Overnight Sentiment - All News Is Good News

Tyler Durden's picture

S&P threatening to downgrade India... UK double dipping... Germany having a failed auction. It is all irrelevant, for the great fruit has spoken and people are buying iGadgets at record levels, which can only mean that once the great credit spree ends, Apple will likely be forced to use its $110 billion cash hoard to start an in house "Acceptance Corporation" vendor financing purchases of its products directly. And while the AAPL earnings beat has become a contrarian bet, now that even Gartman has said he is turning bullish on stocks, here is a summary of what happened and what will happen. In a nutshell, just like Apple was the only thing that mattered yesterday, today it is only the Fed and the subsequent press conference that matter, with the market likely to only take away whatever it wants to take away.

Full summary with BofA:

In focus

Market participants have largely resigned themselves to the Fed maintaining a holding pattern for policy at the April FOMC meeting. However, with Fed officials updating their economic and policy projections, there is a risk that the markets could misread some of the revisions as more hawkish than intended. In the post-meeting press conference, Chairman Ben Bernanke is likely to clarify that the Fed remains committed to its late-2014 forward guidance, while not ruling out other easing options if conditions deteriorate. Of interest will be any discussion of further refinements to the Fed's communication and transparency initiatives, which we expect to occur at some point this year. In our full FOMC preview (see page 2), we outline what information should be revealed as various post-FOMC announcements unfold during the afternoon.

Market action

Overnight, the regional MSCI Asia Pacific Index finished higher, gaining 0.3%, after corporate profits beat estimates. Technology companies in the region posted the biggest advance after Apple reported robust demand for iPhones in China and strong sales of the new iPad.

While the overall regional index advanced, the individual markets we cover actually finished mixed. The best performers enjoyed solid rallies, offsetting the small declines in the market's that finished lower. Japan's Nikkei surged 1.0% and the Shanghai composite managed to finished 0.8% higher. On the flip side, the Hang Seng lost 0.2% and the Korean Kospi finished 0.1% lower.

In Europe, equities are enjoying a solid rally, up 0.9% in the aggregate. If European stocks manage to hold on to their gains, this will mark the second consecutive advance for European markets. The rally is driven by investor optimism after Apple's strong results yesterday and Swedbank AB reporting better-than-expected earnings. At home, futures are pointing to a strong opening, with the S&P 500 set to open up 0.7%.

In bondland, Treasuries are basically flat across the curve, except for the long bond, which is up 1bp, to 3.13%. In Europe, German bunds are also selling off on the risk-on trade, while the UK gilt is rallying along with most of the rest of the region's sovereigns. Spain's 10-year note is 8bp lower, at 5.74%.

The dollar is weakening against a basket of other major currencies. The DXY index is 0.1% lower. Commodities are mixed, with WTI crude oil up 50 cents, to $104.05, and gold down $3.47 an ounce, to $1,638.81.

Overseas data wrap-up

The UK slips back into recession after economic activity contracted 0.2% in the first quarter of the year. That follows a 0.3% decline in the fourth quarter, and today's figure was weaker than consensus estimates for 0.1% rise in output. An economy is, in general, considered in recession after two straight quarters of negative growth, so the UK is technically back in recession. To read more see: UK Macro Watch, 25 April 2012.

Today's events

At 8:30 am, the March Durable Goods Orders report is released. Durable goods orders are expected to drop 1.5% MoM in March after a 2.4% increase in February. The decline stems primarily in nondefense aircraft, as Boeing orders softened over the month. Stripping out this, along with the rest of transportation, we expect durable goods orders to rise 0.7%, a slight slowdown after a 1.8% increase in February. Our forecast assumes core capital goods orders rise 2.5%, consistent with 5% capital spending growth in 1Q. Later in the day, the FOMC will release its rates decision, at 12:30 pm, and then, at 2:15 pm, Ben Bernanke will hold a press conference. For a full preview, see below.

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maxmad's picture

Dollar officially collapses June 28th!

Rubicon's picture

Will it interupt the second week of Wimbledon?

maxmad's picture

NOPE in fact, you know the dollar collapses when the MSM starts really hyping their programs.  "Dont pay attention to the dollar, focus on "Dancing with the stars"

trebuchet's picture

Euro goes first so dollar collapse in relative terms wont happen


Draghi latest comments: setting market up for "steady as she goes"  then - pop, interest to the downside, lets get the euro lower....

EscapeKey's picture

The Federal Reserve maintains a strong dollar policy.

or should that be

The Federal Reserve strongly maintains a dollar policy.

gatorengineer's picture

I think strong dollar policy means that the dollar is printed on strong paper....e.g.  when the obamavilles start popping up you could paper the exterior walls with bills.......

WhyDoesItHurtWhen iPee's picture

Federal Reserve maintains a strong wall covering policy.

ihedgemyhedges's picture

I went long of Apple at $560 yesterday.  Just now able to get that word out

Sincerely, D. Gartman

PS I am still long of bullshit, just not the mad cow kind.

gatorengineer's picture

congrats on a good trade, not sure how long I would hold it.  I think people will figure out that they just pulled sales forward.......  That discrepency with ATTs figures is just too big to ignore.

SimpleandConfused's picture

So, Mr. Gartman, what would you be short of?

Ethics? Common Sense? Hair?

Good job hedges.  You nailed him spot on with the "I'm long of (whatever)" well after a significant rise.  The only thing you forgot was his signature "looking at a chart going from lower left to upper right" bullshit. 

Watch for his I'm long of gold, short of gold, long of gold, short of gold..... coming soon to a CNBS near you.

LongSoupLine's picture

Fuck this "market".  Piece of fucking corrupted shit!


Wait till the great US Govt seizes AAPL's $110B in interest of national security...

francis_sawyer's picture

To what? Pay for 5 minutes of functioning?

Sam Clemons's picture

Why seize and cause anger when you can print and most don't notice?

LongSoupLine's picture

Sam, that's a very logical statement...which leads me back to said subject...the govt. (logic + govt = error, please recompute)

q99x2's picture

Apple's old school accounting principles passed away with Jobs.

It is like new management was under scrutiny and they said to themselves, "How can we make the company perform better?" ACCOUNTING!

China channel stuffing iDgetts.

JohnKozac's picture

AAPL can recycle 'Appledollars' instead of the usual 'petrodollars.'

stocktivity's picture

As I've been saying right along ...It's all Bullshit!

crawl's picture

Risk on, rally on. Doubtful the fed would release or say anything that could be construed as negative today.

Rally at the open, sideways till 12:30, rally into close is my expectation.

Reality is being suspended again.

gatorengineer's picture

Fed cant say anything negative if it wanted to.... Economy is stronger -- Rally on Garth, Economy is stalling QE3 Rally on Garth......  Their ZIRP policy is sacrosanct.....

Rot-10's picture

The Fed is preparing for November elections.  They will paint a picture of a weak economy and offer potential support via QE# if needed.  That will setup Obama to campaign on Democratic kind-heartedness versus Republicans favoring the rich and stealing from the poor.  It's all optics and has nothing to do with the real economy.

WonderDawg's picture

Do you really think the Fed gives a shit who gets elected? They own both parties, so it doesn't matter. It'll be business as usual, regardless of whether the red team or the blue team wins. Elections are just the illusion of choice.

disabledvet's picture

I agree the Fed announcing "all excess reserves are to be released in 3...2...1" would be a market moving event...

francis_sawyer's picture

Bullshit = the AD link on the right of my screen...

ZAGG-FOLIO ~ It's a 'keyboard' device to hook onto your iPad to make it stand on its side and perform like a regular laptop...

So let's think about it... Apple comes out with the iPAD (a touchscreen device which makes it smaller and negates the need for a keyboard)... So now, you buy an extra little gizmo to basically turn it back in to a laptop and dispense with having to type on a touchscreen (a 'smaller' & more annoying laptop)... WTFF?

BRILLIANT! (Where's my Guinness)?

Akira.'s picture

Classic. A player named "World Peace" suspended for throwing a hard elbow.

Vince Clortho's picture

Saw a documentary on the Titanic last night.  

"Full Speed Ahead" policy was working nicely until she hit the dam iceberg.

Old Poor Richard's picture

Apple Mortgage and Loan, Inc.  iPayday loan to buy more iJunk?  No problem!