to think about it.

The Apple links:

• iPhone XR sales might be better than expected -- 14 hours ago -- the inquirer.net
• bad news for Apple as iPhone XR price slashed -- two days ago -- Forbes
• iPhone XR may have been most successful iPhone X of all -- mashable 
• iPhone XR from $449 -- Apple ramps up iPhone sales push -- zdnet -- December 5, 2018

I went to the local Apple store today -- middle of the day on a Wednesday afternoon -- and as busy as ever. I went to the store specifically to reacquaint myself with the iPhone XS, iPhone XS max, and the iPhone XR. These were the three models most recently introduced. I spoke with one of the Apple folks at the store. Unfortunately he did not measure up to the usual Apple standard. He seemed bored, and most remarkably, he seemed unaware that the XR was "on sale." He also seemed unaware that the XR is the best selling model of the three. When I asked why that would be he replied very matter of fact: price. He said that the XR was the least expensive of the three, but compared to the XS and the XS max it was a pretty lousy phone. I'm not sure what he's talking about. When I read the reviews and read the specs, it sounds like the XR is an incredible phone and might be a better phone for the money than either of the other two.

So, Apple slashes prices on its most popular phone. Doesn't cut prices on its most expensive phones. I went to MacRumors to see if contributors there might have something to offer to explain Apple's decision. MacRumors did not have anything. Earlier I posted several links to stories about the XR sale, and some analysts see it as a bad omen; others think it's a great move.

Regardless, it's a real opportunity for consumers. All three phones are incredible. The XS and XS max are a bit too big for me. I would buy the XR in a New York minute if I was in the market for a new phone.

Some people argue that the fact that the XR was reduced in price proves that the market is saturated with smart phones. Others argue that the price point was wrong. If nothing else, this drop in price is a nice experiment. If the XR sales surge, then the price point was wrong and the market is not saturated (saturated means no need to upgrade; "everyone" has a smart phone by now, so in that sense the market is saturated; the question is whether the market to upgrade has been saturated). On the other hand if XR sales do not surge, that would suggest that the market to upgrade to the XR is saturated. Whether the overall market is saturated depends on how sales for the XS and XS max go.

I look forward to Apple's October - December, 2018, earnings call. Something tells me Apple will do just fine.

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