Tim Cook's 15-Year Run as Apple CEO Comes to an End

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zayd Admani, and today is Monday, August 31st. In today's episode, we'll recap Fed Chair Kevin Warsh's big speech at Jackson Hole, and tell you why the odds of a September rate hike just jumped. We'll also talk about Tim Cook's final day as Apple CEO, and the massive challenge waiting for new CEO John Ternus. Then stick around to the end of the show to find out why Liv Golf might be headed for bankruptcy. We got a great show for you today. Let's go. Stocks are coming off a winning week, despite the dip on Friday. The S&P 500 was up 0.5% last week, while the NASDAQ added 0.85%. The big news on Friday was, of course, the speech from Fed Chair Kevin Warsh at the symposium in Jackson Hole. Now, we've been talking about that speech all week last week because going into it, markets weren't really sure how serious Kevin Warsh was about inflation, and if he was willing to raise rates, especially with President Trump publicly pushing for lower interest rates. Well, we got our answer in the speech. Kevin Warsh came out swinging against inflation. He reaffirmed that the Fed's target for inflation is 2%, and he called out how inflation has been above the Fed's 2% target for 65 months now. And here's the line that really caught Wall Street's attention. Kevin Warsh said that he'd be hard-pressed to describe financial conditions as restrictive today, which basically means he doesn't think that interest rates are high enough to bring down inflation. Those were some pretty sharp words there, and markets definitely heard the message. Before the speech started, traders were pricing in a roughly 35% chance of a September rate hike. After the speech, those odds jumped to around 60%. So yeah, Kevin Warsh talked a tough game in the speech on Friday. Now we'll have to see if the Fed actually follows through with the rate hike at the September meeting, which is on September 16th. So it's coming up in a couple weeks. On a side note, as I was watching the speech, I still feel like Kevin Warsh is lacking the aura of past Fed chairs. Jerome Powell was a tough act to follow, and maybe Warsh will get there at some point, but I don't think he's quite there just yet. More importantly for Kevin Warsh, though, he needs to establish credibility with the markets. So if he does follow through with the rate hike in the September meeting after this hawkish speech, I think the markets will start taking them even more seriously moving forward. Now, looking ahead to this week, we are getting earnings from Dell, Broadcom, and Snowflake. And then on Friday, the August jobs report will come out, so we'll get more information on the health of the labor market. So we'll stay on top of all of that, along with everything else happening in the stock market and bond market. So definitely get subscribed to the podcast if you haven't already, and tune in every day to Stay In The Loop. Let's run through some headlines, starting with oil and Iran. After about a month of relatively calm, the US and Iran are exchanging strikes again, which is causing oil prices to jump again. Brent crude is back above $90 a barrel. Over the weekend, US forces struck two Iranian rocket launchers on an island that sits inside the Strait of Hormuz. Iran responded to those attacks by launching missiles and drones at US military bases in Jordan and the UAE. Jordan says it intercepted eight missiles and reported no casualties. So after weeks where the war had shifted more towards sanctions and economic pressure, we're starting to see direct military strikes again. Maybe it's a sign that the economic pressures that the US was applying to Iran are proving to be not as effective as they had hoped. Big picture though, we're six months into this war, and there just seems to be yo-yo diplomacy here. Some weeks, there are talks of a deal. Other weeks, there's missiles flying. But so far, there seems to be no long-term solution. The Strait of Hormuz is one of the most important waterways when it comes to shipping oil, and Iran wants to turn it into a toll road and charge for every ship that passes through the Strait. And so far, the US has not agreed to that. So we might be in this period of unknown for a while. But look, the oil markets have generally settled around the $90 a barrel range. And according to multiple reports, there are about 7 million barrels a day currently moving through the Strait of Hormuz via the Omanian coast. But you know, if oil prices stay at this level or start rising again, it could continue to put upward pressure on inflation, which could force the Fed to hike interest rates. So it's all one big economic story, and we'll see what ends up happening. Let's shift gears and talk about Apple, because today is Tim Cook's last day as CEO. Starting tomorrow, September 1st, John Ternus will officially take over as Apple's new CEO. Now, we don't need to rehash all of Tim Cook's accomplishments again. We did a whole deep dive on Tim Cook a few months ago when he first announced his retirement. We'll put a link in the description if you wanna go check that out. I wanna talk more about John Ternus, because he's taking over Apple at a very interesting time for the company and the tech industry in general. So Apple seems to be in good financial shape. The company has a market cap of $5 trillion today, but there are questions about Apple's ability to innovate when it comes to hardware and their lack of progress when it comes to AI. Apple Intelligence had a rough start since it came out two years ago, falling way behind Chad, GPT, and Claude. So now Apple had to turn to Google's Gemini to help rebuild Siri. The new Siri is expected to come out in September, and early reviews have been strong. As for the hardware side, this is where John Ternus could make a big difference, because he's a hardware guy. So maybe Apple will start prioritizing building cool stuff with him as CEO. Apple is expected to launch its first foldable iPhone this fall, followed by products like smart glasses, camera-equipped AirPods, which I'm not sure how I feel about, and also new smart home devices over the next few years. So there's gonna be a lot of pressure on John Ternus to deliver. And by the way, Tim Cook isn't disappearing. He's becoming Apple's executive chairman and plans to continue managing the company's relationship with President Trump and the Chinese government. So honestly, it seems like a pretty ideal setup. John Ternus gets to focus on building the products and the AI, while Tim Cook handles some of the political headaches. By the way, Apple sent out the invites for the iPhone event. It's happening on September 9th. So in about a week and a half, we'll get our first look at what the future of Apple could look like. Let's talk about some stocks making moves today. GameStop stock is moving higher this morning after the company released preliminary earnings, and the numbers were pretty impressive, kind of. The headline number is that GameStop expects second quarter profits to come in between $290 million and $310 million. That's up from the $169 million in profits the company made in the same quarter a year ago. But the reason that profits are jumping has almost nothing to do with selling video games. It has to do with the company's investment in eBay. GameStop expects to book a roughly $238 million gain from their investment in eBay, where GameStop has built up a 7.78% stake. Remember, CEO Ryan Cohen tried to buy eBay earlier this year for roughly $56 billion. eBay ended up rejecting that offer. So apparently GameStop just started buying up their stock instead. But if you look at GameStop's actual retail business, sales are still shrinking. GameStop expects quarterly revenues to come in between $780 and $800 million. That's down from the $972 million the company made in revenues in the second quarter last year. Now, reason for this decline has to do with store closures and the sale of their French business. But at this point, I think GameStop has become more of an investment holding company than a video game retailer. The market seems to like it, though. Shares of GameStop are up more than 3% in pre-market trading. Now, on the flip side, shares of PG&E are getting hammered this morning. PG&E is the largest utility company in California. They provide power and gas to a large part of the state. And shares of the company are down more than 15% this morning after a California lawmaker stripped out a major liability protection that utility companies were hoping to get in a new wildfire bill. This proposal would have prevented insurance companies from suing utility companies over certain wildfire-related claims, but that protection did not make it into the latest version of the bill, which means that utilities like PG&E could still face enormous legal liabilities if their equipment is blamed for future wildfires. And, you know, investors have seen this movie before. PG&E literally filed for bankruptcy back in 2019 after getting hit with a ton of wildfire claims. They ended up emerging from Chapter 11 bankruptcy the following year, but Wall Street is taking no chances this time and the stock is getting crushed this morning. Let's wrap the show with a fun fact. Live Golf is about to file for bankruptcy. The Financial Times just reported that the Saudi-backed golf league, which started back in 2022, could be filing for Chapter 11 bankruptcy as soon as this week. You know, this whole Live story is so interesting. Just as a quick refresher here, the Saudi Arabia Public Investment Fund spent billions of dollars starting and building up Live. Like I just said, this tour started back in 2022 and they started handing out huge guaranteed contracts and prize money to steal star players from the PGA Tour. But despite all the money being spent, the tour never really built a fan base. And now the Saudi PIF has pulled back on funding, so things are getting pretty ugly over at Live. According to multiple reports, Live has laid off most of its staff last week. Vendors have also sued Live over unpaid bills and players are still owed millions of dollars in guaranteed money. One of those players includes Jon Rahm, who's one of the best players in the world. He recently signed with Live back in December of 2023 in a deal worth more than $300 million, according to multiple reports. Who knows how much he actually got paid, but there's a chance that he'll be standing in bankruptcy court as one of Live's biggest creditors. Now, bankruptcy doesn't necessarily mean that Live will disappear. They're trying to restructure the tour into a smaller Live 2.0, with just 10 tournaments and players owning a majority stake in the league. But I gotta say, going from disrupting the entire sport of golf with seemingly unlimited money to now potentially filing for Chapter 11 bankruptcy in four years is quite the speed run. The biggest winners here are the players that stayed back at the PGA Tour, because when Live first launched back in 2022, the PGA Tour freaked out and started offering larger prize pools to keep players from jumping ship. There was also talks of a Live PGA Tour merger that never ended up happening. And yeah, now Live is cooked. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. Thank you guys so much for listening, watching, and commenting. Shout out to Mike and V for all the work behind the scenes. And we'll see you guys back here tomorrow.