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AAPL-on, But Will Ben Drink The Calvados?

Tyler Durden's picture





 

From Peter Tchir of TF Market Advisors

AAPL-on, But Will Ben Drink The Calvados?

As far as I can tell AAPL is driving everything.  It’s no longer risk-on/risk-off, for the entire week, it has been AAPL-on/AAPL-off.  As a result of AAPL earnings, stocks around the globe are reacting positively.  Spanish 10 year bonds dipped below 5.70% at one time today, and CDS was 25 bps tighter, all the way to 465.  Both are fading, and as far as I can tell, the move was a giant short squeeze as it outperformed Italy and it is hard to see any news out of Spain that would justify that sort of news.

I can’t really remember many days where a single company’s earnings could move the entire global market in all risk assets (though there may have been a day when GS earnings had a similar impact).  So it is hard to figure out how real this is, or what it means.  Clearly good earnings, clearly a big part of the index, but this seems like a very large move.  It looked like many pros were selling AAPL vol into the earnings.  Lots of comments on twitter in particular, about how the break-evens on strangles covered a 7% move.  Well right now it looks like it’s a 10% move.  Whenever there is so much talk about vol and such a big move overnight in a thin market, it is hard to tell how real that is.  I won’t touch AAPL up here, but I think once some of the vol sellers have covered we will see the stock drop back decently below 600.  That would drag the indices, especially NASDAQ, down with it.

Durable goods at 8:30, seems to be about the hardest number to predict.  It is all over the place, and to the extent it has any correlation with housing data, then it is even harder than usual, as housing data has jumped all over the place with some major revisions.  Yesterday’s housing numbers were a case in point.  The markets rallied on the home sales data, but it was hard to tell whether the rally was because of 7.1% decline, making QE more likely, or because of 40k positive revision to the prior month, making the building sector a potential real driver of growth?  Case-Shiller data, although lagging, wasn’t nearly as strong, I personally I trust their methodology more, so I remain dubious that housing is having any real bounce, and that the good numbers remain heavily influenced by great weather.

So, then all eyes will turn to the Fed and the Fed statement.  I think we get a slightly more dovish statement.  More language that the economy shows signs of weakening and that the Fed is vigilantly watching the data to determine if additional actions are necessary.  No change in low rates for extended period, though maybe their they soften the language further hinting that it could go on longer than 2014 if moderate economic growth continues.  I don’t think they will say anything new on inflation, though they might try to hint that it is moderating in their eyes, again, paving way for more QE.  So I suspect a dovish statement, but no QE.  I think the market will initially like that, but we will see the enthusiasm wane as that seem very well priced in, and without QE, and once AAPL stabilizes, we can get back to focusing that on the whole the data here has been weak, and that the situation in Europe is deteriorating rapidly.

 


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Wed, 04/25/2012 - 08:19 | Link to Comment CPL
CPL's picture

weeee....Oil prices rising!

Wed, 04/25/2012 - 08:26 | Link to Comment Colombian Gringo
Colombian Gringo's picture

Quoting Tchir "I think we get a slightly more dovish statement."

 

Interesting, but meaningless. In the big picture to paraphase Keynes:

 

"In the long run we are all fucked"

Wed, 04/25/2012 - 08:39 | Link to Comment DeadFred
DeadFred's picture

I think it's fascinating that we all (including me) sit around trying to figure out what lie the Fed will come out with...

Wed, 04/25/2012 - 08:42 | Link to Comment resurger
resurger's picture

bring the topic that Iran will block the strait to pump the market up

Wed, 04/25/2012 - 11:22 | Link to Comment poor fella
poor fella's picture

Because AAPL has become the perfect proxy for our endless-credit fiatzi global economic system?

Disclosures: A dislike of their proprietary, closed-source, planned obsolescent, price-gauging, overhyped, big-brother complying asses.

I'd bet ~80% of iThing buyers have credit card debt that should have been paid down before purchasing that next soon-to-be-landfilled gadget...

Wed, 04/25/2012 - 08:20 | Link to Comment LongSoupLine
LongSoupLine's picture

 

 

"Eat your iPads...bitchez!!" - Dudley

Wed, 04/25/2012 - 08:22 | Link to Comment hotkarlandthecl...
hotkarlandtheclevelandsteamers's picture

Will Reggie drink it that is the question BAAAHHAAAAA!!!  What a clown that guy is I demand an apology to the board.

Wed, 04/25/2012 - 08:25 | Link to Comment bnbdnb
bnbdnb's picture

The fed is stuck. Thank you Ron Paul.

Wed, 04/25/2012 - 08:25 | Link to Comment SheepDog-One
SheepDog-One's picture

'Paving the way for more QE'... what a joke, and I call BS on the whole idea that Ben will craftily kick the QE can down a carefully paved road, he's got nothin. 

Wed, 04/25/2012 - 08:28 | Link to Comment DavidC
DavidC's picture

Ben and the others will jawbone this for all they're worth, they will NOT QE at this level while Apple holds the market up, the mention of QE keeps it up and while the Facebook IPO is due in May.

The Fed will only genuinely QE when the market has corrected by 10-15%. Could I be wrong? Of course, but why waste one of the one or two remining bullets when there is no need to?

DavidC

Wed, 04/25/2012 - 08:39 | Link to Comment fonzannoon
fonzannoon's picture

David I generally agree but here is the fly in the ointment. Ben is screwed if things get better on their own because who the hell will want treasuries? Even if Europe is imploding no one will want 1.9% for ten years. His only chance is if the markets correct and oil drops pretty substantially and that does not seem likely. If that does happen then he throws another trillion in and maybe people start waking up to that fact that we are really screwed.

Wed, 04/25/2012 - 08:43 | Link to Comment SheepDog-One
SheepDog-One's picture

Right, and when will they allow the markets to drop even .5%? Never, apparently, as any little market red is swarmed on and recovered immediately on next mornings futures. I think theyre totaly stuck here and flying on 1 wing and a prayer.

Wed, 04/25/2012 - 08:59 | Link to Comment fonzannoon
fonzannoon's picture

Yeah I completely agree. The only question is will rates rise and will they flinch in the face of inflation and rising markets and do more qe because someone has to keep rates down. If that happens then look out.

Wed, 04/25/2012 - 08:36 | Link to Comment spastic_colon
spastic_colon's picture

equities in europe up 1+% so equities in US will be up 1+% today, why all the analysis?  AAPL, the Fed, whatever, just look at Europe and the dollar

If anything the AAPL/VZ/T/Fed/CNBC/MSM etc collusion should be evident and investigated

Wed, 04/25/2012 - 08:35 | Link to Comment DormRoom
DormRoom's picture

Durable Good was a huge miss

 

Wed, 04/25/2012 - 08:49 | Link to Comment SheepDog-One
SheepDog-One's picture

AH yes....more 'all news is good news' I'm sure, because its all just fake now anyway.

Who needs durable goods when you've got Siri?

Wed, 04/25/2012 - 08:36 | Link to Comment spastic_colon
spastic_colon's picture

just another data point for more QE dovishness

Wed, 04/25/2012 - 08:42 | Link to Comment crawl
crawl's picture

Yup, durable goods order worse than expected. Today is no bad news day. All news is good news. The bots are stuck on buy, buy, buy.

Wed, 04/25/2012 - 08:43 | Link to Comment SheepDog-One
SheepDog-One's picture

Just more evidence of why retail is long gone and will never return to the clown casino U.S. equities.

Wed, 04/25/2012 - 08:36 | Link to Comment GMadScientist
GMadScientist's picture

Welcome to the Momo feed lot...please keep your hands flat as you hand them the corn.

 

Wed, 04/25/2012 - 08:37 | Link to Comment SheepDog-One
SheepDog-One's picture

FEED ME Seymore!

Wed, 04/25/2012 - 08:40 | Link to Comment SheepDog-One
SheepDog-One's picture

'Apple driving everything'....yea driving the short school bus. Hockey helmets strapped on tight kids? OK off we goooooo!

Wed, 04/25/2012 - 08:42 | Link to Comment GMadScientist
GMadScientist's picture

Timmmayyyy!

Wed, 04/25/2012 - 08:44 | Link to Comment orangegeek
orangegeek's picture

The world is saved.  The recovery is back thanks to gadgets and itunes.

Wed, 04/25/2012 - 08:50 | Link to Comment Mercury
Mercury's picture

Happy to have SLD AAPL pre-market @ 615.62

Wed, 04/25/2012 - 08:54 | Link to Comment bshirley1968
bshirley1968's picture

There will be no more QE until the banks need some more money and right now they have plenty.  This QE "watch" has become a sickening soap that people need to get over.  It is simply an open manipulation scheme to keep people in high hopes and low despair with the Fed in the driver seat as the media spouts more meaningless blather about things they are clueless of while dumbasses who couldn't even spell QE sit glued to the screen.

Move on people.  It will take another quarter or two, but just like England, we will be back in recession before long and then we will get some more fireworks.  Under the table QE happens everyday as the fed, via the banks, buys 60% of the government debt to keep that joke afloat.  The banks are also using QE money to pump stocks here and in Europe.  Nothing in the economy to keep things at this level.

Wed, 04/25/2012 - 09:00 | Link to Comment bshirley1968
bshirley1968's picture

Just in case I wasn't clear.  QE-Ben doesn't give a rat's ass about: unemployment, durable goods, CPI, Manufacturing numbers, PPI, or any of that other bullshit.  That's just headlines to give people something to talk about.  QE-Ben is concerned about bank solvency/liquidity and keeping the perception to the dumb masses that all is well.  He will spend his ass off on those two things so he can maintain his job and control.  All the rest of the reasoning for printing money is meaningless.

Wed, 04/25/2012 - 10:36 | Link to Comment 1eyedman
1eyedman's picture

..but those poor numbers allow him to step up at any moment the markets show weakness....this is a perfect set up for him.

keeps the option open but doesnt do anything, all the while true inflation is 7%+(but not in official stats); retirees/income seekrs are pushed to the edge to take on risk to get a measely 3% which doesnt cover col increases. 

i'm no constitutional scholar, but isnt there something in the constitution about devaluing the currency?  is an act of omission with a known result the same as a commisioned act?

Wed, 04/25/2012 - 09:33 | Link to Comment TrustWho
TrustWho's picture

Apple earnings were phenomenal. The chinese must be great at responding to increasing production schedules EVERY day. How does Apple/Chinese manage the production/shipment/distribution logistics? This will be a Harvard Business school case study soon.

Another subject, Apple is the ideal target for the 99%ers. A dollar of profit from Apple has an entirely different impact on US economy than a dolllar from Catepillar. Production in China and their profits are predominately off US shores. Just think the status of US in the world if Henry Ford had taken his mass production process to China in early 1900s.

In the end, only the Asians could handle the growth rate in production as Steve Jobs told POTUS. 

Wed, 04/25/2012 - 09:48 | Link to Comment cnhedge
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An update on TARGET2

http://www.cnhedge.com/thread-4003-1-1.html

http://www.jinrongbaike.com/

Wed, 04/25/2012 - 09:50 | Link to Comment Downtoolong
Downtoolong's picture

With a 10% move down and back in one week, AAPL is clearly now a victim of the Wall Street casino. As a true long term investor, I wouldn't touch it with a ten  foot pole. Sorry AAPL, but I think even you know who to blame.

 

Wed, 04/25/2012 - 10:31 | Link to Comment 1eyedman
1eyedman's picture

able to lift global equity markets with a single earnings release, its super-AAPL!

tough one for Ben....markets are up, but all econ indicators are fading.  or maybe this is his dream come true.  markets up, and reason to ease further, pushing markets up again...getting away from the 'cheap historical average p/e of 14.

funny thing is though, p/e of 14 to an authentic cheap of 10 is almost 40% decline.  

nothing to see here, move along.  leave your luggage here and it will be brought to you....

 

Wed, 04/25/2012 - 10:45 | Link to Comment Vince Clortho
Vince Clortho's picture

Yes, this is a great day for America -- the day that we finally learned that you don't need to produce goods to have an enormously sucessful looking stock "market".

The Anti-gravity mechanism* discovered by Benny Bernank and the CB Jets means the DJIA, the S&P and the Russell 2000 will forever go higher.

The World is saved.

 

*What could this be?

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