Tag Archives: apple

Apple iPhone Socked As Smartphone Market Hits The Brakes

Smartphone shipment growth is projected to drop into the single digits worldwide this year, led by China’s transition from developing to mature market, research firm IDC said Wednesday. Apple ’s ( AAPL ) iPhone is likely to be much harder-hit than handsets using Alphabet ’s ( GOOGL ) Android operating system, IDC said. It sees iPhone shipments declining 0.1% in 2016, while Android phone shipments rise 7.6%. IDC predicts that total smartphone shipments will rise 5.7% to 1.5 billion units in 2016. Last year, smartphone shipments rose 10.4% to 1.44 billion units. IDC forecasts that Android smartphones will make up 82.6% of shipments in 2016, with 1.25 billion units. It projects Android smartphone shipments will grow at a five-year compound annual rate of 6.9% and reach 84.6% market share in 2020. Meanwhile, Apple’s iPhone will account for 15.2% of smartphone shipments in 2016, with 231 million units, IDC said. The research firm estimates that iPhone shipments will grow at a five-year compound annual rate of 3% and slip to 14% market share by 2020. Overall smartphone shipments are seen hitting 1.92 billion units in 2020, with volumes continuing to shift to lower-cost handsets. The average selling price for a smartphone is forecast to drop to $237 in 2020 from $295 in 2015, IDC said. Mature markets like the U.S., Western Europe and China all hit single-digit growth in smartphones in 2015, while high-growth emerging markets such as India, Indonesia, the Middle East and Africa, and other pockets of Southeast Asia all remained healthy. “The mature market slowdown has some grave consequences for Apple, as well as the high-end Android space, as these were the markets that absorbed the majority of the premium handsets that shipped over the past five years,” IDC analyst Ryan Reith said in a statement. “I believe Apple’s move into the trade-in business with its ‘Trade Up with Installments’ program is aimed at further increasing churn in some of its most lucrative markets despite the high penetration rates. By entering this space, Apple can more tightly control the trade-in offerings, as well as monitor the demand for where these perfectly functioning one-year old iPhones end up. The latter is just as important as the trade-in location, as it will give Apple a strong pulse on areas of high demand but perhaps less disposable income.” Large-screen smartphones, or phablets, continue to be a growth segment of the market. Phablets accounted for 20% of smartphone volumes in 2015 and are forecast to reach 32% of shipment volumes in 2020, IDC said. Apple’s iPhone sales to end users fell for the first time ever in the fourth quarter, research firm Gartner reported last month . Apple has projected that its iPhone sales into the sales channel will drop on a year-over-year basis for the first time this quarter. Image provided by Shutterstock . RELATED:  Apple Working On Dual-Camera iPhone 7 Plus Smartphone: Analyst .

We Don’t Think Volatility Is An Effective Hedging Signal. Here’s Why

By Jeremy Schwartz , Director of Research and James Wood-Collins, CEO of Record Currency Management In a recent blog post , we outlined why volatility is not among our preferred currency-hedging signals. To recap, by definition, volatility does not indicate a specific direction of a currency pair, and it would lead to opposite conclusions for U.S.-based investors compared to internationally based investors. But to expand on the analysis, consider the following: If there were a correlation between volatility and, say, U.S. dollar strength or weakness AND if an investor were willing to rely on this correlation persisting, then perhaps a more or less volatile environment could be taken to indicate the likeliness of U.S. dollar strength or weakness. However, although such correlations have been observed sporadically in the past, they have not proved persistent. The chart below shows the correlation between historic volatility (measured as the standard deviation of daily spot movements over a rolling 63-day window at successive month-ends) and the returns from being long U.S. dollar in a hedge against each of the euro, Japanese yen and pound sterling in the following month. Although there have been times when this correlation was positive at a statistically significant level, it has also been negative at times, and overall has proved highly sporadic and unstable over the full period shown. 36-Month Rolling Correlation: Currency Pair Spot Rate Volatility (63 days) vs 1m Passive Hedging Return (Long USD, 1m Lag) Click to enlarge Using volatility as a currency-hedging signal could therefore be a classic case of relying on a sporadic correlation that has emerged from time to time and naively assuming that it will continue into the future. It is worth asking, though, why this correlation emerged. We attribute it to the ” safe-haven ” status that the U.S. dollar acquired at times during the financial crisis of 2008-2009 (indeed, it’s noteworthy that even in this period, returns from being long U.S. dollar frequently had the lowest correlation with volatility, and hence safe-haven status, when measured against the Japanese yen, itself a regional safe haven). Should we expect this status to persist? To some degree, U.S. Treasuries will always be seen as one of the world’s safest asset classes. However, if U.S. dollar interest rates continue to increase, it’s possible the dollar becomes more of an “investment” than a “funding” currency in certain currency strategies, in which case we would expect its risk sensitivity to increase and safe-haven status to diminish. Therefore, relying on the sporadic correlation seen in the past could be even more unreliable in a rising U.S. dollar rate environment. All of this reinforces why we favor three directional signals in applying our hedge ratios . Higher U.S. interest rates, the momentum of the U.S dollar or an undervalued dollar will all signal to U.S. investors to hedge their euro exposure, while also being a signal to euro-based investors not to hedge their U.S. dollars. These three signals are thus consistent by virtue of being directional. Volatility does not share this feature and relies on a weak link between the correlation of U.S. dollar volatility and the strength of the U.S. dollar. Given the multitude of factors at play impacting currency markets, relying on this correlation of volatility to stay positive for an extended period seems a bet we would not be willing to take. Hedging can help returns when a foreign currency depreciates against the U.S. dollar, but it can hurt when the foreign currency appreciates against the U.S. dollar. No WisdomTree Fund is sponsored, endorsed, sold or promoted by Record Currency Management (“Record”). Record has licensed certain rights to WisdomTree Investments, Inc., as the index provider to the applicable WisdomTree Funds, and Record is providing no investment advice to any WisdomTree Fund or its advisors. Record makes no representation or warranty, expressed or implied, to the owners of any WisdomTree Fund regarding any associated risks or the advisability of investing in any WisdomTree Fund. Jeremy Schwartz, Director of Research As WisdomTree’s Director of Research, Jeremy Schwartz offers timely ideas and timeless wisdom on a bi-monthly basis. Prior to joining WisdomTree, Jeremy was Professor Jeremy Siegel’s head research assistant and helped with the research and writing of Stocks for the Long Run and The Future for Investors. He is also the co-author of the Financial Analysts Journal paper “What Happened to the Original Stocks in the S&P 500?” and the Wall Street Journal article “The Great American Bond Bubble.”