Flagship Pod 78: Apple's VR Launch

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Now let's get into what we reviewed.

 

Here are the 4 key things we went over:

• What's behind the market's bull run

• Why Apple's VR announcement today is a huge deal

• Where other speed bumps for the economy are materializing

• How we're picking our investments as things get a little more volatile

And if you're too busy to listen to the entire recording, below we included a compact summary of what went down.

To get all the juicy details, just listen to the entire recording.

And now, onto the summary 👇

Overview:

The Dow Jones went nearly euphoric last week after the debt ceiling deal was sealed by the Senate. Now that a huge potential bomb has been disarmed, the market simply had nothing left but bull sentiment. 

Nvidia's AI rally still has some legs with a lot of these tech stocks threatening to become overbought in the short term. 

But the big news we're watching this week happens later today. This rally is being primarily driven by tech innovation driving value, and we may be on the cusp of either a new iPhone moment in the market or a show so disappointing it honestly trips up the momentum of this rally. 

Shortly after this podcast gets published, Apple will kick off their WWDC conference and potentially launch their much-anticipated VR/AR headset. 

Whether it's an incredibly lame VR headset or a groundbreaking piece of Augmented Reality technology remains to be seen, but since a lot of the market's sentiment hinges on how well tech companies are doing, if Apple flops, it could be enough that this rally comes to a minor halt. 

At the same time, even though VR/AR simply has not caught on as a concept in the wider market, if any company can pull this off and keep the good times rolling, it's Apple. 

Other than that, we're on the lookout for other potential "black swan" style events that can trip up the minor bull run we're starting to kick off. 

Is the recovery finally here, or are we about to get caught in another bull trap? Let's dive into the details and see what's up 👇

 

Apple's Hinge Point:

The last time Apple had a potential product launch with this much PR behind it was in 2014 with the announcement of the Apple watch.

Sure, Apple has optimized its ecosystem since then, but there hasn't been anything genuinely groundbreaking from a technical perspective. We're not counting Airpods here because even though they've been hugely successful, they aren't as risky a launch as other wearables. 

Not only will this be the first big shift from Apple in nearly a decade, but it's basically their riskiest product ever. Wearables are a deeply unproven market and VR headsets are currently deep in niche territory. Apple currently has not specified whether this headset is just VR or some kind of augmented reality headset. 

VR would just be for gaming and entertainment, while Augmented Reality has a lot of potential applications for general use and wider adoption. 

The way the analysts here at Moby.co see it, if Apple is just releasing a VR headset today, that's going to be a pretty big flop. Meta's stock got essentially cut in half by an ill-advised and worse-timed pivot to the metaverse, and the stock is only recovering thanks to the market collectively forgetting that's Mark Zuckerberg's new goal for the company. 

However, Apple has been investing a lot in Augmented Reality tech and it's really likely that's what their headset will be centered around. 

Which gets to the next potential pitfall. Wearables are hard enough, but wearables for your face have to be pitch-perfect from a fashion perspective.

But if any company can pull this off, it's luxury-coded Apple. But, at the same time, they did "fail" at making the Apple Watch get adopted as more of a luxury/ fashion accessory. While Apple Watch is successful, it's successful as a fitness tracker (and not even world-changingly so). 

That's honestly why we're nervous about WWDC. It's really hard to picture how Apple can launch a new category like this on their first real try. Sure, Apple could definitely make breakthroughs and eventually develop a headset that earns wider adoption, but producing a genuine iPhone moment in AR is a pretty tall order for a company that hasn't quite pulled off any massive innovations in the past 5 years.

Meanwhile, all of this can be overshadowed by any updates Apple makes on the AI side of the equation. Maybe all of this talk about AR is washed away by Apple jumping on AI mania and showing off some great new chips and language models. 

Regardless, since this rally is dependent on the market buying into genuine technical advancements, if Apple flops today it can potentially rob the whole market of a lot of steam.

 

Wrapping This Up:

Now that the big fear points have passed, the market is still extremely cautious in this economy.

Traders are worried about everything from a decline in earnings broadly, to a collapse in commercial real estate, to a slow grind into a consumer credit crunch. 

It's going to take a lot to convince this market to turn bullish again. More importantly, we are still a few months out from fully digesting the effects of high Fed interest rates. If we get a pause and even one reduction in interest rates this year, that will do a lot to drive us toward recovery in 2024. However, the deck is very much stacked against this recovery, so the analyst team here at Moby.co remains overly cautious in this environment. 

A long-term view is the main way to digest risk in this economy.

The market can very much keep going down from here, but if your time horizon is 5 years, you're essentially buying at a solid discount. Either invest like you're not seeing any returns until 2027, or maintain a little extra dry powder until we see how this month's CPI and July's GDP figures shake out. 

We're definitely in the more interesting phase of this correction, so we'll keep you posted as more details come to light.