- Lesson From Buffett: Doubt Yourself (WSJ)
- Gold Bulls Split With Buffett as Traders Say Sell (BBG)
- Apple Misses IPhone Customers as Global Carriers Balk (BBG)
- Russia extends Cypriot loan by 2 years, cuts interest: troika document (Reuters)
- Tax Rewrite in Play in Capitol (WSJ)
- No early warning for U.S. on Israeli strikes in Syria (Reuters)
- Germany riveted at start of neo-Nazi murder trial (Reuters)
- JPMorgan Investors Urged to Split Chairman Role, Oust Directors (BBG)
- Leniency for Offshore Cheats (WSJ)
- Brussels steps up efforts over tax avoidance (FT)
- Ambulance chasing: Mesothelioma Doctors, Lawyers Join Hunt for Valuable Asbestos Cases (WSJ)
- Web Sales-Tax Bill Set to Face Bumps (WSJ)
- Colleges Cut Prices by Providing More Financial Aid (WSJ)
The clear message from the doctors this week is that they plan to keep administering the pills, in larger quantities if necessary, until the donkey turns into a butterfly. Citi's Matt King reminds us though that they failed to mention the associated risk that the donkey dies of the side effects first (apart, that is, from Dr Osborne, who urged the other doctors to ignore any such possibility entirely). For investors, King notes the immediate implication is that the central banks would like the party in any and all risk assets to carry on. This raises the spectre of a rally back to 2007 valuations, made all the more dizzying this time by the lack of any accompanying justification in the state of the economy. And yet we have played this game before, and it does not end well. Ideally at some point the central banks realize that the donkey is just a donkey, realize that their sole focus on their inflationary (& employment) mandate is blinding them to the risks of asset price inflation. To paraphrase a certain former CEO, when the central bank music is playing, investors are compelled to get up and join the party. Yet we know how that one ends...
The Web's Most Comprehensive Apple Analysis & A Roadmap To Apple's Resurgence That Management Is Ignoring!!!Submitted by Reggie Middleton on 05/05/2013 09:26 -0500
This one post contains comprehensive profit margin analysis apps, 15 minutes of prescient Apple video analysis, and basically better research than you'll find in a year's worth of Goldman research. Don't belive me? Post a compariosn for all to see.
Succinctly summarizing the positive and negative news, data, and market events of the week...
- U.S. Bulks Up to Combat Iran (WSJ)
- Taking sides in Syria is hard choice for Israel (Reuters)
- Gold Traders Most Bearish in Three Years After Drop (BBG)
- It's a Hard Job Predicting Payrolls Number (WSJ)
- EU economies to breach deficit limits as economic picture darkens (FT)
- IBM Says U.S. Justice Investigating Bribery Allegations (BBG)
- At Texas fertilizer plant, a history of theft, tampering (Reuters)
- SAC Sets Plan to Dock Pay in Cases of Wrongdoing (WSJ) - "in case of"?
- EU to propose duties on Chinese solar panels (Reuters)
- Billionaire Kaiser Exploiting Charity Loophole With Boats (BBG)
- SEC Zeroing In on 'Prime' Funds (WSJ)
- Apple Avoids $9.2 Billion in Taxes With Debt Deal (BBG)
- China April official services PMI at 54.5 vs 55.6 in March (Reuters)
New Apple Research Coming Up, But BoomBustBloggers Don't Need It For Apple's Performed Exactly As I've Forecast!Submitted by Reggie Middleton on 05/02/2013 14:24 -0500
999 basis point drop in earning power in less than a year! Whoa, let's trip over ourselves and lock in bond rates of 70bips over treasuries for 30 years. 1st we have margin compression, now we have common sense compression!
The mobile gold rush of Web 2.0 continues to attract thousands of techie fortune seekers to San Francisco. It's an old story, and a compelling one: there's gold in them thar hills, and I'm a-gonna git me some. The only thing that changes is the nature of the gold. The dot-com boom of the late 1990s created a new gold rush in San Francisco and Silicon Valley that fizzled in the early 2000s as the same old reality hit home: only the first few gold-seekers hit it big, and most of the late-comers trudge home empty-handed. Over 50,000 people left the San Francisco Bay Area as employment in dot-com technology imploded. The new gold rush is mobile--mobile apps, mobile services, mobile anything. All this overlooks the basic mobile gold rush model: poaching advert spending in a stagnant economy.
- The number of bond funds that own stocks has surged to its highest point in at least 18 years (WSJ)
- Clubby London Trading Scene Fostered Libor Rate-Fixing Scandal (WSJ)
- Cheap money bankrolls Wall Street's bet on housing (Reuters)
- Bank of Japan reveals concerns over easing policy (FT)
- iPads and low-end rivals propel higher tablet shipments (Reuters)
- China Cyberspies Outwit U.S. Stealing Military Secrets (BBG)
- Draghi Fuels Bets on Rate Cut With Risk of Limited Impact (BBG)
- China guides renminbi to fresh high against US dollar (FT)
- Japan is preparing to start up a massive nuclear-fuel reprocessing plant (WSJ)
- Apple’s Ive Seen Risking iOS 7 Delay on Software Overhaul (BBG)
- UBS faces calls for break-up at investor meeting (Reuters)
“… current policies come with a cost even as they act to magically float asset prices higher…, a bond and equity investor can choose to play with historically high risk to principal or quit the game and earn nothing." Bill Gross, PIMCO
Stanley Fischer, who cost his central bank a lot of money with his ill-timed bet to invest billions of the Bank of Israel's foreign currency reserves on names such as Apple last year, has demonstrated that Einstein's definition of insanity is alive and well when it comes to central-planners, has just decided to double down on stocks. Alas, this is not a joke. Bloomberg reports that "The Bank of Israel plans to almost double equity holdings by the end of the year after falling bond yields prompted the central bank to invest in European shares for the first time. The bank will increase its stock holdings to as much as 6 percent of foreign-exchange reserves, or about $4.5 billion, from 3 percent at the end of 2012, according to Yossi Saadon, a Bank of Israel spokesman. Investments in shares rose to about 4.5 percent of assets in the first four months of 2013 as the institution made a “small allocation” to European equities in addition to its U.S. funds, he said." Well, if the BOI's investment in AAPL was the beginning of the end for that company, one can start shorting Europe - an academic Keynesian just called the top.
- Physical demand up: U.S. Mint Sales of Gold Coins Jump to Highest in Three Years (BBG)
- Paper demand down: Gold ETP Holdings Cap Record Drop as $17.9 Billion Wiped Out (BBG)
- It's May 1 not April 1: Fed Seen Slowing Stimulus With QE Cut by End of This Year (BBG)
- Another great step for Abenomics: Sony leadership to forgo bonuses after broken promise on profits (FT)
- High-Speed Traders Exploit Loophole (WSJ)
- It's peanut Breaburn jelly time: How Google UK clouds its tax liabilities (Reuters)
- Frowny face day at the Mark Zandi household: Obama Said to Choose Watt to Lead Fannie Mae Regulator (BBG)
- Russia’s 20 Biggest Billionaires Keep Riches From Putin (BBG)
- China Affair With Cheap Diamonds Heats Mass Market (BBG)
- China's emotional ties to North Korea run deep in border city (Reuters)
- US companies must use cash piles for capex (FT) ... and yet they aren't. Tax anyone who doesn't spend for CapEx!
- Chinese Way of Doing Business: In Cash We Trust (NYT)
What seems to be known by very few, is what appears to be a very disturbing trend in the distribution of cash domestically vs cash abroad. As the chart below shows, when it comes to offshore-held cash, AAPL is indeed a cash cow. And with the bulk of the company's growth prospects, and ever more so, sales abroad, this makes intuitive sense. As noted above, AAPL reported $102 billion in cash abroad, an increase of $8 billion in the quarter. This is terrific news... if only the company could dividend, buyback or engage in any other shareholder friendly action with this cash. It can't. How about cash held domestically? Well, as can be seen in the red bar below, domestic cash has not only stagnated in the $30-40 billion area for two years, it actually declined in the most recent quarter. And yes, this is the cash that Apple has full recourse to, and which it uses to make dividend payments out of, and to fund stock buybacks. Congratulations to Apple for its record $17 billion bond offering today. Perhaps the real question, however, is when is the next one?
Yesterday we showed the good side of college by presenting those majors that result in the best starting salaries fresh out of college. Now the bad side.
Last time it issued bonds was in 1996, when it flirted with bankruptcy. But now a new era is dawning.
With today's cap-arb market frenzy focused on the latest development out of Cupertino, where Tim Cook moments ago announced that Apple's Goldman-syndicated bond issue would be $17 billion, the biggest ever for a corporate issuer (basically representing a circular cash flow stream where hedge funds give AAPL cash, so that AAPL cash pay them cash in return), some are wondering: is locking in a sub-4% yield for 30 years the best idea for a company which may not exist long before that? And with the stock recently having crushed the Apple collective, plunging 40% from its all time highs in a few short months, leaving many bottom and momentum-chasing hopefuls explaining just how they get to throw good monopoly money after bad monopoly money time after time, some are looking at alternative means of expressing their affection for the computer/cell phone/tablet company preferably coupled with a juicy ROI. One such suggestion comes from Germany's Auction Team Breker, which last November made news for selling an original 1976 Apple I computer for the world record price of $640,000 (€492,000). Considering the Apple I originally sold for $666.66 in 1976, this represents a jawdropping CAGR of 20%+ over 37 years, a return which trounces virtually every other asset's return over the same time horizon, or most other time horizons. On 25 May 2013 collectors, capital appreciation chasers and Apple-aficionados will have the chance to buy another of the 6 surviving Apple I computers still in working order. Expected price $260,000-$400,000.