Blow-Off Top? Or Just Another Run-Stop? AAPL 12% Drop!

Reporting after hours are:

MSFT (link):

  • EPS beats $0.76, Exp. $0.74,
  • Revenue misses $21.46 bn vs $21.64 bn estimate
  • Q2 Window revenue $5.88 billion
  • Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion.
  • Entertainment and Devices Division posted revenue of $3.77 billion, down 11% Y/Y - need XBOX 1080 now?

AT&T (link)

  • EPS misses $0.44. Exp.$0.45
  • Revenue beat $32.58 bn vs $32.24 bn estimate
  • Sees 2013 Revenue growth of 2%, capital spending in $21bn range
  • In the quarter, the company activated a record 8.6 million iPhones, with 16 percent new to AT&T
  • Says 31.7 million, of all smartphone subscribers, are on usage-based data plans vs 22.1 million a year ago
  • May complete $300MM buyback as early as mid-year

Starbux (link)

  • EPS of $0.57 inline with expectations
  • Revenue misses $3.8 billion vs $3.84 bn estimate
  • Sees 2013 year end EPS of $2.06-$2.15, Exp. $2.16
  • Q1 comps up 6%, expects slight operating margin improvement in the Americas and EMEA segments
  • Forecasts some operating margin contraction in China/Asia Pacific, driven by the shift in equity mix towards company-operated stores as well as costs associated with accelerated store growth in China.
  • Capital expenditures of ~$1.2 billion for the full year

* * *

Amid the deafening screams of hundreds of hedge fund managers looking for any hedging port in an AAPL storm, stock indices (expect the Nasdaq) surged to new highs from the moment the US day-session began until POMO was complete and European markets closed. Volume and block size was large as we took out S&P 500 highs up to 1500 and it appeared we ran out of the short-term proverbial great fool. In general, risk-assets and stocks were well correlated though the big disconnect today was a rising VIX. HY Credit did not play along with the exuberance early on either - as it seemed relatively clear that any and every trick in the book was being used to enable more out of the AAPL boat as we ramped up to VWAP. Once Europe had closed, AAPL slid, stocks slid (with S&P 500 dropping its most of 2013 so far), and risk-assets in general slid lower. JPY weakness and EUR strength helped support risk but Treasury yields falling back and a drop in commodities overall (Gold -0.9% on the week) had the opposite effect. The typical late-day ramp failed despite the best efforts of vol compression as stocks closed almost unch, at VWAP, in line with risk-assets (ahead of tomorrow's LTRO news). AAPL at lows as ramp failed...


S&P 500 futures took off from the day-session open, topped at end of POMO and European close, retraced it all... then levitated back to VWAP close...


Early on it was HY Credit and Vol that ignored stocks (as FX and rates markets tracked it higher and back down)... They tried to ramp HYG to keep things alive into the close - but VXX, TLT, and SPY all recoupled by the close...


AAPL retested its early morning lows as we closed...


VIX made a decent run back lower in the late-day as every effort was tried to lift stocks...


Commodities were weak - odd given USD weakness. Gold and Silver weakness suggests margin calls perhaps on AAPL-based holdings...


But across broad risk-assets in general, today saw no major disconnect as risk correlations picked back up once again in their systemic way...

Completing the humor is the epic collapse in the Yen today, which after soaring on the disappointing open ended BOJ intervention which is very much unopen for another 11 months until 2014, today for some reason decided to plunge back to levels worse than when the BOJ disappointed the market. USDJPY down 2.6% in 20 hours:


Charts: Bloomberg and Capital Context

Bonus Chart: SPX/VIX appears to have hit an interesting level of exuberance...


Bonus Bonus Chart: Post-QE3, The Dow Transports are up 12.25%, Nasdaq down 1.7% and the S&P and the Dow up around 1.8%...



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