1/24/13…an Apple a day?

From the Friars Club Encyclopedia of Jokes: “There are three ways to get something done: do it yourself, hire someone, or forbid your kids to do it.”

Bloomberg Quote of the Day: “The question isn’t who is going to let me: it’s who is going to stop me” – Ayn Rand…and nobody did to this person whose philosophy was much the same as Scientology. TB

Bloomberg Top Stories:

*Cameron Says UK Referendum Uncertainty Won’t Hurt UK Ecconomy – uh OK…

*Jobless Claims in U.S. Unexpectedly Decrease, Prolonging Seasonal Swings – duh!

*Apple tumbles After Weakest Growth Since 2003 Amid Sales Slowdown – the past week has been bad for them, much of it self-inflicted as today’s commentary indicates–sad! TB

*Yen Snaps Three-Day Climb as U.S> Stocks Index Futures Drop on Apple Profit

*Bernanke Seen Pressing Ahead With Stmulus as Fed Debates Duration of QE

*Nokia Will Skip Dividend for First Time in 143 Years After Losses – not bad news though as they swung from loss to sizable gain but will use saving to rebuild. TB

*Growth Glimmers(?) Worldwide as Manufacturing Picks Up in China, Euro Region

*Monte Paschi Hid Financial Documents Amid Speculation of Profit Revision – Bad!

*Banks May Face Restrictions on Models of Risk Assessment, Basel Chief Says

*BMW to Develop Sports Car With Toyota as Technology Partnership Deepens – !

*Citigroup Sees Underwriting Opportunity as Euro Banks Bail from Brazil – Citi???

*Faux Facebook Friends Debt Collectors Draaw U.S. Regulatory Inquiry

*Women Warriors in Combat Order by Panetta Advances Obama’s Equality Goals – if they volunteer and can pass tests let them do so. Otherwise it impairs careers. TB

*U.K. Urges Its Citizens to Leave Benghazi, Libya on Threat to Westerners – kudos to Hillary for calling the GOP on the reasons for their continued harassment. As she said, nothing in this investigation would save those four lives. Leave it! TB

Yesterday was the fourth straight ‘up’ session – mostly that is. However, Transports wre flat, the nicely performing Dow Utilities fell 0.3%, as did the Russell 2000 and NYSE Financials (all sectors weak). all decline by This time even the two Nasdaq indices joined in thanks to an Apple rally (+1%). For a second straight session Apple boosted the two Nasdaq indices, but the entire gain and then some in the NDQ 100 (+16) would have been negated without Google (+9), Apple (+8) and MSFT (+3). Again more NDQ members declined (57) then rose (43) as tech continues to be pounded. were up, 48 down! Once again S&P volatility (VIX) barely budged, rising by just .02 to 12.45, just above the lowest level since 5/25/07. Oh joy!!!…or is it? Consider that the peak in stocks was just after this period of complacency…while the high was hit on October 11, 2007, it was the financials that peaked in May…keep that in mind! The decline in NYSE Financials of just 0.3% hid the real situation with Brokers declining 1.1% vs +1% vs +1.5%, while KBW Banks fell 0.3% vs 0.8% vs +0.3% and Nasdaq Banks +0.9% vs 0.2% BofA was most active stock as usual –-0.4% vs +1.9% vs -1.2% vs -4.2% vs +2% vs 0.7% vs -1.4% vs -1.3%. Total NYSE volume was little changed at 3.51B shares vs 3.55B vs 3.76B vs 3.68B vs 3.16B vs 3.13B vs 2.96B – recent range 2.96B-4.2B. Trades executed on the floor of the NYSE slid again to 638M shares vs 699M from Friday’s 1.07B shares, on options expiry, highest since 12/21,  the 12 month high of 1.88B shares, from 710M vs 499M (lowest since 12/27). Recent range 499M-1.88B. Advance/declines and Breadth were all modestly negative. New 52 week highs hit 713 a week ago and after bottoming at 308 a week ago Friday, fell back to 540 vs 688 vs 518 on the expiry vs 552 vs 270 vs 304. Recent range 270-713. New lows rose dropped to a very weak 12 vs 18.

 

European stocks higher Asia weak, ex-Japan +1.3%. India -0.5%, Korea -0.8%. UK +0.6%. France +0.2%, DAX +0.1%. U.S. stock futures mixed Nasdaq slaughtered following Apple earnings: DOW +19; SPX -1; NDQ -40!!!.

 

The bond market rallied did little yesterday and is weaker overnight. The 10 yr note is 1.84% -1/8 vs 1.82%, and the 30 yr 3.04% -3/8 vs 3.02% – the old 3% high set on 12/18! Long TIPS also weaker at 0.43% -3/8 vs 0.41% – well off the 0.22% record low set on 12/6! Reverse Repo rate at 0.19% vs 0.13%! Libor 0.301%, 3 months, and 0.477% six months…these are new recent lows. Foreign bond rates mixed with developed nations higher by about 1bp and Portugal rising 18 to 5.84% ending a huge rally! Greece (10.35% -1 and Spain (4.98% -5!).

 

Gold not only closed lower yesterday but took out  the 40 day ($1687), now resistance then  the 50 day ($1696), closing at 1686.70 -$6.50, and nearing the 200 day m/a ($1668). The $1636 low on 12/21 – lowest since 8/21 is key support. It is up slightly overnight at $1694.10 +.90. Overnight it is in the soup at $1673.60 -$13.10 and in danger of broaching the 200 day! Crude fell by $1.01 to $95.23 after putting in an intraday high of $96.92 (highest since 9/17) – opportunity lost! Overnight it is $95.91 +.68. Caution.

…for several years now TB has mocked the concept of free-market capitalism originally espoused by Milton Friedman but disproven in the financial meltdown. As Richard Fisher remarked and was quoted in yesterday’s column, companies no longer react to shareholders nor does the board look after their interests. Therefore, few if any companies concern themselves with the longterm sustainability of the company but the short-term interests of the management and the speculators. Such appears to be the case of Apple, one of the world’s largest companies with a market cap of $483 billion (at the high on 9/21, it was $662 billion)…and heavily influences the S&P 500 and the Nasdaq indices. Overnight it reported the slowest earnings growth since 2009 which will surprise many analysts, but that is not what concerns TB. It is corporate mis-governance.

More and more articles are coming out challenging the company. It is true that Steve Jobs was a brilliant innovator and marketing strategist (planned obsolescence in products which have gained a cultlike aura plus by keeping tight control on source codes made it difficult for hackers but that is now changing). But he was also a tough guy, some would say a thug. An article today from Reuters shows emails of how Jobs threatened rivals to enforce a ‘no-hire’ policy, and if anyone did hire several Apple employees threatened them with patent suits. But that is not what concerns TB. It is something more insidious from a company that proclaims it mutual love of its clients: it is failing to protect them by encouraging theft of its products! Here is the story link: Star-Tribune Apple misdeeds

TB will explain it with a short true/false quiz:

  1. You buy an iPhone and buy insurance against loss, theft, or damage. The policy is no questions asked and will immediately provide you with a new phone.
  2. You report your phone lost or stolen and receive a new phone. If someone else turns in the phone you will get a new one since you had insurance?
  3. Apple upholds all laws to protect its customers?

Answers:

  1. Depends…IF you bought it from Verizon, AT&T or any large provider, in other words a ‘locked’ phone, your insurance will do all of the above. But IF you bought it directly from an Apple store, you may not…
  2. The no questions asked policy does not even require identification. Thus that wonderful feature that allows you to track your phone and has been successful in getting back many of them is nullified. How? The thief/finder merely goes to an Apple store and gets a new one. This, despite the fact that Apple has the name of the registered owner. Their defense? People buy them for gifts (these are ‘unlocked’ phones), or may sell them, so they don’t know if that is still the owner! Rubbish! At the very least they should obtain identification and keep records of that with the turned-in phone. In some cases, the phone has been traced by the locator system to the Apple store.
  3. In those cases where Apple exchanges a phone without identification they are clearly in violation of law…i.e. receiving stolen property. If a pawnshop did this they would be prosecuted for receiving stolen property. Despite complaints, Apple refuses to change its policy. Now get this: in the case cited in the article, Apple refunded the unused portion of the insurance policy to the phone’s owner! Talk about insult to injury! The question is why would a company choose to hurt its loyal customers and encourage theft of their products? Beats TB!!!

 

This is just one more example of corporate contempt. It is not unique to Apple but this case is truly bizarre. It is so appalling that TB contacted his cellular provider who verified the story. Now for another example of hubris by a financial company that we, the people, helped bail out. Morgan Stanley It also validates TB’s concern that a broker is not a bank and thus should not be afforded any form of protection by the government. They are not, and do not wish to be banks, the definition of which is taking deposits and making loans.

The elements of this story combine the hearings on Goldman Sachs which resulted in fines and the hubris of Merrill’s Henry Blodget who in emails ridiculed the fools who would buy that kind of ‘crap.’ Crap is what Morgan Stanley peddled to Chinese investors and like Goldman, sold pools of mortgages without even putting the mortgages in the pools (which was done frequently with MBS squared and cubed products). Then they held contests to come up with the funniest name for these further ridiculing their clients, the buyers of the securities. If the government doesn’t prosecute this it will be a travesty.

How have we allowed greedy managements to destroy the best market in the world, the one with the best record of fairness…and who has gone to jail? Been prosecuted? Fined? It is the shareholders who have paid the fines and in most cases the culprits are still there and amply compensated for their greed.

Wake up America…and for God’s sake Congress, do your job. Stop letting the financial services lobby, along with other lobbies dictate policy. Hopefully the addition of Elizabeth Warren to the Senate Banking Committee will help in this effort.

Eisenhower almost had it right when he warned of the industrial/military complex being a threat. But it is now the industrial/financial/military complex that is destroying America.

As long as we continue to allow the two parties to redistrict to protect incumbents and take ‘bribes’ from the lobbyists in the form of campaign funding and allow SuperPacs to operate without answering to anyone, however, nothing will change. THIS is why TB voted for Obama…not because he felt he could do anything, but because now in four years the two parties will have to look deep within and both come up with viable candidates, and IF Romney had won they would have ‘stacked’ the Supreme Court to the far right…goodbye balance. That’s how TB sees it…you decide.

Have a great day!

TB

. . .  – – –  . . . (SOS!)  . . .   – – –  . . .  (SOS!) . . .   – – –  . . .  (SOS!)

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