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Now that I've released my early Apple research and the collapsing stock cat's out the bag, I hear very, very few Margin Compression theory bashers. Crickets anyone? Let's dissect the near 25% drop and how I made the call.

Do we have what it takes to get from here to there? This apparently simple question offers profound insights into the dynamics of individuals, households, enterprises and nation-states. If we answer this question honestly, it establishes a "road map" of what must be in place before a progression from here to a more sustainable future ("there") can take place. For most of the world's economies and societies, the answer is a resounding "no." The U.S. Status Quo is as intellectually bankrupt as it is financially bankrupt. Our "leadership" cluelessly clings to the only model they know: incentivize "consumers" into borrowing more money to buy more "stuff" from China, in the magical-thinking belief this churn will somehow lead to sustainable "growth." This is akin to handing a parched alcoholic a fresh bottle of whiskey to wean him of his addiction. There are more than a few lessons to be learned from Japan...

As the first exit polls start trickling in, readers can keep track of the live action with the following handy maps, selected from various websites. As a reminder, exit polls are about as predictable as any other polling 'data point' based on +/-4% error margin sampling, which in turn is virtually every data point used to feed Garbage In, Garbage Out "predictors", "simulators" and other "black boxes" which forecast the future with triple digit "accuracy." Simply said, in an election in which the margin of difference in the key electoral states (not to mention the popular vote) is far narrower than the error rate, take everything you have heard about the final outcome and burn it, or sell it and buy several Stat 101 credits at the local community college.

• Obama and Romney Deadlocked, Polls Show (WSJ)
• NYC Commuter Week Faces Uncharted Ground as Storm Brews (Bloomberg)
• New York region struggles to move on a week after Sandy (Reuters)
• Europe's Bank Reviews Collateral (WSJ)
• Less circuses to pay for the bread? Time Warner Cable misses on falling demand (Reuters)
• Spanish unemployment total jumps by 128,242 as recession continues to take its toll on economy (Independent)
• Goldman Sachs Partner List Drops 31 Since February, Filing Shows (Bloomberg)
• China's mission impossible - a date for Hu's military handover (Reuters)
• German-Iranian trade booming (Jerusalem Post)
• Russia supplying arms to Syria under old contracts: Lavrov (Reuters)
• Russia endorses Egyptian-led regional group on Syria (Reuters)
• Election Winner Must Win Over Wall Street (Bloomberg)
• On Google, a Political Mystery That's All Numbers (WSJ)
• Richard Koo: explain to Americans why $22 trillion in debt in 4 years is good for them.. or something (FT)

Mario Draghi has reassured the world that no matter how much 'crap' collateral is taken on to the ECB's balance sheet, their risk management process is rigorous and ensures the safety of the entity's capital thanks to well-devised haircuts and collateral. Once again, it appears from a report in Die Welt (via Bloomberg), Draghi lied, as the ECB is now checking terms on some lending to Spanish banks that may have already contravened the ECB's mandate allowing overly generous terms to be offered on the Spanish banks' collateral. As Bloomberg notes, the issue surrounds EUR80bn relatively short-dated T-Bills which were wrongly classified as rated 'A' instead of the 'B' that agencies - except DBRS! - had assigned (a vast difference) - which would imply (if the ECB re-assigns the correct rating) the affected Spanish banks would have to produce up to EUR16.6bn in additional collateral (cash or quality collateral that is non-existent in Europe). This of course "casts doubt on the quality of the ECB's risk management" and merely serves to confirm the Juncker-ian lies we have come to expect from Europe's leaders (economic and political). As Die Welt notes: "Critical observers ask: who actually controls the ECB?"

Bloomberg has an update on the most amusing story of the day, namely that Rochdale appears to have blown daytrading Apple. And guess what: taking a cue from SocGen, UBS, and JPM, it's all a "rogue trader's" fault. Of course, if the trade had gone the "other way", Rochdale would not be needing a bailout, and the rogue trader would be looking forward to a generous holiday bonus.

• Rochdale bought more Apple shares than the brokerage’s management intended around the time of the technology company’s Oct. 25 earnings report, two people familiar told Bloomberg’s Hugh Son, Saijel Kishan and Zeke Faux.
• Rochdale officials told employees a rogue trader amassed the position, one of the people said.

We wonder how many more such "rogue traders" who dabbled in AAPL, and blew up after leveing the house in hopes to make their year on AAPL soaring into year end, will emerge before the next week is over...

While much of New York City and Westchester remain 'dark' thanks to Sandy; it seems across the pond, the government of Valencia has gone dark due to stupidity. As El Economista reports, several departments of the Generalitat Valenciana have remained without power Tuesday after a power cut ordered by Gas Natural Fenosa, trading company that supplies electricity to the regional administration. The reason, well it's not clear, but reading between the lines of the comments of one politician "disastrous [government] policy has left the box empty so there's no point to pay for electricity," suggests a combination of lack of funding and a need to 'bite one's own nose off to spite the face'. The 'incomprehensible and inconceivable' temporary cessation of power has apparently been restored - after the government 'satisfied payments to the company'. Perhaps this anecdotal snafu explains why Spanish bonds have been bleeding higher in yield when all we hear from talking heads is that all is well - and deficits will be better next year.

Other than some obligatory arrests for disorderly conduct, the Occupy Wall Street movement celebrated its one year anniversary this past September with little fanfare. While the movement seems to have lost momentum, at least temporarily, it did succeed in showcasing the growing sense of unease felt among a large segment of the US population – a group the Occupy movement shrewdly referred to as “the 99%”. The 99% means different things to different people, but to us, the 99% represents the US consumer. It represents the majority of Americans who are neither wealthy nor impoverished and whose spending power makes up approximately 71% of the US economy. It is the purchasing power of this massive, amorphous group that drives the US economy forward. The problem, however, is that four years into a so-called recovery, this group is still being financially squeezed from every possible angle, making it very difficult for them to maintain their standard of living, let alone increase their levels of consumption.

• U.S. Super Storm’s Record Flooding Lands Blackout Blow (Bloomberg)
• Sandy Carves a Path of Destruction Across the U.S. East Coast (WSJ)
• Losses May Exceed Those of 2011 Storm (WSJ)
• Hurricane Sandy Threatens $20 Billion in Economic Damage (Bloomberg)
• Huge fire in Sandy's wake destroys dozens of NYC homes (Reuters)
• Possible levee break in New Jersey floods three towns (Reuters)
• Apple Mobile Software Head Forstall Refused to Sign Apology (WSJ)
• Stagflation in Spain (Bloomberg)
• German Oct. Unemployment Rose Twice as Much as Forecast (Bloomberg)
• A declining Japan loses its once-hopeful champions (WaPo)
• Unable to copy it, China tries building own jet engine (Reuters)
• Obama Signs Disaster Declarations for NY, NJ (YNN)

Follow this simple chronology of events...

Well, here you go! Apple missed a 3rd time in a year and a half, and after going against the crowd to call all three misses I now release my subscription valuation bands from the last two years for the fanbois, haters and honestly interested alike...

A week after the second most populous hedge fund hotel, Google, blew up, it is now time for good ole' Hotel Caaplefornia itself. The HF holders table below is presented without comment (as we have said all there is to say many times). Remember: orderly, cool, calm, collected single file procession through the tight exit: and nobody panic!

No surprise Europe remains highly vulnerable to sudden sentiment shifts. How to stablise it? The usual smoke & mirrors are conveying what might or might not be good news on Greece [since denied]. The crisis in Europe may be contained, but it clearly isn't solved. "Europe is like an overweight dinosaur on a crash diet, that's got really really bad toothache with not a dentist in sight." But But But.. yesterday's ructions weren't just about the political shenanigans that pass for markets these days. There are deep undercurrents roiling these placid markets. All of which leads us to wondering what happens next? If this continues what hope for next year? Low low yields and global economic depression? Boy scout time...

What is wrong with this market? The S&P 500, instead of grinding higher in the aftermath of QE3 actually hit its peak for the year the day after the policy announcement. Go figure. Maybe economic reality finally caught up with Mr. Market (there is a very fine line between "'resiliency" and "denial" — and keep in mind that the S&P 500 is still up 14% in a year in which profits are now contracting, not just slowing down)... On average, six weeks hence, the S&P 500 was up more than 9% after the policy announcement. It was all so novel! Tech on average was up over 11%, industrials were up 12%... ditto for Consumer Discretionary and Materials. The cyclicals flew off the shelves. But this time around. either Mr. Market is jaded or the laws of diminishing returns are setting in. Six weeks after the unveiling of QE3, the market is down 2%. This hasn't happened before. Every economic-sensitive sector is in the red, and even Financials — the one sector that should benefit from all the "sucking at the Fed teat" — have made no money for anybody!

Usually the Troika is held responsible for all things evil in Europe, but as Die Welt notes, the latest demand that all senior officials at the Ministry of Finance (including all current Greek tax inspectors) be fired by Friday (over corruption and incompetence concerns) has been greeted more positively by many. "The Troika is the only hope to purge this country of the gangs that plunder it - the ONLY hope!" is how one Skai TV commentator summed up the move, adding that "it would be nice if we could read one day that all presiding judges are dismissed." The plan to "collect record amounts of money in record time" involves the interviewing of 2235 new tax investigators (with no written exam!) who will be judged on how much money they bring in (with minimum quotas) and maximum tenure of one year before re-applying. The new plan is likened to 'medieval tax collectors' and the tax-collectors union, unsurprisingly upset at this new plan, added that the Troika never had to face "a destitute pensioner who cannot pay his tax bill." With rumors of government resignation and re-election, the external pressure and internal strife are coming to a head rapidly.