[tveita]

"While critics might note that Apple’s price increase is greater than the pound’s loss in value, financial analysts predict that the market still hasn’t fully priced in the cost of Brexit — that is to say the pound still has further to fall."

So what mechanisms keep the price from instantly dropping if "everyone" agrees it should be lower? Market inefficiencies? Or lots of money betting on an upswing?

[simonh]

> ...Apple’s price increase is greater than the pound’s loss in value...

It's 5% more than the pound's loss in value next to the Dollar. But bear in mind that for the last 6 months Apple has simply swallowed a 20% reduction in their (and developers) UK App Store revenue. Look at it that way and we in the UK have enjoyed subsidized prices for most of the last year.

[ensignavenger]

Do app developers get to set their own prices for foreign app stores? Or are the prices automatically and uncontrollably set by Apple, based on US app store prices?

[Humdeee]

Apple does pricing in tiers. Tier 0 (free) to tier 87 ($1000 USD). You choose a tier which correlates to a fixed price from a drop down menu. These tiers are converted to a localized price through all the stores. The same works for in-app purchases.

Eg: Tier 87 is automatically $1399 CAD, as long as you allow that app to be available in the Canada App Store.

[ensignavenger]

Thanks- Can a developer select one tier for the US and another tier for a different country?

[Humdeee]

Not with the sale price of the app at least. Just like there is a review process for the app, there is also a separate review process for in-app purchases. 1 tier across all countries for each in-app purchase and the initial sale price.

Now, with that being said, I have not seen an instance of a developer or seller abusing the localization API for this purpose... meaning forcibly charging other stores for the same in-app purchase content. A separate in-app purchase would have to be made in any case for other stores to route to. Apple has a pretty firm fist and I imagine location abuse like this may lead to the seller's account being banned or punished. It may be perfectly allowed however, I haven't dug too deep into the TOS.

[ensignavenger]

I'm not sure I understand your post? I was thinking along the lines of a developer picking a different tier for one territory over another because they disagreed with Apple's default pricing. Maybe they don't like the exchange rate, or they have unique localization costs associated with one territory, or they have additional licensing costs for one market over others. I wasn't really thinking about in-app purchases.

[systoll]

They're set automatically; but they can be varied manually.

[spuz]

If that's true it would suggest that Apple are not in fact basing their price on expected further devaluations of the pound vs the dollar. So either they don't expect the price to fall further, or they do expect it to fall further but don't want to burden their UK customers with even higher prices at the moment.

[simonh]

Or they are aligning their prices against a psychologically meaningful breakpoint such as the increase from £7.99 to £9.99 given in the article, which happens to be about 25%, rather than a precisely 20% increase which would yield a price of £9.59.

People here are reading way more into that 5% than is remotely warranted and for ludicrously incidental reasons. What's actually happening here is very simple. Apple has been taking a hit for a while. They are re-aligning prices to the nearest logical breakpoint. That's it. All that analyst guff about Brexit downside risks because of a slight percentage discrepancy with exchange rates is just because analysts don't know crap about the real reason - marketing.

[tlrobinson]

Uh 25% increase only leads to round prices at certain points. 25% increase on £1 is £1.25...

Otherwise I agree with you.

[simonh]

They increased the basic price 'unit' from £0.79 to £0.99. Although at higher price points they use a 'unit' of £1.49 that's now changed to £1.99.

Apple uses prices aligned to multiples of these units, with some rounding. So when Apple realigns UK prices to take into account currency fluctuations, they do so based on a combination of how much and how long the exchange rate has changed, and what their target price units and price points are. Also I'm sure they factor in holiday season timing to e.g. avoid negative publicity running up to Christmas.

[easytiger]

> "While critics might note that Apple’s price increase is greater than the pound’s loss in value, financial analysts predict that the market still hasn’t fully priced in the cost of Brexit — that is to say the pound still has further to fall."

Someone should probably tell the worlds biggest futures exchange that their forward rate for GBPUSD is wrong then:

http://www.cmegroup.com/trading/fx/g10/british-pound.html

Methinks someone is talking nonsense

> o what mechanisms keep the price from instantly dropping if "everyone" agrees it should be lower?

It would drop. It hasn't, because that is not what the "experts" consensus is

[andysinclair]

Forward prices are not a predictor, they are simply based on interest rate differentials between two currencies.

[tomarr]

Not necessarily - the market has priced in multiple future outcomes according to their probability, each which see a massively different valuation of pound sterling. Article 50/hard Brexit/etc. is now very likely (lower pound sterling value), but there’s still the potential of a late change to this approach or a parliament refusal of the bill (higher pound sterling value).

[notahacker]

And of course it suits Apple to focus on the highest probability event, particularly since (unlike FX traders) they don't stand to very quickly lose large amounts of money if low probability but cannot be ruled out yet positive news for the pound happens. The worst case scenario for Apple if the pound rebounds involves people thinking their UK App Store is a bit overpriced until they revise prices again.

[noja]

GBP/USD is listed as "strong sell" on https://uk.investing.com/currencies/gbp-usd-contracts (right panel)

Earlier today it was "strong buy".

[jstanley]

The market has always priced in all of the information that is available to its participants.

The "financial analysts" are talking nonsense basically. If they're so sure it's going to drop further they should short the pound now, as much as they can. That in itself would cause the pound to drop, and then whatever effect they're predicting would be priced in.

[simonh]

No, for several reasons. You might be sure that the value will fall but not know when. There might be short term risks that might make now a sub-optimal time to make that bet. There might be other effects that might mitigate this particular effect - so you might be convinced that Brexit will drive down the pound compared the the value it might otherwise have had, but not know what that price driven by other factors might be. Government intervention might mitigate the effect - George Soros made a fortune betting against the government but many others have lost fortunes the same way. The trading floors eat naive market perfectionists for breakfast.

[chki]

Isn't that just the fundamental problem with financial analysts? If they were always right they could be really rich really quick. But I've never heard of that..

[bertil]

> So what mechanisms keep the price from instantly dropping if "everyone" agrees it should be lower? Market inefficiencies? Or lots of money betting on an upswing?

Asymmetric uncertainty: some people believe there is a small chance that things could change for the better; in that case, the market will go up spectacularly and Apple will update their prices again. If that doesn’t happen, Apple doesn’t have to change their price again, which is, I presume, a fairly costly operation — but the equilibrium rate with an effective Brexit is lower than where it is now.

Once such situation is if the Parliament refuses to approve the referendum: Courts have rules their vote is needed, and most MPs were against Brexit beforehand.

[mattmanser]

Are these the same financial analysts that said there was going to be an immediate meltdown post-brexit?

[simonh]

We aren't post-brexit yet. That's more than 2 years away.

[mattmanser]

I should have been clearer, the analysts said there would be an immediate meltdown in the UK economy after the brexit vote if it was leave.

That forecast was completely wrong, the opposite has happened.

As it's widely been reported in the UK, in both lefty and righty papers, I'm surprised you've failed to see it. It's been mentioned every time we get a positive growth figure, or an unemployment fall, or whatever.

[TillE]

Yes, predicting fuzzy emotional reactions to uncertainty is a lot harder than the analyzing the clear, solid legal and economic changes which are to come.

[simonh]

As has been mentioned on this thread before you posted, those analyses were based on the announced policy that article 50 would be triggered immediately. It wasn't. Long term Brexit is absolutely going to be disastrous for the UK economy, unless parliament can get us on to a soft-brexit EEA membership track.

The tragedy is that the British economy was going well through the beginning of 2016 and after a bumpy road immediately after the vote that momentum has held up over the last 6 months. That won't help us if we really do crash out of the EU hard.

[Ntrails]

> Long term Brexit is absolutely going to be disastrous for the UK economy, unless parliament can get us on to a soft-brexit EEA membership track.

No. It might be. I'll even accept will probably be. You haven't got a clue, I haven't got a clue. Professors of economics at respected universities don't agree, in house analysts at top financial institutions don't agree. At best you can say that heavily politically influenced bodies tend to agree.

I'm fine with you stating an opinion on this stuff, I have my own expectations (chunky period of inflation and stagnant growth at best) - but I'm awfully tired of people selling forecasts as facts

[zigzigzag]

those analyses were based on the announced policy that article 50 would be triggered immediately

Then they were naive analyses rather than expert analyses weren't they?

Did anyone seriously think Cameron would stay on to implement Brexit? Only someone utterly clueless about British politics could have thought that - it was obvious there'd be a leadership change in the event of a leave vote.

It is also obvious that Article 50 was deliberately botched, the guy who wrote it have said so explicitly. 2 years is a stupid choice for the amount of time available, designed specifically to discourage people from trying to leave. So assuming it'd be invoked immediately anyway was a very bad assumption.

No matter how you slice it, the so-called "experts" were completely wrong and excuses don't cut it.

[andy_ppp]

In the mean time lots of money to be made raising and lowering the price of the pound based on various announcements.

I'm writing a bot that shorts on Donald Trumps tweeting company names...

[misnome]

And, in fact, the talk the past few days from Phillip Hammond/the leaks is that there will be a collapse in the economy ("short term" is a euphemism that can cover just about anything. Short term, the sun will expand and melt the earth).

[tonyedgecombe]

Yes, but we were told article 50 would be called immediately however it hasn't been.