Is Apple Inc. (AAPL) Immune to the Fed?

The common retort to this concern is that the recent numbers speak for themselves sufficiently to demonstrate that Apple will not be driven by the general direction of the economy. The problem with this position is twofold. First, the mature smartphone market, while still growing, is becoming closer to saturated. The growth rate differential between the mature market and the emerging market is significant.

The second issue to consider is that while the U.S. economy has been “improving,” if Friday’s sequestration cuts are not quickly addressed, the impact for the economy could be severe. The Congressional Budget Office estimated that the cuts could cost as many as 1.4 million jobs. This means that while the blind devotion people have to their smartphones may not change, they may be less willing to maintain an accelerated upgrade cycle. When you are concerned you may lose your job or earn less money, you are less likely to buy a new smartphone every year when the old one works just fine.

Apple’s on notice
The Fed’s continued policy of quantitative easing, one that Bernanke made clear was well in place, will likely prove a major contributing factor to the inflation that is coming. There may be no “inflation,” but things sure seem to cost more than they used to — food and gas being highest on that list. Gas at $4 and $3 milk could easily mean my iPhone 4S stays in my pocket an extra year. The perceived immunity that tech has to the Fed is an illusion and Apple shareholders should be pushing for more emerging market activity.

The article Is Apple Immune to the Fed? originally appeared on Fool.com and is written by Doug Ehrman.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.

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