Apple is up almost 15 percent off the June 20th low of 310 and leading the overall market higher. This is the stock’s best move since last September. We’ve posted several pieces on Apple’s market leadership (click here). With no debt and more than $70 per share in cash and liquid securities, coupled with its innovation and growth prospects, we may be seeing the beginning of the “good private sector/bad public sector” trade. That is, who looks more risky when the terminally ill public sector balance sheets are juxtaposed with, say, Apple’s balance sheet, management and growth prospects?
The ugly macro picture is catching many offside as the equity markets, especially large cap/strong balance sheet tech, ramp here. This is not to say that Apple will move straight up if the U.S. G defaults, but let’s not dismiss the prospect the markets may be redefining “risk-free” and morphing into something we haven’t seen in the G7 economies. Brazil, Mexico, Argentina, and many other emerging markets understand and have experienced such a situation when their governments, struggling with massive debt, were perceived more risky than local blue chip companies. Stay flexible.
(click here if chart is not observable)