Has Apple Become the New Safe-Haven Global Currency?

• The debate about a safe-haven global currency has heated given global inflation and conflicts.
• The scenario of a world split between the US dollar and Chinese yuan is not impossible to imagine.
• It could also be argued the common link between the US and China is Apple stock, making it a strong candidate for safe-haven global currency.

I had an interesting conversation with a gentleman from far western Kansas Wednesday morning. After discussing the continued dry weather with plenty of wind (so far the weather hasn’t changed with the season in my friend’s part of the world), the topic changed to global currencies. My friend was concerned the US dollar ($DXY) was losing its status as the safe-haven currency of choice given: 

• How many dollars have been printed over the last 5 years to 10 years or so
• Russia’s ultimatum that any purchases of its commodities must be done in rubles (that should be fun)
• The historically odd economic alliance between Russia and China
• India’s stance that of not putting sanctions against Russia because the country wants to buy deeply discounted fuel

With all those factors in play, the question was if the global currency of choice would be the Chinese yuan or the Russian ruble (setting aside India’s rupee for now). It’s a great question, so let me break my answer into pieces. 

First, it won’t be the Russian ruble (RUBUSD). I have another friend in the investment community who has been itching to buy the ruble given it is historically cheap versus the US dollar. While the ruble has firmed of late, I wouldn’t touch it at this point with global sanctions against Russia still in the process of taking effect. Inflation should skyrocket in Russia as it starts to run out of goods, meaning the ruble should continue to weaken over time. Politically, I see no way the world will ever view the ruble as a safe-haven currency given the lingering effects of sanctions will likely outlast the dictator in charge at this time. 

The Chinese yuan (CNYUSD) would be too controversial of a global currency given its lack of transparency. I’m old enough to remember when the Chinese government was accused of manipulating its currency, then it wasn’t, then was, and wasn’t, and so on (it all depended on the mood of Tweeter-in-Chief occupying the Oval Office at the time). Do I think China is a currency manipulator? Absolutely, and not just its own but its fingerprints could likely be found on the currencies of key trade partners around the globe as well. Given China’s realm of influence, though, the argument could be made of a split globe between those that use the yuan and those that hold to the US dollar. 

My friend also brought up my recent piece on the move to nationalism, meaning each country could try to use its own. However, I would still argue when it comes to global trade Friedman’s tome “The World is Flat” still rings true, and given that, there needs to be one safe-haven currency. Not a common global currency mind you, I’m not opening that Pandora’s Box, but an established safe-haven currency. 

Since before the global pandemic hit I’ve been thinking there is one common tie to world economies, one safe-haven, and it isn’t gold. We are now a month away from one of the most awaited annual events in the global investment world, the Berkshire Hathaway (BRK.A) shareholder meeting in Omaha. A few years back CEO Warren Buffett was heavily criticized by younger investment gurus for holding too much of his portfolio in cash. A look at the Berkshire Hathaway portfolio now shows the top five holdings to be[i]: 5) Kraft Heinz (KHC) 4) Coca-Cola (KO) 3) American Express (AXP) 2) Bank of America (BAC) and 1) Apple (AAPL). 

Reportedly, Apple makes up nearly 48% of the Berkshire Hathaway portfolio after Buffett increased his holdings back in 2018. Back before the global pandemic hit and everyone became addicted to and reliant on their phones and home computers. CNBC ran a story Tuesday talking about how Apple’s stock rose for the 11th straight day, it’s longest winning streak since 2003. The stock is also within sight of its record-high daily close of $182.01 (from January 3, 2022), closing Tuesday at $178.96. 

I’ve already mentioned how the currencies of the world’s two largest economies, the US and China, could split the globe. But what if there was a common bond the two could agree on outside the realm of currencies? The two that initially come to mind are Tesla (TSLA) and Apple, and since most of the world doesn’t own a Tesla car (at least not now), that puts the spotlight on Apple. Reportedly, Apple CEO Tim Cook (no, not Tim Apple as some were fond of saying) stated the company has over 1.8 billion active devices worldwide, strengthening the idea Apple stock could be viewed as the global safe-haven currency. If so, we can draw two conclusions: 

• Warren Buffett is still the Oracle of Omaha, as he moved from holding too much cash to being the world’s second largest shareholder in the new global currency – Apple. In other words, he didn’t change his strategy as all the young hotshots said he should.
• And Forrest Gump keeps getting richer.

Life really is like a box of chocolates. 

[i] From Invsetopedia