UPDATE: Within the first 90 minutes of the open, AAPL has traded down to under $564 - officially entering bear-market territory (down 3.4% today)... These are 5-month lows for AAPL
From the $705.07 jubilant highs on 9/21, the most widely held stock among hedge funds is sliding in the pre-market very close to its bear-market barrier. A 20% slide from those 'peak AAPL' levels is around $564, less than $10 away. For some this is the buying opportunity of a lifetime as those $1111 price targets and Apple TVs are far from 'priced in'; for others, every VWAP rip is now faded and orderly lines are being formed at the 'get me out of this' window... What was the alpha-generating master-of-the-universe-making stock in the last few years, is now the overweight, over-crowded, waiting-for-the-straw-on-the-camel's-back holding that managers love to hate as their bogeys drift and portfolios plunge. So much for buying high-beta to chase performance eh?
FINRA Arrives After The Fact To Put Out The Fire Caused By Burning Apples At Dick Boves Employer, More Jokes To Ensue!Submitted by Reggie Middleton on 11/06/2012 11:29 -0400
Rochdale Securities executes a trade levered at 294x its capital base, in direct contradiction to BoomBustBlog research & FINRA arrives with a fire hose to wet the smoldering ashes.
Today it is all about the elections. It is not about last night's relatively surprising RBA decision to not cut rates (on an attempt to create a reflexive feedback loop when it said that China has bottomed; it hasn't, and the RBA will be forced into another "surprising" rate cut as it did previously). It is also not about Europe missing its Service PMI estimate (just like the US), with the composite printing at 45.7 on expectations of a 45.8 print (with both core countries - Germany and France - missing badly, at 48.4 and 44.6 on expectations of 49.3 and 46.2, respectively). It is not about reports that the EU believes Spain's GDP will again contract more than expected (it will, and certainly without any reports or beliefs). It is not about Greece selling €1.3 billion in 26-week bills even as, according to ANA, its striking power workers have taken 5 power plants online just as winter approaches. It is not about Jean-Claude Juncker telling the truth for once, and saying that Europe is still in crisis, and is facing the viability of the Euro (after saying weeks ago that the Euro is unshakable) and that some countries aren't facing up to their responsibilities. It most certainly isn't about German factory orders finally collapsing as the country is no longer able to delay its slide into full-blown recession, with a September decline of 3.3% on expectations of a modest drop of -0.5%, from the previous decline of 0.8% (the German ministry said that a weak Eurozone and lack of global growth are taking its toll; they will continue taking its toll for years and decades longer). No. It is all about the US elections, with the peak frenzy starting as soon as polls officially close at 8 pm. Everything else is noise.
More of my contrarian, yet highly accurate Apple research released free to the public, unfortunately not in time to save Rochdale's ass...
The saga of Rochdale, or the firm that is now officially Too Little To Fail, following its hilarious screw up in Apple trading as reported previously, when it got the size if not direction of AAPL stock post earnings wrong, and as a result the guy who otherwise would have had a massive X-mas bonus has been outed as a "rogue trader", is nearing its logical conclusion.
- ROCHDALE SAID TO BE IN ADVANCED RESCUE TALKS AFTER APPLE TRADES
- ROCHDALE SAID TO POTENTIALLY ANNOUNCE DEAL AS EARLY AS TODAY
What happens next? DBRS buys them for their strong integrity and work ethic? The NYT gets a licensing deal and makes Dick Bove into a political forecaster taking advantage of his infallible predictive Black Box (see his Bank of America reco rating below)? Inquiring minds want to know.
What a roundtrip! After starting off November with a bang, and after nearly retracing all October losses in the aftermath of the NFP headfake in less than 2 trading sessions, the S&P futures literally imploded, and dropped 23 points from the intraday high, the same distance traveled as it crossed yesterday, only to the downside and on very strong volume for the second day in a row. While the 1400 support in ES is once again in play (ES closed literally on the lows of the session at 1405.5), as we suggested earlier, the far more ominous news is that the AAPL bubble appears to have popped (but, but, it is so cheap on forward multiple basis: guess what - forward multiples are based on forward earnings, which may very well never materialize! and thanks to the dividend, not even AAPL's cash hoard is the bastion it one was) and is now close to entering bear market territory, down just shy of 20% from its all time highs of $705.07 hit on September 12. Now with the 200 DMA taken out, the next support is the 20% retracement from the high which is at $564. After that it is freefall for a long time as a very deep gap needs filling. It is unclear just how much of the selling was there to cause max pain for Dick Bove and Rochdale, for whom every tick lower in the stock means a bigger margin call.Finally, news hitting literally seconds ago that MSFT may be launching its own phone if its partner strategy falters, means there go even more margins.
Perhaps the reason why AAPL is having its biggest daily tumble in recent history on the day it officially launched the iPad mini for retail sale, is because all the people who otherwise would be waiting in line in front of FAO Schwartz and inhaling the smell of fresh horse excrement, are doing all they can to obtain gas. Any gas. Because iHeater, iShower and iFridge just lack that little "oomph" when dealing with people who are cold, smelly and hungry.
Bloomberg has an update on the most amusing story of the day, namely that Rochdale appears to have blown daytrading Apple. And guess what: taking a cue from SocGen, UBS, and JPM, it's all a "rogue trader's" fault. Of course, if the trade had gone the "other way", Rochdale would not be needing a bailout, and the rogue trader would be looking forward to a generous holiday bonus.
- Rochdale bought more Apple shares than the brokerage’s management intended around the time of the technology company’s Oct. 25 earnings report, two people familiar told Bloomberg’s Hugh Son, Saijel Kishan and Zeke Faux.
- Rochdale officials told employees a rogue trader amassed the position, one of the people said.
We wonder how many more such "rogue traders" who dabbled in AAPL, and blew up after leveing the house in hopes to make their year on AAPL soaring into year end, will emerge before the next week is over...
And it was shaping up to be a slow news days. From Bloomberg:
- ROCHDALE SAID TO SEEK CAPITAL INJECTION AFTER TRADING ERROR
- ROCHDALE EXECUTIVES SAID TO TIE CAPITAL SHORTAGE TO APPLE TRADE
- ROCHDALE SECURITIES ANALYSTS INCLUDE DICK BOVE
By that logic, can one imagine the epic bailout Rochdale would need if Bank of America trades back to its rightful price well over 50% below current levels? Also, why is Rochdale trading on its own account? According to an unverified rumor, a Roch trader was supposed to be buying 125 shares every half hour, and instead bought 125,000. If correct, oops: that's a $74 million margin call. Finally, the question of the day: How many more funds will claim they bought AAPL due to an "error" and now need a bailout?
It’s my understanding that Synthes has another headache on its hands.
Today's entire stock market action was contained in the span of an hour starting with the open, following a series of economic data which, as was to be expected, couldn't possibly disappoint several days ahead of the election. Sure enough, after everything came in mostly in line or beat, ES ramped from its recent support level just north of 1400 to a high of about 1424, in no more than 60 minutes, and meandered there for the balance of the day where it also closed, on above average volume. What is interesting is that unlike yesterday, when the ramp took place in the overnight, ES-driven session, following which it fizzled all day, today it finally allowed retail investors to jump in alongside the first of the month capital flows. Needless to say, equities were once again in a vacuum of their own, with the EURUSD sliding, TSYs broadly unchanged, and that one time biggest driver of market upside, Apple, unable to stage any break out.
- In Darkened NYC, Safety On The List Of Concerns (AP)
- New York Subway System Faces Weeks to Recover From Storm (Bloomberg) ... as we said
- Power Outages May Last More Than a Week (WSJ)... same
- U.S. stock markets to reopen on Wednesday after storm (Reuters)
- Questions Cloud Market Reopening (WSJ)
- Apple revolution shows signs of reboot (FT)
- Euro Chiefs Set to Grant Greece Extension Amid Squabbles (Bloomberg)
- Italy Bank Poll Casts Shadow Over Savings (WSJ)
- Shocked UBS staff take to Twitter (FT)
- Corporate China hit by unpaid bills (FT)
- Panasonic Posts Loss of Nearly $9 Billion (WSJ)
- BoJ independence called into question (FT)
- Barclays hit by fresh U.S. investigations (Reuters)
- Adoboli’s Girlfriend Said Confess, Co-Worker Said to Run (Bloomberg)
If trying to explain why S&P futures are up another 9 points to 1417, and are now 25 ticks from the Monday night lows, there are so many catalysts: perhaps it was the European September unemployment rate rising to a new record of 11.6%, (Italy unemployment is now 10.8% up from 10.6% but it still has a way to go until it hits Spain's 25%) even as Consumer prices kept inflation at a steady 2.5% rate, or that French producer prices rose more than expected even as spending missed expectations, or that Spanish housing permits collapsed by 37.2% in August from July, or that Greek retail sales plunged by 7.2% Y/Y and the Greek 2013 economic outlook was cut in the latest budget with the budget deficit now seen at 5.2% from 4.2% before and that Greece now sees 189.1% debt/GDP in 2013 up from 175.6% in 2012, or that Japan just cut its economic outlook last night after its manufacturing PMI came at 46.9, the lowest since 2009 excluding Fukushima, or that UK consumer confidence printed -30, vs -28 last and the lowest since April, or that Taiwan slashed its 2012 GDP forecast from 1.66% to 1.05%, or that nothing has been resolved on the Greek labor reforms or the now two month overdue Troika bailout, or that insolvent Spain has still not requested a bailout, or that virtually every company that has reported revenues in the last two "dark days" missed expectations, or that US Mortgage applications tumbled 6% for its fourth straight weekly decline (government refi index down 5.5%, mortgage apps down 4.8%), or of course that Hurricane Sandy will cut both Q4 GDP and corporate profits (not to mention sales). Truly, there are so many reasons why the S&P has now soared since Apple announced the termination of its two key executives on Monday afternoon, one doesn't know where to start (and don't you dare say "window dressing"). Perhaps Kevin Henry would, but sadly his Bloomberg status is now "gray"...
Just when you thought the Star Wars sexalogy had three horrifying episodes too much, here comes Mickey Mouse to buy the HoldCo (for $4 billion) and make sure that even more atrocious dancing takes place on the grave of the science fiction movie that defined a generation. That, and a whole lot more Lando Calrissian action figures. Because how does one know Hollywood has officially run out of ideas? Like this: "Star Wars Episode 7 is targeted for release in 2015, with more feature films expected to continue the Star Wars saga and grow the franchise well into the future." Surely Star Wars 7 will have a Retina Display, but if young Skywalker relies on Apple maps to get to Tatooine we will just wait for part 9 (not to be confused with how many inches the maxiPad will be). What we are most excited about, however, is Indiana Jones 7 - Raiders of the Lost Wheelchair. And the renaming of Star Wars IV, of course, to "A New Hope and Change."
- U.S. Super Storm’s Record Flooding Lands Blackout Blow (Bloomberg)
- Sandy Carves a Path of Destruction Across the U.S. East Coast (WSJ)
- Losses May Exceed Those of 2011 Storm (WSJ)
- Hurricane Sandy Threatens $20 Billion in Economic Damage (Bloomberg)
- Huge fire in Sandy's wake destroys dozens of NYC homes (Reuters)
- Possible levee break in New Jersey floods three towns (Reuters)
- Apple Mobile Software Head Forstall Refused to Sign Apology (WSJ)
- Stagflation in Spain (Bloomberg)
- German Oct. Unemployment Rose Twice as Much as Forecast (Bloomberg)
- A declining Japan loses its once-hopeful champions (WaPo)
- Unable to copy it, China tries building own jet engine (Reuters)
- Obama Signs Disaster Declarations for NY, NJ (YNN)