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AAPL Beats Revenues And EPS As Margin Declines, Guides Lower, Boosts Buyback And Dividend

Apple is out with Q2 results which are hardly inspiring. Revenue and sales beat, but margins missed and guidance is weak:

  • The good news: Q2 Revenue: $43.6 billion, Exp. $42.3 billion
  • Q2 EPS: $10.09, Exp $9.98
  • And the not so good news:  Q2 margin weaker than expected 37.5%, Exp. 38.5%
  • And Q3 revenue seen at $33.5-$35.5 billion far below the estimate consensus $38.4. Remember: AAPL no longer sandbags the future

For those looking for a special dividend you won't see it, instead will have to be satisfied with a buyback expansion by $50 billion (eventually), and an increase of 15% in the dividend. Ironically, cash cow AAPL just announced it will raise debt (and got rated by various rating agencies) in order to fund its cash outflow. In other words, it is slowly but surely becoming a utility. So much for the near infinite growth projections.

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Horrible News Is Great News, Lifting Stocks To Just Shy Of All Time Highs

As we tweeted somewhat prophetically this morning when futures were still modestly red:

And sure enough, equities close at the highs of the day (up over 1.5% from the overnight lows) and back near all-time highs once again. Ignoring the well-discussed elephant-in-the-room of the fake-tweet-based-flash-crash which exposed all that is unholy about the financial markets (i.e. coordinated HFT algos across every futures-market risk-asset); we note that shorts were heavily squeezed today, grossly outperforming the indices and JPY carry trades pulled stocks up tick-for-tick. Bonds sold off about 8bps higher in yield from overnight lows on the terrible data but yields ended the day only modestly higher (far removed from equity exuberance). The Dow, intriguingly, closed perfectly unchanged to the moment the Boston news hit last week, but the Russell was the day's big winner...

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US Mint Halts Sales, Depletes Inventory Of One-Tenth Ounce Gold Coins

We have been reporting extensively on the terminal disconnect between the paper gold market, which tumbled ten days ago for a variety of reasons, and the physical gold market which one can safely say, has seen a record surge in demand by those who wish to take advantage of the tumbling prices, depleting inventories of gold and silver in virtually all jurisdictions, and leading to the a record purchase of gold in the US mint a week ago as also reported here. Today, we learn that, as expected, none other than the US Mint has officially run out of small denomination gold coins, in this case One-Tenth ounce American Eagle gold bullion coins. We are confident this incontrovertible proof of soaring retail demand for physical will somehow result in JPM or another bullion bank dumping a few extra thousands ounces of paper/electronic gold or silver to further disconnect the paper price from what is actually going on with physical demand. As for the US Mint, first it's fractions of an ounce: look forward to the mint running out of all bullion denominations in the coming days and week, first in gold, then in silver as well.

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Guest Post: We've Dug A Pretty Damn Big Hole For Ourselves

“Recovery” has become the shibboleth constantly invoked by people running things after the crisis of 2008. Unfortunately, no such recovery was underway. It was papered over by the twin Federal Reserve policies of quantitative easing and financial repression – a combination of the nation’s central bank loaning vast new amounts of money into existence at ultra-low interest rates (hardly any interest to pay back) and creating steady monetary inflation to reduce the burden of existing debt by shrinking the dollar value of the debt. The program was a racket in the sense that it was fundamentally dishonest. The presumed purpose of these shenanigans from the point of view of the Federal Reserve and the White House was to keep the financial system stable and afloat, and therefore to keep “normal” American daily life going. Unfortunately, it was based on the unreal assumption that the financial norms of, say, 2006 could be ginned back up again, and this premise was just inconsistent with the reality of a post-Peak-Cheap-Oil world. Unfortunately, there was no organized counter-view to this wishful thinking anywhere within the boundaries of the political establishment.

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Wondering What Is Driving Today's Rally?

Presented with little comment, but it's another one of those short-squeeze days...

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Finally, This Is What A "Locked Market" Looks Like

Another word for locked (or where the bid and ask are the same; the only condition which is worse - crossed, where the bid is higher than the ask)? Broken.

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And This Is What A Full Blown Market Exodus Looks Like

260,000 S&P 500 e-mini contracts traded in the three minutes following the fake AP Tweet. That is ~$20.4 Billion notional value 'changed hands'. For those with trailing stops, our condolences...

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From A Twitter Hack To The Complete Evaporation Of All Market Liquidity In One Chart

Presented with little comment aside to note that based on a tweet, the 'deeply liquid' US equity market collapsed instantaneously as all those liquidity-providing 'algos' jumped ship. The good news, if indeed this was merely a test for "the big one", is that everyone managed to sell ahead of everyone else. Right?

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SaxoBank CEO: "We Must Re-Evaluate The European Union"

Despite a very positive starting point for European citizens' view of the EU; over time, this support and optimism evaporated. Massive central bureaucracy, European arrogance and lack of respect for the independence, history and culture of the national states slowly destroyed confidence in the project. When we look back, we must admit that it took too long to recognise what the European project really was. But we also have to state that this recognition came much later to many others and some of our career politicians obviously still do not get it. The big question is really whether the EU is more the problem than the solution in the current crisis. The euro has shown its true colours and anyone with a rational view of the world sees the currency collaboration as a historic failure that can lead to even further fatal consequences for Europe and the continent’s competitiveness vis-à-vis the rest of the world. There is one thing, and only one thing, that can rescue the euro. That is a much more far-reaching integration between the euro countries; a common financial policy, joint debt issuing, a willingness to pay enormous transfers from the rich to the poor countries or, more specifically, from Germany to all the other member states. That is a possible route, but not a desirable one. The time has come to do everything to ensure that Europeans understand what the future perspectives of this choice are and that Europeans understand the importance of this choice.

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Spot The "Housing Recovery" Disconnect(s)

Confused about the latest disconnect between reality and propaganda, this time affecting the (foreclosure-stuffed) housing "recovery" which has become the only upside that the bulls can point to when demonstrating the effectiveness of QE now that the latest attempt at economic recovery has failed miserably both in the US and globally? Gluskin Sheff's David Rosenberg is here to clear any confusion.

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Spain's Rajoy Yields To Merkel, Agrees That EU Countries Must Cede Sovereignty

In what seems like a bow to his overlords in Berlin, Spanish Prime Minister Mariano Rajoy has unleashed a somewhat remarkable torrent of terrible realization and truthiness:

  • *EU countries’ giving up sovereignty to the bloc is crucial for its future

In other words, handing over your liberty to Germany is for your own good. It seems the German perspective (as we noted here) is winning out.

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Sliding German Economy Unleashes Biggest European Rally In Eight Months

Despite dismal data on German PMIs, Italian and Spanish equity markets have had their best 4-day run in 7 months to push back to two-month highs as the exuberance around the world reaches fever pitch once again. The Eurostoxx 600 (broad European stock index) jumped a tremendous 2.4% for its biggest rise in 8 months. EURUSD plunged and perhaps gives the hint that the ECB will be forced to act next week - so what are they going to do? Rate cut? (maybe) Another all-encumbering LTRO? (bank spreads didn't weaken) More direct bond-purchases? (failed abysmally last time - though this shift could be the front-run of that) Doesn't matter... nothing matters. Spanish and Italian bond yields and spreads smashed lower to near pre-crisis spread levels even as Rajoy says things are worse, much worse, than expected. Bad is good, but terrible is way better... but if it's all so 'good' why did investors seek Swiss short-dated debt as a safe haven once again? (hovering at 3-month low rates).

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Universal Online Sales Tax Imminent?

That Congress has had aspirations on collecting sales tax on online purchases, which comprise an increasingly bigger portion of all retail sales in the US, in the past is nothing new. However, following last night's passage of the Marketplace Fairness Act in the Senate with a cloture busting 74 votes for (and 20 against), the US may be very close to finally adopting a uniform standard taxing all online transactions, regardless of physical jurisdiction or any other geographic boundaries. As Ars Technica reported last night, "your tax-free days of online shopping are numbered. If S743, also known as the Marketplace Fairness Act, becomes law, the millions of Americans who have been able to avoid sales tax online will have to start paying it. Given the broad support shown by today's US Senate vote, some version of it is likely to come to fruition."

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PIMCO's Bill Gross Advice In Two Words: Sell Euros

In his increasingly ubiquitous manner, the bond king has reduced his thesis to 140 characters, summed up in just two words... Sell Euros

It seems sometimes there is no need for a 300-page Powerpoint presentation.

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