Imagining a post-iPhone Apple

[Bloomberg]( New to Bloomberg Opinion Today? [Sign up here](. Today’s Agenda - Apple’s [iPhone has some problems](. - China's [Belt and Road plan]( has a lot of problems. - The jobs report will [cause the Fed no problems](. - Goldman Sachs has a [Malaysia problem](. - CBS and GE have [new leaders](, [old problems](. - The [student-loan system]( is a problem. Imagining a Post-iPhone Apple America's biggest company is having some trouble with its biggest product. Its fourth-quarter financial update last night disappointed Wall Street, thanks to [sluggish iPhone sales]( and a downbeat forecast for the current quarter. Its shares tumbled more than 7 percent today. On the plus side, [the B team of Apple products]( — namely the Apple Watch and AirPods — keep knocking the cover off the ball, Tim Culpan notes. But they have to keep it up. With iPhone growth struggling, Apple will increasingly rely on these peripherals to draw more Apple addicts into the fold. Leonid Bershidsky points out [Apple will also have to rely more on its services]( for growth. He describes this as milking rent from a captive audience, which sounds kind of bad, put that way. The downside for Apple: Its services aren’t all that great, and they aren’t generating much revenue. The upside: There’s a lot of room for improvement. More Apple reading: Apple’s bummer outlook for sales and profit is, on the flip side, [good news for Apple suppliers](. – Tim Culpan China’s Belt Doesn’t Quite Fit On paper, the Belt and Road initiative sounds like a can’t-lose economic, political and strategic coup for China. It gives its industries and banks the potential to profit on much-needed infrastructure projects that spread China's influence around the world and bolster its defenses against the West. What's not to love? [In practice, a whole bunch](, writes Nisid Hajari. The projects haven’t been carefully chosen or executed, and many have raised suspicion of China’s motives and inspired regional rivals to work harder and more cooperatively to counter it. So, as Nisid writes, “this plan to project Chinese power, influence and trade across much of the world could undermine all three.” Read the [whole thing](, which includes some great graphics: Nisid and Bloomberg’s editors agree the [Belt and Road needs a new tack](. Its ambitions must be scaled back, its projects must be chosen more carefully, and it must be less political and more transparent about the whole process. The West could also benefit from China's woes and offer its neighbors some attractive alternatives to the Belt and Road — though everybody could benefit if China gets its plans right. More China reading: China’s economy is permanently shifting to [more consumption and less production](. The rest of the world hasn't thought enough about the implications. – Dan Moss Jobs Report Is a Green Light For the Fed The U.S. job market clocked in another strong month in September, with [wage growth a particular bright spot](, growing 3.1 percent from a year earlier. That’s good news for workers, a sign the tight labor market is driving up wages as it should. But as John Authers wrote in his [newsletter]( last night, wage growth above 3 percent will keep the Fed tightening rates. The central bank should keep in mind, though, just how much [hotter the U.S. economy]( is running than the rest of the world, Dan Moss writes. Jacking up rates indiscriminately will cause more pain around the globe. One hint of what’s coming: The “yield curve” — the gap between short- and long-term interest rates — collapsed today, as traders [priced in more Fed rate hikes](, notes Brian Chappatta. More jobs reading: - [Seven takeaways]( from the jobs report. – Mohamed El-Erian - More people have been [working on roads and bridges]( lately than since before the recession, but this bump won’t last. – Justin Fox Goldman’s Malaysian Malaise The allegations in the U.S. bribery and money-laundering case involving 1Malaysia Development Berhad are pretty incredible. One allegedly ambitious fraudster allegedly worked with Goldman Sachs Group Inc. bankers to allegedly skim billions from a Malaysian development fund. The bankers no longer work for Goldman, and the firm has not been charged with any crimes. But ex-Goldmanite Matt Levine writes the particulars of the bank's scrutiny, or lack thereof, of deals that brought in $600 million in fees mean [this may not be “the last Goldman will hear]( about 1MDB.” Lionel Laurent writes this comes at a [particularly inopportune moment for Goldman](: It’s gone a long way toward cleaning up its reputation since the financial crisis, is starting to do more business with normal humans, and even has a hip new DJ CEO. The old Vampire Squid label might just stick for a while longer. New Leaders, Old Problems Two troubled corporate icons with new leaders had their first quarterly earnings reports today. Neither exactly shined. CBS Corp.’s acting CEO Joseph Ianniello, who replaced the ousted Les Moonves, had the somewhat easier job: Results were pretty decent. But the stock barely budged — possibly, as Tara Lachapelle writes, because CBS looks increasingly feeble next to its bulked-up competition. Ianniello reportedly joined Moonves in resisting a merger with Viacom Inc. Tara writes he [won’t be able to resist for much longer](. General Electric Co., meanwhile, has a new CEO in Larry Culp, tasked with reversing that company’s shocking decline. GE delayed its earnings report to give Culp time to get up to speed, but Brooke Sutherland writes the company apparently [squandered that time](: The earnings call “was vintage GE: lots of talk but little clarity.” It’s not a good look when your stock price tumbles while you’re talking, as GE’s did during Culp’s presentation. Culp’s at risk of [squandering not just time but goodwill](, Brooke warns. The Student-Loan System Is Broken A college education is supposed to be the golden ticket to a lifetime of higher earnings, but for many students who finance that education with loans, it is [a ticket to a lifetime of crushing debt](, writes Noah Smith. We’ve known this for a while, but new data put into perspective just how bad it's gotten and how the poorest Americans — the ones who could be helped most by an education — suffer the most from the system. It needs an overhaul, but now that the federal government is basically running the student-loan business, it has less incentive to change. Read the [whole thing](. Telltale Charts Starbucks made good progress on its turnaround in the latest quarter, though [weak traffic is still a problem](, writes Sarah Halzack. Tesla Inc.’s profit margin got a [bigger boost from regulatory credits]( in the latest quarter than we realized, writes Liam Denning. Berkshire Hathaway Inc. [sure has a lot of cash](, and the recent market swoon gives it a chance to spend it, writes Tara Lachapelle. Weekend Reading To counter the rise of populism and anger at globalization, [we need a new social contract](, one that gives workers a lift and makes the global economy more fair. – Minouche Shafik [Five things to watch]( on Election Day. – Jonathan Bernstein Republicans have moved hard right on immigration, and [Democrats have moved]( to the left. – Ramesh Ponnuru Trump's Iran sanctions are his latest example of [talking tough, then backing off](. – Ellen Wald Capitalism is [still badly hamstrung]( in post-Castro Cuba. – Mac Margolis Why aren’t you [taking more of my money](, Spotify? – Leonid Bershidsky AbbVie Inc. [can’t even enjoy its last days]( of having the world's best-selling drug. – Max Nisen The ultra-light sentences given to former Valeant Pharmaceuticals International Inc. executives just show [how spineless white-collar prosecutors have become](. – Joe Nocera Parking garages could solve the [traffic problem of driverless cars](. – Nathaniel Bullard We’re all part of a massive global experiment to see what happens when people [eat a bunch of plastic](. – Faye Flam ICYMI Trump is a step closer to [having to turn over business records]( in a lawsuit. Want a divorce? [Hurry up and do it now]( before the tax laws change. Kickers New thing I want to do when I grow up: [astroarcheology](, or using satellites to look for evidence of lost cities and tomb raiders. San Francisco’s Salesforce Tower [dressed as the Eye of Sauron]( for Halloween. (h/t for the first two kickers to Scott Duke Kominers) Scientists find new evidence the [Milky Way was formed]( by a galactic collision. Mercury is [shrinking](. Why is [art so expensive](? The [best songs of 2018]( so far. [Photos of the week](. Note: Please send art, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net. [FOLLOW US [Facebook Share]]( [Twitter Share]( SEND TO A FRIEND [Share with a friend] You received this message because you are subscribed to Bloomberg's Bloomberg Opinion Today newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022