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China is the newest corporate scapegoat

Fingers pointing at China
Illustration: Rebecca Zisser/Axios

Earnings rise and earnings fall, but one thing remains constant: The downside is almost always somebody else's fault.

The bottom line: It's China's turn in the scapegoat spotlight.

  • For many years coming out of the financial crisis, fingers were pointed at "political uncertainty," even though folks pretty much knew what they were going to get from President Obama (both before and after he got a Republican Congress).
  • Then there was Brexit and then U.S.-everybody trade tensions, as Axios' Courtenay Brown detailed in October.
  • Big storms and other extreme weather often get used as excuses, as if corporate America can only plan for 70 degrees and sunny.

Now it's going to be China.

Apple kicked off the coming wave on Wednesday night, blaming China's slowed economy for a big fourth quarter revenue miss. Never mind that the smartphone market was already known to be saturated or that Apple still hasn't nailed a big new product category since Tim Cook took over (unless you count the watch).

Nope, it's all about China — causing others to freak out via a (not entirely implausible) thesis that Apple's economic insights into the country are more trustworthy than the government's official data.

  • Such things have a way of feeding on themselves, eventually trickling down from the public markets into the private markets (where valuations are already under pressure, but where relatively few U.S. companies have near-term China growth plans).

The bottom line: Whether or not Apple is right about China's faster-than-expected economic deceleration or just playing its traditional role of outlier, others will seize on it to explain their own shortcomings. After all, if it's good enough for Apple, it's certainly good enough for us.

  • It's the iScapegoat, a perfect patsy for any troubles that may await in 2019.