Credit Suisse

JPM Takes The Axe To iPhone Sales Estimates, Says Consensus Is 10% Too High

"1Q16 bears potential downside risks, while 2Q16 Street estimates seem unrealistic: TSMC saw 10% order cuts in November, which we believe is from Apple business with the impact during the end of 1Q16 or early 2Q. We believe 45-50mn is a more reasonable target. We expect to see meaningful stock price corrections for Apple supply chain names in 1Q16 with lowered Street expectations and disappointing Apple sell-through numbers."

Pains For Trains From Automobiles

With global freight costs collapsing, as China trade dries up, status-quo-hugging talking heads have point to America's car sales and picture some islandic isolation that means investors in US equities are immune. Well that little dream just burst. Rail freight carloads tumbled 5.1% in October, dramatically accelerating the 1.6% drop in Q3 as a strong dollar crimps exports, retailers whittle down excess inventory and energy investment stalls. Until recebtly, the one bright spot in rail traffic was auto shipments... but even that just plunged and is now at the seasonally weakest since 2008.

Frontrunning: December 8

  • Anti-Trump Effort Launches Super PAC (WSJ)
  • Muslims decry Trump's proposal to keep them out of US (AP)
  • Debate Heats Up Over No-Fly List, Gun Sales (WSJ)
  • OPEC Takes Down Oil Majors as Lower-for-Even-Longer Kicks In (BBG)
  • Chinese Companies Are Trapped in IPO Logjam (WSJ)
  • Republican Ted Cruz vaults into first place in new Iowa poll (Reuters)

Beware The "Massive Stop Loss" - JPM's Head Quant Warns This Unexpected Downside Catalyst Looms Next Week

"There are $1.1 trillion of S&P 500 options expiring on Friday morning. $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market. This important event falls at a peculiar time—less than 48 hours before the largest option expiry in many years. "

Amid FX Reserve Liquidation, These Are The Countries JP Morgan Says Are Most Vulnerable

While EM sovereigns as a group may be in better shape now in terms of “original sin” (i.e borrowing heavily in foreign currencies) than they were during say, the Asian Currency Crisis, the confluence of factors outlined above means no one is truly “safe” in the current environment as moving from liquidation back to accumulation will entail a sharp reversal in commodity prices and a pickup in the pace of global growth and trade.

Apple "Faces Risk Of Inventory Correction": Three Channel Checks Confirm Deteriorating iPhone Sales

One month ago, Credit Suisse confirmed what we had reported in the previous several weeks, namely that according to channel checks, iPhone supply chain orders had weakened recently adding that "in our view, the continued weak supply chain news could weigh on Apple shares for the next few weeks/quarters." The market did not like the news and sold AAPL stock only to promptly BTFD as it always has in the past 7 years: after all any transitory weakness is merely an opportunity to buy, right? Only this time the weakness may not be transitory, because as of this morning we now have not one but three updated channel checks all pointing to a substantial slowdown in AAPL's flagship product and core revenue generator, the iPhone.

What Polarized Politics Teaches Us About Stock Market Uncertainty

It’s important to respect the power of econometric models. It’s important to work with econometric models. But we don’t care who you are... whether you’re the leader of the world’s largest central bank or you’re the CIO of an enormous pension fund or you’re the world’s most successful financial advisor... it’s a terrible mistake to trust econometric models. But we all do, because we’ve been convinced by modeling’s henchman, The Central Tendency.

The "Real Stuff" Economy Is Falling Apart

Can an economy thrive if it doesn’t make or move physical things? Intuitively the answer is no, because most of the services either maintain the status quo (like healthcare and restaurants) or (like houses) consume rather than build capital. The US, in short, is engaged in an experiment to see how long an economy can function with services growing and manufacturing contracting. As with so many of today’s monetary and fiscal experiments, no one knows when definitive results will come in. But the data so far aren’t encouraging.

Correlation May Not Equal Causation, But This Divergence Looks Like Bad News

For about three weeks, beginning on August 11, just about all anyone wanted to talk about were EM FX reserves, and for good reason. But because the market has a short memory, the global EM FX reserve liquidation story has been largely forgotten even as commodity prices remain in the doldrums and even as a laundry list of idiosyncratic factors are still weighing on the world’s most important emerging economies from Brasilia to Ankara to Beijing to Kuala Lumpur.