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State Street worries about crypto rally

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GLD's competition: more than bitcoin?

The bitcoin rally is generating a false sense of security among investors, according to the strategist behind the so-called granddaddy of gold exchange-traded funds.

State Street Global Advisors’ George Milling-Stanley warns cryptocurrency plays don’t offer the stability of gold.

“Bitcoin, pure and simple, it’s a return play, and I think that people have been jumping onto the return plays,” the firm’s chief gold strategist said on CNBC’s “ETF Edge” this week.

Milling-Stanley’s comments came as his firm’s SPDR Gold Shares ETF (GLD) celebrated its 20-year anniversary this week. It is the world’s largest physically backed gold ETF, and it’s up more than 30% in 2024.

“Gold was $450 an ounce [20 years ago],” said Milling-Stanley. “It’s now five times what that price was then. If you look at a five-times price, then gold should be somewhere over $100,000 in twenty years’ time.”

Gold just had its best weekly performance since March 2023. Gold futures settled at $2,712.20 on Friday, the highest settle since Nov. 5. Gold prices are now just 3% below the record high hit on Oct. 30.

Bitcoin, which has surged since the Nov. 5 election, is having a banner year, too. It hit an all-time high on Friday.

Milling-Stanley thinks investors who treasure gold’s safety qualities should reconsider piling into bitcoin. He suggests the crypto world is trying to manipulate them.

“This is why they [bitcoin promoters] called it mining. There’s no mining involved. This is a computer operation, pure and simple,” he said. “But they called it mining because they wanted to seem like gold — maybe take some of the aura away from the gold.”

Yet, he acknowledges it is unclear how high the yellow metal can actually go.

“I have no idea what’s going to happen over the next 20 years except it’s going to be a fun ride,” Milling-Stanley said. “I think that gold is going to do well.”

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These are 3 big things we’re watching in the stock market this week

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A security guard works outside the New York Stock Exchange (NYSE) before the Federal Reserve announcement in New York City, U.S., September 18, 2024. 

Andrew Kelly | Reuters

The stock market bounce last week showed once again just how dependent Wall Street has become on the whims of the White House.

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These U.S. consumer stocks face higher China risks

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Apple iPhone assembly in India won’t cushion China tariffs: Moffett

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Street's biggest Apple bear says a production move to India is unrealistic

Leading analyst Craig Moffett suggests any plans to move U.S. iPhone assembly to India is unrealistic.

Moffett, ranked as a top analyst multiple times by Institutional Investor, sent a memo to clients on Friday after the Financial Times reported Apple was aiming to shift production toward India from China by the end of next year.

He’s questioning how a move could bring down costs tied to tariffs because the iPhone components would still be made in China.

“You have a tremendous menu of problems created by tariffs, and moving to India doesn’t solve all the problems. Now granted, it helps to some degree,” the MoffettNathanson partner and senior managing director told CNBC’s “Fast Money” on Friday. “I would question how that’s going to work.”

Moffett contends it’s not so easy to diversify to India — telling clients Apple’s supply chain would still be anchored in China and would likely face resistance.

“The bottom line is a global trade war is a two-front battle, impacting costs and sales. Moving assembly to India might (and we emphasize might) help with the former. The latter may ultimately be the bigger issue,” he wrote to clients.

Moffett cut his Apple price target on Monday to $141 from $184 a share. It implies a 33% drop from Friday’s close. The price target is also the Street low, according to FactSet.

“I don’t think of myself as the biggest Apple bear,” he said. “I think quite highly of Apple. My concern about Apple has been the valuation more than the company.”

Moffett has had a “sell” rating on Apple since Jan. 7. Since then, the company’s shares are down about 14%.

“None of this is because Apple is a bad company. They still have a great balance sheet [and] a great consumer franchise,” he said. “It’s just the reality of there are no good answers when you are a product company, and your products are going to be significantly tariffed, and you’re heading into a market that is likely to have at least some deceleration in consumer demand because of the macro economy.”

Moffett notes Apple also isn’t getting help from its carriers to cushion the blow of tariffs.

“You also have the demand destruction that’s created by potentially higher prices. Remember, you had AT&T, Verizon and T. Mobile all this week come out and say we’re not going to underwrite the additional cost of tariff [on] handsets,” he added. “The consumer is going to have to pay for that. So, you’re going to have some demand destruction that’s going to show up in even longer holding periods and slower upgrade rates — all of which probably trims estimates next year’s consensus.”

According to Moffett, the backlash against Apple in China over U.S. tariffs will also hurt iPhone sales.

“It’s a very real problem,” Moffett said. “Volumes are really going to the Huaweis and the Vivos and the local competitors in China rather than to Apple.”

Apple stock is coming off a winning week — up more than 6%. It comes ahead of the iPhone maker’s quarterly earnings report due next Thursday after the market close.

To get more personalized investment strategies, join us for our next “Fast Money” Live event on Thursday, June 5, at the Nasdaq in Times Square.

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