The ex-back of the envelope TARP calculation "chump" become wood-chopper, turned equity portfolio manager has gone full circle and decided his time is better spent serving the public good once again. As the WSJ reports, Neel Kashkari is considering running for office in California. The napkin-laden chrome-dome has seen his funds suffer from spotty performance since their launch - all underperforming the benchmarks. We can't help but think the timing of his announcement odd given his love affair with Apple and tonight's collapse but that would be harsh judgment on the always self-denigrating 39 year-old. Of course, we will hear the impressive nature of him leaving a well-paid job to run for office as his patriotism runs wild; we are less 'believer'. Still, managing to have your name turned into a noun and a verb is no easy task...
A Quick Listing of My Tweets After Apple's Predicted (4th) Miss & Indisputable Signs of #MarginCompressionSubmitted by Reggie Middleton on 01/23/2013 19:10 -0400
I'll let the numbers and facts speak for themselves as the #FanBois grope for something to retort... It's "knowledge how", not "knowledge that"!!!
AAPL Meets EPS, Misses Revenues, Fails To Impress With In Line iPhone Sales, Total Cash Grows To $137.1 BillionSubmitted by Tyler Durden on 01/23/2013 18:05 -0400
The most anticipated earnings release of the quarter has come and it has been a dud, at least judging by the market's expectations and its response. Because while EPS beats just barely (a far cry from the epic EPS beats of Steve Jobs days) coming at $13.81 on expectations of a $13.53 print, revenue outright missed, coming at $54.5 billion on expectations of a $54.9 billion Q1 2013 result. Furthermore, fears about profit margins were proven correct, with total gross profit coming in at $21.1 billion, which alas was 38.6% of revenue, well below the vaunted 40% threshold (as a reference margin was 44.7% a year ago, and 40.0% a quarter ago). And finally, the breakdown by components in the iPhone 5 release quarter was just, well, meh.
In the old days, it was Fed via POMO to stocks; but given the new normal, now we have levered POMO to rescue us via vol compression and yet again - today saw risk-assets sliding all night (though admittedly only around 0.5% off highs) only to be rescued by a vol-compressing equity push that started the moment POMO finished. HY credit was tinkered with in the last hour to keep things afloat and of course AAPL soared into its earnings report. The debt-ceiling vote did little to maintain risk-on as CAD weakness (BoC holding off from rate hikes) pulled the USD higher, and hurt risk-on commodities - as Oil plunged on the day. Treasury yields continued to fall - entirely ignoring stocks once again - even though stocks caught down to risk early and ended at new five-year highs on the Dow (thanks almost entirely to IBM). So low volume in stocks (AAPL decent volume), low average trade size in S&P futures, and a disconnected equity market from bonds and FX once again... eyes down for an Apple full-house...
With minutes to go, this is what the world (according to the Google machine) is thinking ahead of Apple's earnings... and what the market expects...
Two days ago we presented the complete hedge fund performance for 2012, in which it was clear that David Einhorn's Greenlight had a Q4 that did not go quite as expected, primarily as a result of AAPL plunging in the quarter, and his hated GMCR soaring, leaving his fund with a 8% return for the year (and -5% for the quarter), well below the general market and some of his far more vocal hedge fund peers. Those curious just what it is that caused this underperformance, here is the complete Greenlight Q4 letter discussing not only why Einhorn is doubling down in AAPL, why he still likes Marvell, Computer Sciences and Vodafone, as well as his continuing negative outlook on Iron ore, and the Yen. He closed out positions in WLP, MCO, DIA, ITX and PBI. In summary: "At quarter end, the largest disclosed long positions in the Partnerships were Apple, Cigna, General Motors, gold and Vodafone Group. The Partnerships had an average exposure of 114% long and 70% short."
Google's Q4, 2012: This Looks To Be The Leader Of The New Distributed Information Paradigm, As I called It In 2010Submitted by Reggie Middleton on 01/23/2013 12:32 -0400
As the video denotes below, here we have big brother traded on an exchange
Heading into the North American open, equities are trading in minor negative territory, led lower by banks as markets look forward to the first LTRO repayment, as well as lingering concerns that losses from derivatives contracts by Monte Paschi (entered with Nomura) may undermine the lender’s earnings. Monte Paschi shares opened 8% lower and were halted by the exchange to prevent a further slide in share price. As a result, even though EUR/USD is trading higher and peripheral bond yield spread are tighter, Bunds are trading in minor positive territory. Of note, Spain’s Iberian neighbour Portugal opened books for its 2017 bond and books are said to be around EUR 10bln, with guidance at MS+395bps (down from original MS+410bps). EUR/USD has also benefited from the decision by the Portuguese Treasury to tap capital markets only a day after a successful placement by Spain yesterday. Looking elsewhere, even though USD/JPY has bounced off earlier lows, implied vols continue to trade heavy as option decay and re-positioning post the BoJ decision weighs on prices. So much so that R/R has slipped to Sep levels, but still favours bets on further JPY depreciation.
HSBC has quietly moved into acquiring large amounts of silver bullion. The bank has secured another deal to buy silver bars from KGHM which brings their total purchases of silver from KGHM alone in the last 12 months to $876 million or PLN 3.65 billion. KGHM is one of the largest producers of silver in the world and is the second-largest producer of refined silver in the world. They produce silver bars registered under the brand KGHM HG that are attested to by “Good Delivery” certificates issued by the London Bullion Market Association and the Dubai Multi Commodities Centre. Listed metals producer KGHM signed an estimated PLN 1.67 billion deal on 2013 sales of silver to HSBC, KGHM said in a market filing yesterday. The deal puts the total value of deals between KGHM and HSBC in the last 12 months to PLN 3.65 billion or $876 million, the filing read. KGHM is one of the largest companies in Poland and one of the largest mining & metallurgy companies in the world.
Most Wall Street pundits just follow the crowd....
- Geithner allegations beg Fed reform (Reuters)
- BOJ Adopts Abe’s 2% Target in Commitment to End Deflation (BBG)
- Bundesbank Head Cautions Japan (WSJ)
- In speech, Obama pushes activist government and takes on far right (Reuters)
- Atari’s U.S. Operations File for Chapter 11 Bankruptcy (BBG)
- Israel goes to polls, set to re-elect Netanyahu (Reuters)
- Apple May Face First Profit Drop in Decade as IPhone Slows (BBG)
- EU states get blessing for financial trading tax (Reuters)
- Indian Jeweler Becomes Billionaire as Gold Price Surges (BBG)
- Europe Stocks Fall; Deutsche Bank Drops on Bafin Request (BBG)
- Algeria vows to fight Qaeda after 38 workers killed (Reuters)
- GS Yuasa Searched After Boeing 787s Are Grounded (BBG)
- Slumping pigment demand eats into DuPont's profit (Reuters)
Well, my fellow Slope-a-Dopes, your selfless Idiotic Savant servant, whom is securely chained to his desk, has spent a significant part of the long weekend, perusing nearly every finance blog on the world wide web for you. Therefore, I can reliably report to the SOH, that the overwhelming consensus out there in the financial blogosphere, which has now reached a nearly universal feverish pitch, is boldly & proudly heralding that a most encouraging new economic dawn is finally upon us. It seems, a pristine permanent plateau of prosperity has been patently perfected.
An overview of the key factors and events that are shaping the investment climate in the week ahead. It looks at some emerging market developments as well. These are the main talking points and considerations that ought to be on your radar screen as investors or pundits.
It’s all a money game on Wall Street.
The groupthink for investors today is predicting three major outcomes for 2013. Unfortunately, they will likely all prove to be popular delusions.