Is Apple The Next Netflix? Plus Why The Job Market Is Broken

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

Otherwise, enjoy the column!

Subscribe to The Market Chronicle to get the Daily Monster Market Commentary and join the 2,892 subscribers getting it for FREE!

Is Apple The Next Netflix? Plus Why The Job Market Is Broken

Michael Kramer and the Clients of Mott Capital own Netflix

Apple Vs. Netflix

I’m not going to spend much time on Apple tonight because I’d like to see how it trades tomorrow, and then expanded on the topic. But the service revenue growth was very impressive. But I shall tease with this. How much would Apple be worth if it traded with a Netflix or Amazon like valuation? It sounds crazy yes, but what if the key to Apple’s future isn’t the iPhone, but the content the iPhone can provide. Because as I said to my friend today at lunch prior to the Apple report, everything that is happening today is on the smartphone. I can run my whole business on my smartphone, and nearly all of my content for entertainment or web browsing is on the phone. If Apple should happen to own some of that content or charge a fee to access it, as service revenue would indicate, then that may be a huge growth opportunity and worth a higher earnings multiple.

[widget id=”text-19″]

Moving on…

Economic Reports

There will be a lot of economic data over the next three days, ADP Private Jobs and FOMC tomorrow, then PMI Services and ISM non-manufacturing on Thursday, and BLS Jobs on Friday morning. Seems like plenty of economic data to get the markets rising of falling.

[widget id=”wordads_sidebar_widget-41″]


We have been talking about this for some time, and since ADP only reports once a month, it has taken almost a year. But it seems to be pretty clear now that ADP job growth is starting to accelerate on a y/y basis, and the chart suggests we are beginning to make the “U” turn higher.

The BLS job number is also starting to turn higher, on y/y basis as well.

Subscribe to the The Market Chronicle to get it Daily and join the 2,892 subscribers getting it for FREE!

[widget id=”text-28″]

Broken Job Market

Fundamentally, I still think there is something wrong with the labor market, and what I find most curious, is that for the time since the 1940’s, the labor participation has been falling, as the unemployment is falling. It is clear as day in the chart below that since the 2008 recession the u3, u6 measures of unemployment, and the labor participation rate are falling together.  It mildly happened after the 2000 recession, but not like the most recent period.

If the unemployment rate is falling, then more people should be working, and that should mean the participation rate should be rising.

[widget id=”text-23″]

95 Million Americans Not In Labor Force

The issue comes from the fact that the population growth in this country is exceeding that of job creation, and the chart below shows that, giving us our 95 million Americans, not in the labor force.

It would tell me, that the low labor participation rate is not because of a flood of people retiring, is because there are people who still can’t find employment.

[widget id=”text-23″]

Stable Unemployment Rate

That is why I also still believe we will continue to see job growth in coming months and year, without seeing the unemployment fall below much 4 percent. As more jobs are created, more people will join the labor force and start looking again or start working on an “on the books” capacity. It may even cause the unemployment rate to rise.

[widget id=”wordads_sidebar_widget-41″]

Not Enough Job Growth

The next chart illustrates just what I am talking above. It takes the change in the civilian labor vs. the prior year, divided by the total noninstitutional civilian labor force. It shows that in 1978, the number of jobs created represented nearly 2 percent of the population, while today it is merely three bps.

[widget id=”text-21″]

The Fed

We care about all of this stuff because the Fed sets monetary policy off maintaining full employment, and inflation.

There is also still a long way to go for wage growth to rise to a level of concern.

I doubt we find out the answer to any of this scenario in this week’s reports. But it is something to think about, and something I have been tracking since early 2016 when the unemployment rate was around 4.9 percent and I was even a more terrible writer than I am now. 🙂



[widget id=”text-19″]

[widget id=”wordads_sidebar_widget-41″]

Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

Just $200 Per Year – Get Your Free 2 Week Trial

Recent Videos:

Why It Is Time To Dump Starbucks, Plus A Look At ACAD

The Market Continues To Sink

It’s Back! Apple Investors Are Worried Once Again

A Review Of Netflix, IBM And Earnings Outlook

Taking A Look The Banks, And Prepping For Earnings Season

Passive Investing May Not Work In 2018

Stock Surge, A Breakout Is Close

Trade War Worries Returns

Free Articles Written By Mike:

Why S&P 500 Stocks May Rebound 6% Short Term

Intel’s Stock Seen Jumping 16% on Raised Forecasts

Facebook’s Stock May Plunge 8% Short Term

Why MasterCard Shares May Outperform Visa

Why McDonald’s Big Stock Rally Won’t Last

Apple Traders Bet on 8% Drop as Earnings Approach

Under Armour’s Stock Faces a 14% Decline Short-Term

Alibaba Stock May Rebound 14% Over Short Term

AT&T Stock Faces a 14% Decline

Join our 2,892 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe


[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]

Photo credit via Flickr

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #apple #netflix #amazon #jobs #unemployment #labor 


Thanks For Visiting The Market Chronicle!

Sign up to receive more great market content like what you just read sent to your inbox daily!

We don’t spam! Read our privacy policy for more info.