Apple

UPDATE: As Apple Crosses $600, Dan Loeb Rejoices

Two weeks ago we first reported that Dan Loeb was the latest entrant into the Apple hedge fund hotel, which at last estimation has now risen to nearly 250 hedge fund holders in the name, having made the company a top 5 position in his hedge fund Third Point at some point during the month of February. According to his latest monthly update, Apple is now the second best performer for Third Point, having been held at most 45 days. And considering that the vortex of Hotel Applefornia is now actively snaring every single "asset manager" starving to outperform the market, it is very likely that today's latest gap up in the name, is about to take out $600 as the company proceeds to add many more billions in market cap as somehow the launch of a pipeline of products that was known a year ago, is priced in over and over and over each and every day.

The U.S. Is Letting China Steal Its Nuclear Innovations … Just Like Xerox Let Apple and Microsoft Steal Its Valuable Breakthroughs

Andy Borowitz provides the one retort to Greg Smith that only free taxpayer money and trillions in bailouts can buy. In other news, we fully expect Mr. Smith to enact a voluntary refund of the 12 years worth of compensation and bonuses earned while working at Goldman any minute now. Or maybe epiphanies on Goldman "culture" following more than a decade of employment comes without compensation clawbacks?

A company whose value is dependent on the continued success of two key products, now has a larger market capitalization (at $542 billion), than the entire US retail sector (as defined by the S&P 500). Little to add here.

As Apple gaps open by another 1% at $558, it stands less than $14bn (in market cap) away from being larger than the entire US retail sector. The good news: it still has a ways to go before eclipsing the retail and the semi sectors combined.

As Portugal gets jealous of Greece's ability to just not pay bills, insurance portfolios will suffer greatly as the FIRE sector burns! The first domino has fallen, yet the MSM is taking this as a non-event!

One may be surprised to learn that in the past 6 months NASDApple is not the best performing "asset class." Sure, it has generated a respectable 43% return since last September when the Greek 1 Year bond crossed a 100% yield for the first time ever (or a cash price of 54). That was also the time when many were saying to buy Greek bonds as there was no chance the yield could tumble much further (probably the same ones who said to buy AAPL). As it turns out, now that the saga of Greece is officially over, and its existing debt is being "retired" at a final price of about 19 cents of par, here is the final tally: shorting Greek bonds since September 2011 has generated 63%, while being long Apple returned 43%. And that's with virtually every hedge fund and their mother entering the Apple hedge fund hotel. So yes - sometimes going against the conventional groupthink does generate the best results. Now if only one could short the "new" Greek bonds at par, the return would be 80% in a millisecond as the bonds will break for trading under 20 cents.

• Investors help Athens over bailout hurdle (FT)
• Greece Moves Closer to Swap (WSJ)
• U.S. Warns Apple, Publishers (WSJ)
• China offers other Brics renminbi loans (FT)
• Court Challenges EU on Bank Downsizings (WSJ)
• QE blamed for surge in pensions shortfall (FT)
• Tang: Open to adjusting dollar trading band (WSJ)
• U.S. Report to Warn on Cyberattack Threat From China (WSJ)

Apple share price dropped modestly (around $4) as Tim Cook took the stage but has levitated back up as he mentions...

*APPLE SAYS SIRI WILL BE COMING TO JAPAN
*APPLE NEW APPLE TV HAS NEW USER INTERFACE, GOES ON SALE MARCH 16 FOR $99, NEW APPLE TV HAS 1080P SUPPORT
*APPLE HAS SOLD MORE THAN 55 MILLION IPADS SINCE ITS DEBUT
*APPLE NEW IPAD HAS SIMILAR BODY AS PREVIOUS MODELS, 9.7 INCH SCREEN, AND RETINA DISPLAY, HAS NEW A5X CHIP, FOR QUAD-CORE GRAPHICS

With all of the Goldman and sell side hype, as well as many other sources focusing on nearly meaningless metrics failing to capture high growth cos. value, I decided to update my report to reveal usable knowledge and info.

All you need to read.

As Apple goes sour (-5% from yesterday's highs) and financials flounder (MS -7% this week), the Dow is suffering its largest single-day loss in 3 months (which is relatively stunning given that it is -150pts or only just over 1% on the day). Under the surface though weakness is considerable across asset classes and sectors (as Materials, Financials, and Energy are the laggards).

Spain is next...

While not quite as impressive as the 02/15 sell-off in terms of volume or size, today's weakness in Apple's stock price was the 3rd largest drop in 3 months as we note implied vol pushed up once again mimicking the pattern from mid-Feb as the stock lost over $21.5 from high to low in a very flash-crash style around 1110ET. As both realized volatility and implied volatility increase, perhaps some of the 200+ hedge funds will allocate some risk budget away from the Apple or change mandates so that their bogeys are AAPL. Apple's weakness weighed on most other high-beta assets with High yield credit lower and only Utilities and Staples managing a positive close among S&P sectors (financials were mixed in stocks but CDS were wider). Somewhat interestingly, Treasuries sold off all day and modestly steepened and while FX markets drifted very modestly higher for the USD after the European close (despite some overnight JPY strength - risk-off), ES (the e-mini S&P futures contract) synced back with an underperforming CONTEXT (broad risk asset proxy) into the close as WTI regained $107 (along with strength in commodities) and AUDJPY improvement.

In what was likely the most ominous news from last week (and a near certain top for the stock) we reported that now none other than the Israel Central Bank was going long shares of AAPL. While the implications for stocks in general are extensive and were previously discussed, it is worth noting that the Israel Monetary Authority now has a big MTM loss on its Apple investment (although as Greece and the ECB have taught us, a central bank can book a "profit" even when a given security is trading at an all time low, and completely irrelevant of what one's cost basis is). And where Israel is, it is quite certain that other central banks have boldly ventured as well. So how long until the Fed has to open an FX swap line with Tel Aviv to bailout Stanley Fischer in this latest of hare brained schemes to keep the Ponzi system going? And how long until it has to be extended to the nearly 250 hedge funds who are now also long the stock, with the universe of incremental buyers disappearing by the day? What is most stunning is that Apple dipped a modest 3% intraday... Which just happened to be the biggest decline since November 2010.