Apple Hit with $13B in EU Taxes After iPhone 16 Underwhelms

[Music] all right good morning [Applause] [Music] [Applause] everybody good morning all you magnificent Melon Heads of the world and happy Tuesday everybody today is September 10th 2024 and the top story this morning we're talking about Apple again today Apple's got two big stories going on right now the first front page news the European court of justice or ecj has just thrown out Apple's challenge to a 2016 ruling that says Apple owes more taxes to Ireland and I remember this goes way way back almost feels like another life I remember hearing about this story in 2016 the European Union just basically said you know what we don't think Ireland is charging Apple enough taxes Ireland is a tax Haven Country they have lower tax rates than the rest of the European Union they've done that to attract business and it has worked businesses have flocked into Ireland namely Apple has headquartered there chasing the lower tax rate as most businesses would do and the European Union said you know what we don't like that and since we are this bloated bureaucracy and we like to trample on The Sovereign rights of individual countries within our membership you know what Ireland you have to charge Apple more taxes and Ireland was like but we don't want to charge more taxes to Apple and the European Union said doesn't matter you have to charge them more taxes and I'm just sitting over here like no wonder England left you guys suck you know country wants to lower their taxes and you won't let them why because it's not fair to the other countries who don't want to lower their taxes well it's sucks life is hard be competitive or shut the heck up well it looks like apple fought that Court rolling it dragged out for years and here we go this morning Apple's finally their challenge to that has been thrown out so has been hit with a $13 billion tax bill for Ireland that's uh comes just a day after the much anticipated iPhone 16 launch we were so excited about this and I heard all about the iPhone super cycle for the last couple of weeks and all oh our analyst and our department of arbitrary number projection says billions of people are going to buy new iPhones why because Apple intelligence and everyone's like oh really so what's Apple intelligence and they're all like we don't know because it's not ready yet say what this this new thing that you can't tell me what it is because it hasn't even been built yet but it's going to be the Big Driver of growth for Apple who has seen two consecutive quarters of iPhone sales declined negative Revenue but don't worry this thing it's just over the horizon it's G to be awesome you're G to love it pay for it now we'll tell you what's in it later that's basically what Apple told the world yesterday yeah they also came out with a thinner Apple watch that does exactly what the older fat fatter Apple watch does and they came out with new airpods all right this cool nice not a needle mover for Apple so yesterday the market kind of yawned Apple stock was down most of the day yesterday it rallied into the close they managed to eek out a little couple of pennies of gains yesterday but considering all the hype of the iPhone super cycle and the fact that Apple stock is up 19% year to date on what I don't know because their revenue is falling it certainly isn't the fact that they're making more money so stock is up 19% just on the hype that this iPhone 16 is going to be a big seller I don't know maybe it will maybe it won't but consumers don't exactly have money to burn on expensive phones right now I know a lot of people are due for phone upgrades that's hence the term the super cycle because a lot of people bought new phones in 2021 well they were getting to that time now where you'd have to replace them but you know what the consumer 2021 was a totally different animal than the Consumer in 2024 so I'm not so sure those iPhones are going to be flying off the shelf quite like they're saying you're always going to have those Tech Bros lining up around the corner at the Apple Store for those first few days but when that initial enthusiasm wears off what's going to be left only time will tell but apple is having a rough morning Google is also having a rough morning they were also hit with a big bill from the European Union Europe's just like hey big Tech America you know uh we got this whole big budget deficit yesterday Mario dry said we need $800 billion a year so we're going to slap some American companies with some big fines Google just got hit with a 2.4 billion Euro fine for anti-competitive practices around their search results that favored Google's own shopping Services over their Rivals so another big European antitrust fine issued to a US tech company today we've also got Under Armour came out with some news late yesterday that they're basically doubling the expected restructuring costs associated with the shutdown of this big distribution facility in Rialto California uh bad news for underarmor stock they're trying to basically produce less under armers tired of discounting their clothes so they want to sell as a more premium brand which means making a lot less this is their strategy for weathering a struggling consumer we got earnings from Oracle this morning they're looking pretty good Cloud Revenue was up 21% mostly driven by of course AI spend and the big buildout and data centers so Oracle is doing fantastic this morning that stock was up 8% the last time I looked another big AI name there and we've got this trucking company in Illinois this story is a few days old I just caught wind of it yesterday this Illinois trucking company called Midwest Transport Inc they just announced they are abruptly ceasing operations laying off 650 employees including 480 truck drivers uh look guys when it's when the guys who move the stuff around the economy or going out of business that can't be good news for the people that make the stuff or the people that sell the stuff we talked about this a lot last year with the collapse of Yellow trucking that this was a bad sign for the consumer and this one nowhere near the size of Yellow trucking right yellow was 30,000 employees this one's 650 but another carrier going under you know the logistics recession is continuing there's been some signs of life in the trucking industry that hey maybe things weren't terrible but now we got another say mid-level truck are going under here also along the line of that we've got bankruptcy filings in the United States there have been 452 corporate bankruptcy filings year to date in in uh the US that's through the end of August that is the most since 2020 which you may recall was a pretty bad year for bankruptcy filings and if you take out 2020 it's the most since 2010 which was on the Downs slope of the great financial crisis so bankruptcies are picking up consumers are hurting truckers are going out of business the signs are all there and last but not least we got Goldman Sachs is out with the news report today that they are taking another $400 million hit associated with their ill- fate Adventure into consumer banking the losses keep piling up from former CEO Solomon's Venture into that lot going on today guys why don't we shrink my big melon of a head and let's see what's happening in the markets don't forget that like button for the algorithm and if you're new here hit that subscribe button and come have your coffee with with the Melon Heads every morning as we go through markets the S&P 500 is up 17 points or 32% higher ahead of the opening bell the Dow is also up just barely 38 points 9% higher ahead of the open and the NASDAQ is up 66 points about a third of 1% higher so stocks up across the board this morning the dxy meanwhile is marginally higher 10 basis points 101.6 five got a four or five day winning streak for the dollar here going it bounced off that 100 level last week and it's been grinding higher ever since uh also we'll check in with Japan here we have got a slight strengthening of the Yen this morning after weakening a little bit yesterday we're pretty much right back to where we were at the start of the day yesterday 142. N4 Yen to the dollar now let's look at the bond market we got a mixed bag here the long end of the curve is higher the short end is lower so we've got a rest steepening of the yield curve continuing here 30-year treasuries at 4 007 that's up almost one basis point the 10 years at 3.71 that's up a fraction of one point but the two-year is down almost one point 3 3.66 for the two-year and the one month is grinding lower here guys we'll be at 5% in no time here again the FED is expected to cut by 25 basis points next week so we're watching the one month lower to that rate here 5.14% for a one-month T bill that's down another two basis points this morning and just for you fed Watchers out there right now CME fed watch tool is saying we've got a 73% likelihood of a 25 basis point rate cut and a 27% likelihood of a 50o cut we don't really have many data points left between now and the fomc the only one we have is CPI tomorrow which unless we get a drastically lower CPI print I think right now 25 basis points is pretty much the likelihood here um I unless we get a one handle on CPI I don't see anything in there that's going to convince the FED to go 50 for that First Rate cut although 50 in November I do think that is still on the table uh let's look over here at the Commodities board we've got spot gold is up a couple of bucks this morning $2,512 that's up $630 quarter of 1% higher spot silver is at $284 cents that's up about a nickel or a quarter and 1% higher we've got December copper Futures at 4 0 that's down a couple of pennies October Platinum Futures are up a fraction of 1% December Palladium Futures are up one and a half percent and crude oil still can't catch a bid here guys 6825 for October WTI Futures that's down another 43 cents this morning or about 6% lower and I would add we've got oil is shutting down in the Gulf of Mexico right now and all along the Gulf Coast because we've got right now tropical storm Francine is expected to make land landfall tomorrow as a category one or two it is currently in the gulf and strengthening it's going to skirt the coast of Texas and then make landfall pretty much right in the middle of Louisiana right around I think it's Lake George is called that's right where all of that new LG export infrastructure is so this will be the first big weather test for that facility um that's expected to make landfall tomorrow but again guys it's not moving oil prices even though every rig in the Gulf is currently shutting down and they're evacuating aot out of the coast here no movement in oil prices oil continuing to make new lows for the year currently 6825 down again this morning after catching a little bit of a bounce yesterday but it was very shortlived Also let's check in on bitcoin we've got Bitcoin is uh $6,990 on coinbase this morning that's down 140 bucks from yesterday but we had pretty nice upward move yesterday so Signs of Life in Bitcoin but still below the 50 and the 200 day moving averages so I won't be celebrating just yet uh now for the main story this morning guys Apple must pay 13 billion euros in back taxes to eu's Top Court rules and you know the back taxes thing even that title is misleading because it's Apple paid all the taxes that Ireland asked for and the European Union came in and said no Ireland you have to demand more so now they're saying Apple owes back taxes when really they paid everything they had to it's just the Europeans wanted Ireland to raise their taxes Europe's top court on Tuesday ruled against Apple in the tech Giants 10-year Court battle over its tax Affairs in Ireland the pronouncement from the European court of justice comes hours after Apple unveiled a swath of new product offerings looking to revitalize its iPhone Apple watch and airpod lineups the in 2014 the European commission the European Union's executive arm opened an investigation into Apple's tax payments in Ireland the tech Giants headquarters is in the EU the commission and 2016 ordered Dublin to recover up to 13 billion euros or 14.4 billion oh wow I didn't even realize the 13 billion was a Euros number so even my even my title wasn't big enough $ 14.4 billion doll in back taxes from Apple at the time saying that the tech company had received illegal tax benefits from Ireland over the course of two decades apple and Ireland appealed the commission's decision in 2019 now this is the interesting thing both apple and Ireland appealed the decision Ireland did not want to raise their taxes the European Union is forcing them to do it and in 2020 the EU general court cided with the US tech giant but the eu's second highest court annuled the commission's 2016 decision and said that the executive arm did not prove that the Irish government had given Apple a tax advantage the Commission in turn appealed the general Court's decision sending the litigation to the European court of justice and the ecj on Tuesday set aside the general Court's decision and confirmed the commission's original 2016 ruling the case which first began under outgoing competition Chief margari vtiger highlights the continued conflict between US tech Giants and the EU which has sought to tackle issues from data protection to Taxation and antitrust so European Union proving why it was a terrible idea to begin with stepping on Sovereign governments own decisions to set their tax code how they see fit and then they're saying no Ireland if you want to be in the club you have to charge higher taxes why because World economic Forum I don't know uh so Apple having a rough morning here but also we've got more news from Apple about the iPhone 16 apple looks to entice iPhone 16 Shoppers with not quite ready Ai and if there was ever besides fraud and round tripping and all the ridiculous things but if ever there was a phrase that could describe this bubble that we're in not quite ready AI that sounds about right I'm sure AI is going to do wonderful things and it's going to be great and a big productivity boost but it's not quite ready but don't let that stop you from inflating your $16 trillion do stock bubble Apple introduced the latest version of its Flagship device the iPhone 16 bet it betting it can entice consumers with modest Hardware upgrades and AI technology that's still on the horizon chief executive officer Tim Cook unveiled the smartphone alongside new watches and airpods or earbuds at an event on Monday that was infused with the promise of artificial intelligence I hear so much about the promise of artificial intelligence the iPhone 16 was built for AI from the ground up he said though the capabilities will only be gradually added to the device via software updates it's a Gambit for the tech TI it's a Gambit for the tech Titan which has been racing to develop a suite of tools called Apple intelligence though Apple has been touting the technology since its developers Conference in June the software won't be included in the initial versions of the new iPhones they're set to go on sale Friday with the product reaching stores on September 20th so who wants to buy something that they have no idea what it can do it's a what is this like a $1,600 phone for the pro Max Deluxe Platinum Premium Plus rewards whatever you want to call the the highest highest version of it it's almost a $2,000 phone and we're not sure what it can do yet but it's going to be great so go ahead and buy it now and then we'll Force out an update that's probably going to cut your battery life in half and then it's going to be awesome trust me it's basically what they said yesterday uh look I don't know if this is going to work or not guys we talked about how there was this study done that consumers are actually actually less likely to buy a product if you label it AI that they've studied TVs vacuum cleaners all this other stuff and consumers actually don't trust artificial intelligence and they're less likely to buy it will that translate into smartphone Shoppers I don't know but you're labeling it AI and it doesn't even actually do any AI yet you're just telling people eventually it's going to do the thing it's not a very good not a very compelling sales pitch that Apple made yesterday the market kind of yawned at it Apple stock down 88% this morning trading at $28.97 that's down almost two bucks I think the downward movement in the stock right now is probably being driven by that European Court ruling although the stock was down about 2% midday yesterday it rallied back to close a couple of pennies higher uh but guys this stock up 19% year-to date on a super cycle hype that in my opinion is very much overdone so I these things need to fly off the shelf in order to justify Apple's valuation here and just based on the fact that it's an incomplete product tells me it's probably not going to fly off the shelf also Google is getting in on the European antitrust action today Google's 2.4 billion Euro find upheld by Europe's Top Court in EU antitrust probe so Europe's making all kinds of money off of us companies today Europe's top court on Tuesday upheld a 2.4 billion Euro fine imposed on Google for abusing its dominant position by favoring its own shopping comparison service CNBC has reached out to Google for comment the fine stems from an antitrust investigation by the European commission the executive arm of the European Union which concluded in 2017 the commission said at the time that Google had favored its own shopping comparison service over those of its Rivals and they basically said you're abusing your search results in order to pump your own products here's $2.4 billion dollar fine for your trouble so Google parent alphabet getting in on the EU cash grabbed this morning $150. 194 for alphabet stock it's actually up 0.94% here a140 higher so Google shareholders don't seem to care too much about that bill for the European Union also going on this morning Under Armour doubles expected restructuring cost and cuts the Outlook uh this was bad news hit for Under Armour after the Bell yesterday Under Armour lowered its outlook for fiscal year 2025 saying it expects to double its restructuring costs as it closes a distribution facility and lays off more employees we didn't get a number of how many layoffs but they're roughly doubling the amount of restructuring cost so I'm assuming that means they're doubling the amount of layoffs that they initially announced the latest restructuring measures will lead to pre-tax charges of 140 million to $160 million with up to 75 million of that in cash for the fiscal years ending 2025 and 2026 uh the sports wear maker said that's what they said on Monday the company previously guided for charges of between 70 and 90 million so they're nearly doubling or more than doubling here 140 to 160 under arour said it now expects a loss of 58 cents to 61 cents in fiscal year 2025 up from the prior guidance for a loss of 53 to 56 cents also sees an operating loss of 220 to 240 million that's up from 194 to 24 million the company will book a $30 million from Severance related cash expense instead of the 15 million expected in May uh Under Armour earlier this year warned that there would be no quick fix to its sales slump as it positions itself as a more premium brand the company aims to reduce its discounted merchandise and start delivering higher priced exclusive products as consumer spending remains strained so the struggling consumer has taking a bite out of Under Armour here that stock is down 2.3% ahead of the opening Bill trading right around $7 down another 17 cents this morning year to date it's been a pretty rough year for Under Armour they started the year at about $8.20 so they're down about 12 a half% year-to date meanwhile we got Oracle earnings another AI company another AI Cloud company hosting fantastic numbers even though the AI companies don't make money the hardware and the cloud companies that service the AI company they do make money and so they're doing all right Oracle shares jump as Cloud growth fuels strong results Oracle shares Rose more than 9% in premarket trading on Tuesday as the cloud computing company upbeat quarterly results and forecast reinforced investor confidence about its ability to narrow the Gap with the market leaders the texas-based firm's Cloud business viewed as a less expensive option to leaders Microsoft and Amazon has seen rapid adoption due to integration of artificial intelligence Oracle cloud services Revenue Rose 21% to 5.6 billion in the first quarter its overall revenue of 13.3 billion beat estimates of 13.23 billion q1 results were good overall and remained fundamentally positive on certain aspects of oracle's narrative particularly oracle's ability to capitalize on AI training related opportunities JP Morgan analyst said in a note Oracle shares have risen more than 32% this year while Microsoft and Amazon have added 8% and 15% respectively now guys it's important to point out here that they're talking about how Oracle is viewed as a less expensive option to Microsoft and Amazon and yeah their revenue growing 21% here so the less expensive competitor is seeing 21% Revenue growth it's interesting could we be seeing margin compression in the cloud space here we're seeing that in the server space Dell is eating super micro lunch but Dell is making almost no profits and doing that they're capturing market share their revenue is growing but they're not actually earning any money and they're putting smci out of business as they do it now a lot of talk about Revenue here but not a lot of talk about earnings as this less expensive cloud provider starts to bring in more Revenue it's an interesting thing we could be seeing further margin compression in the AI space we're seeing in servers we saw ever so slight margin compression with nvidia's results possible the same thing going on here with Oracle but right now Oracle stock is doing really well up almost 10% pre-market $153.59 that's up $13.60 or almost 10% higher ahead of the open and we've got Illinois trucking company with 480 drivers abruptly ceases operations this one's actually a couple days old this hit on Friday I just caught wind of it last night here an Illinois based Trucking and logistics company which contracted with the US Postal Service to Hall mail has notified over 650 employees including more than 480 drivers that the carrier is ceasing operations according to sources familiar with the closure former truck drivers for Midwest transport headquartered in Robinson Illinois told Freight waves that they received telephone calls from their regional managers late Thursday notifying them that the company was winding down operations as a publication on Friday MTI has not issued a formal statement about what led to the closure however Freight waves confirmed with some former senior managers and truck drivers who work for the mail contractor that the company was ending operations they did not want to be named in the article for fear of retaliation so there's another 650 layoffs worth of anic data 480 of them truck drivers and I got to wonder what is the multiplier for every truck driver that loses his job how many people elsewhere in the economy lose their job my guess is is it's somewhere between 5 and 10 if the stuff on the truck is not moving then the people who are doing whatever with the stuff when it gets wherever it's going then they've got nothing to do either so I'm assuming these 480 drivers is going to result in probably a couple of thousand layoffs ewhere elsewhere in the economy it's why it's important to keep an eye on Logistics now I know they're saying this is a US mail carrier but the US Postal Service still handles most of the small packages in the economy so I think this probably has more to do with Freight than you know envelopes and letters I think this is just less stuff moving throughout the economy here and we're seeing more news like this here us bankruptcy filing spiked in August after a Slowdown in July filings for the year through August are the highest since 2020 and the second highest since 2010 according to S&P Global Market intelligence us bankruptcy filing spiked in August after a Slowdown in July propelling the total for the first eight months of the year to the highest level since 20 20 and the second highest since 2010 according to S&P Global there were 452 filings in the year through August which compares to 466 in the same period in 2020 which was Peak covid hysteria I might add um and this also compares to 604 in the same period in 2010 so if you take out 2020 you'd have to go all the way back to 2010 to find a number higher than this in August alone the tally came to 63 that's up sharply from the 49 in July that was the third highest monthly total this year behind 72 in June and 68 in April us companies continue to struggle with several issues this year including High interest rates and geopolitical uncertainty S&P said and they included this chart in the article the blue here is showing as of the end of August how many bankruptcy filings we had 452 versus 451 a year ago 236 in 2022 now you can see we had a higher year-to dat total in 2020 and before that you got to go all the way back to this bar here in 2010 to get a higher number so more companies filing for bankruptcy including that Trucking Company Midwest Transport Inc again best economy ever right is this a sign of a healthy consumer is this a sign of an economy that's rapidly growing or is this a sign of an economy that is deep in recession and the only reason we haven't heard about it is because the government through its fiscal dominance is spending so much money that it's creating the illusion of economic growth and last but not least Goldman Sachs to post $400 million hit to third quarter results as it unwinds its consumer business this has been one of the biggest dumpster fires in the history of banking Goldman Sachs ill- fated foray into consumer banking Goldman Sachs will post roughly $400 million in pre-tax hit to third quarter results as the bank continues to unwind its ill-fated consumer business CEO David Solomon said Monday at a conference that by unloading Goldman's GM card business as well as a separate portfolio of loans the bank would post a hit to revenues when it reports results next month it's the latest turbulence related to Solomon's push into consumer retail in late 2022 Goldman began to Pivot away from its nent consumer operations beginning a series of write Downs related to selling chunks of the business Goldman's credit card business in particular its Apple card allowed rapid growth in retail lending but also led to losses and friction with Regulators so Goldman taking more losses on their consumer banking Division and I just want to say thank you so much to Mr zeel Fritz for gifting one nobody special Finance membership who is that lucky melon head that got zeel Fritz's melad membership I Don't Know But be sure and say thank you to zeil Fritz and I will say thank you as well thank you Z I appreciate the support of the channel sir and thank you to Mr Charles Coughlin who says there are a ton of sketchy trucking companies based out of Illinois equally likely to be mismanagement as a sign of economic malaise yeah as a as a guy who grew up in New Jersey I can tell you the you know the whole fell off a truck thing yeah fell off a truck you I get it I'm sure you got plenty of that going on in Chicago but we've also seen a lot and I mean a lot of small and mid-level carriers going out of business in the economy in the last two years so out barring any outside influences I'm I'm assuming this has to do with the slowdown in trade and the slowdown in the consumer but you're right there's always a possibility for fraud or for some kind of M wrongdoing especially in a corrupt state like Illinois uh but that being said we have seen a lot of trucking companies going under we even saw a bank went under because of bad loans to trucking companies what was that bank it was one of the small ones in the midwest uh it was like Citizens Bank of something some City Iowa Citizens Bank of saxity Iowa they failed last year it was a small bank but it was due to loans to trucking companies that were going um so you know when you got a bank failing because a trucker going out of business and then you had the big yellow bankruptcy now we've got another mid-level trucker I'm I'm leaning towards it was probably just a Slowdown in Freight but hey I'm open to the possibility stranger things have happened it is the 2020s after all thank you so much Charles Coughlin and thank you to tpin who says thank you so much for the daily updates tpin you are most welcome thank you sir for watching these daily updates just a reminder guys hit that like button and that subscribe button if you're new here thanks again t-pin I appreciate that sir and my buddy Travis real estate mindset what's going on brother he says good morning stud muffin there you go making it awkward again buddy reliably so reliably so are we going shark fishing next week oh don't give it away uh I'm all about shark fishing right you know uh I got I'm gonna dust up on my Quint Impressions I'll be quoting Jaws let's do some shark fishing Trav shall we by the way guys check out real estate mind mindset check out the videos that Travis has done with Mitch Wexler about the property tax fraud case that he's got going on in Texas that story is going National I'm seeing a lot of other channels are starting to cover that and always remember as you see Mitch making the rounds on financial YouTube and probably eventually in the financial press that that story was broken at real estate mindset Travis you did an awesome job with that story also if I might take a moment to plug the doomers news network or DNN that is my second Channel that I have it's a joint venture with real estate mindset as well as Melody Wright I got links down below to that one if you guys want to check that out we also uh had the Mitch Wexler tax property tax fraud story on DNN as well thanks again Travis for everything you do brother you doing awesome over at real estate mindset Travis is the most Bonkers man in the business and I want to say thank you everybody for having your coffee with the Melon Heads this morning thank you very much to my patreon support and magnanimous melonhead members on YouTube links down below should you feel so inclined hi Mom hi Dad love you guys everybody till next time Li small and dream big