Apple, Gold and Inflation: 3 Things to Watch

Apple (AAPL) prepares to launch the iPhone 17, gold (GC=F) hits a new record, and investors brace for key inflation data ahead of the Fed's decision next week. Yahoo Finance's Ramzan Karmali is joined by Russ Mould, Investment Director at AJ Bell, to break down what you need to watch this week in markets.

Video Transcript

00:00 Speaker A

I'm joined by Russ Mould, investment director at AJ Bell. Russ, fantastic to have you here on Market Sunrise.

00:06 Speaker A

Well, let's start with your take on Friday's jobs report. It was a pretty weak number, wasn't it?

00:10 Russ Mould

Yeah, and there's no getting away from that. and that timed with what we saw from the ADP number earlier in the week. So and also the jolts number, the job openings and labor turnover survey, where the number of job vacancies actually undershot the number of unemployed Americans for the first time in about five years.

00:30 Russ Mould

So clear signs of some softening in the US economy. We also have to be aware that this is likely to be a kind of lagging indicator just because of how long it takes companies to go through the process of of the of the unfortunate process of perhaps having to shed staff or just decide indeed not not to take them on.

00:46 Russ Mould

So, I think there are signs of softness in the US economy. It probably also raises further questions as to the quality of the data given some of the historic revisions that we saw. And for all of the fact that weakness and revisions both enormously annoyed the president in the prior month, those figures may yet still give him what he wants, which is interest rate cuts, and that market's now pricing in three quarter point cuts by the end of the year from the Fed.

01:05 Speaker A

Now, we've got PPI data out and CPI data out this week. They're probably the last data that we get before the Fed makes their decision next week as well. So, what are you looking out for?

01:16 Russ Mould

Well, you'd assume the Fed would get a bit of a sneak peek at those given how important they are. I think you've already flagged that there is some mild acceleration expected in the consumer price index rate to just under 3%. That would mean there's been no improvement since January.

01:31 Russ Mould

So if the Fed was looking for a reason not to cut interest rates, it would potentially have one because its target is 2%. But there is that sense still that certainly the White House would rather that the central bank played a little bit fast and loose with inflation in the White House's quest for growth.

01:41 Russ Mould

And it'll be intriguing to see whether chair Powell delivers or not. Again, markets seem pretty convinced that he will.

01:45 Speaker A

Yeah, the markets are convinced that we'll get at least a 25 basis point cut next week. But there are people now talking about 50, maybe even 75. What are you thinking?

01:54 Russ Mould

Yeah, I think looking at this I can cheat Ramzan, I can look at the CME FedWatch service, which will do all the hard work for me. And I think there is a small chance scene of a 50 basis point cut in the coming at the coming meeting. Treasury Secretary Scott percent has been pushing for that.

02:07 Russ Mould

give given that it would require quite it is requiring a fair degree of, you know, fresh police fresh data input and pushing and shoving from from the White House to get the Fed to where it wants, may want it to go. I'd be personally surprised by a 50 point cut, but you never can tell.

02:18 Speaker A

It's interesting to note that gold is still on the rise today, uh, possibly because people are making more bets that the Fed will cut more aggressively, no?

02:27 Russ Mould

Well, I think that comes back to the point we've just discussed we've had about inflation. With inflation being above target for the Fed to be aggressively cutting rates could be seen as playing with fire very definitely. Um and so that I think is probably playing to to to to the narrative that gold bugs have been pushing for some time that

02:46 Russ Mould

America has got a debt problem, a federal debt problem.

02:50 Russ Mould

One way out of that is to try and inflate it away, or another way is to try and get nominal growth to run really, really hot, which I think you could argue is the Trump agenda, lower personal taxes, lower interest rates, lower all prices, lower dollar, less regulation. Um, but that does again play to to to to the gold bugs' theory that you know, either there's inflation coming, or there's very rapid growth coming, which could lead to inflation and therefore you need some sort of store of value on your side, hence the argument for gold.

03:15 Speaker A

All right, let's move on to some company news now. We've got the big event tomorrow from Apple. I'd mentioned the iPhone 17 Air, as Dan Howley put it, an iPhone on a Zepic. What do you want to hear though from this event tomorrow?

03:27 Russ Mould

Well, I mean I'm or dropping I think is the way that Apple is trailering this event and it seems to be very, very hardware focused, whether it's iPhone 17, Air 17, new functionality on the Watch, new functionality on the AirPods, but it is hardware and Apple is looking to sort of recapture some of the face lost from the delay in, you know, AI powered upgrade to Siri that have slipped to next year.

03:45 Russ Mould

So yes, I'm sure Appleholics will be very excited to see what hardware products are coming. But the market's going to be just as intrigued to see, you know, want to know what's coming further down the pipe in terms of AI. But also I'm sure Apple will be laying the groundwork for what I'm told could be a foldable iPhone in 2026. And then in 2027, the 20th anniversary of the iPhone. But again, that in itself is a clue. Apple is still very heavily relying on a 20-year-old product. And I'm sure there will be some people out there looking for more innovation going down the road.

04:06 Speaker A

How how disappointed have you been that we've not heard more on the AI front from Apple then?

04:10 Russ Mould

I mean, the shares are down 4% this year, which I think ranked at about 300 and something within the S&P 500. So I don't, you know, have to express any opinion. The market's already telling you what it thinks, which it is concerned that Apple is starting to lag behind.

04:22 Russ Mould

We know it has a fantastic franchise, we know it has sticky loyal customers, we know it's able to monetize those through services and the walled garden ecosystem, even if regulatory pressure there is not going away. But I'm sure yes, at some stage, given that Apple is spending barely 5% of its sales on capital investment, and most of its rivals are spending 15 to 20% or more, there may be some certainly questions asked as to what it's looking to do to catch up.

04:41 Speaker A

And Russ, very, very quickly, earnings season coming to an end, but what have you made of it so far?

04:45 Russ Mould

So far, so good. It certainly hasn't done anything to upset the market. We've seen specific companies warned about tariff hits, whether it's been Lulu Lemon, Athletic or Caterpillar. But overall, it seems at the moment as if companies seem to be eating those costs rather than passing them on. The big question in the coming quarters is, what happens to inflation, what happens to earnings, if they do indeed start to pass those on to consumers and other and corporate customers.

05:04 Speaker A

Russ Mould, great to have you here on Market Sunrise. Russ Mould there from AJ Bell. Many thanks.

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