Apple

“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey

Update: CISA is now the law: OBAMA SIGNS SPENDING, TAX BILL THAT REPEALS OIL EXPORT BAN

"They’re kind of pulling a Patriot Act." When Obama signs the $1.1 trillion Spending Bill in a few hours, as he will, it will be official: the second Patriot Act will become the law, and with it what little online privacy US citizens may have had, will be gone.

Yellen and her cohort have no clue, however, that all of their massive money printing never really left the canyons of Wall Street, but instead inflated the mother of all financial bubbles. So they are fixing to blow-up the joint for the third time this century. That was plain as day when our Keynesian school marm insisted that the Third Avenue credit fund failure this past week was a one-off event - a lone rotten apple in the barrel. Now that is the ultimate in cluelessness.

• Oil heads for third straight weekly loss as supply weighs (Reuters)
• BOJ's $2.5 Billion ETF Boost Seen Having Little Impact on Stocks (BBG)
• Japan core CPI seen flat in November, household spending down (Reuters)
• Dollar gets altitude sickness as BOJ disappoints (Reuters)
• Fed Hikes, but Some Rates Veer Lower (WSJ)
• White House calls for 'common sense steps' to help Puerto Rico (Reuters)

• Global stocks rise but oil, Fed keep investors nervous (Reuters)
• Janet Yellen: An orthodox economist for unorthodox times (Reuters)
• House Democrats Said to Be Open to Lifting Oil Export Ban (BBG)
• Don't Count on an Oil Rally If U.S. Crude Export Ban Is Lifted (BBG)
• Germany welcomes 34-state Islamic military alliance against terrorism (Reuters)
• U.S. soldier Bergdahl may face life sentence in court-martial over desertion (Reuters)

The start of the Fed's most eagerly awaited two-day policy meeting in years has finally arrived with the market expecting Yellen to announce the first 25 bps rate hike in 9 years tomorrow with nearly 80% probability, and so far US equity futures are enjoying a last minute relief rally, while emerging market stocks rose for the first day in ten after the longest losing run since June. Europe's Stoxx 600 Index has also rebounded from a five-day losing streak, the worst in over four months.

• Oil prices drop towards 11-year lows on worsening glut (Reuters)
• Third Avenue Seen by Top Investors as Fueling More Carnage (BBG)
• Lucidus Has Liquidated $900 Million Credit Funds, Plans to Shut (BBG)
• Investor nerves tested with yuan, oil, Fed in play (Reuters)
• Junk Bonds Stagger as Funds Flee (WSJ)
• Seattle lawmakers set to vote on allowing Uber, other drivers to unionize (Reuters)

"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."

The U.S. establishment has been aggressively pushing against the American public’s right to private communications, i.e. encryption, ever since the terror attacks in Paris. This push continues unabated, with the latest shots fired earlier this week by FBI chief James Comey at a Senate Judiciary Committee hearing. “I don’t want to tell them how to do their business... but there are costs to being an American business."

• Win or Lose, Trump Has Already Left His Mark on Republican Primary (BBG)
• S&P 500 Futures Rise With Miners; Oil Erases Gains, Euro Drops (BBG)
• U.S. top court divided over affirmative action in college admissions (Reuters)
• San Bernardino Shooter Said to Have Planned an Attack in 2012 (WSJ)
• Gun buyer and gunman linked through marriage, previous plot (AP)

After yesterday's rollercoaster session in both the S&P and in oil, where initially stocks soared alongside oil, only to promptly tumble as stops were taken out and as the refiners' inventory strategy was exposed after the DOE's latest weekly numbers were released, it has been a quieter session so far, though maybe not for China where stocks jumped at the open only to fizzle and close at the lows in what appears to be ever less intervention by the market manipulating "National Team."

"Invest for the long-term," "buy-and-hold," "stay diversified," are the mantra of every asset-gathering commission-taking 'manager' out there... However, as JPMorgan notes, empirically that is a loser's bet. In fact, investors owning just the top 10 performers of the S&P 500 has never suffered a single rolling 12 month period loss (lowest was April 2009 +0.24%).

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.

"It is our humble belief that the consensus at the Fed does not fully understand the magnitude of the problems in corporate credit markets and the unintended consequences of their policy actions."

"... As the tide of leverage goes out, the full extent of irresponsible lending becomes apparent. The previously virtuous cycle between risk spreads and fundamentals goes into reverse, with lower prices, defaults, and downgrades forcing leveraged investors to sell, leading to even lower prices."