iPhone Inflation Drives Apple Earnings, Again

Apple continues to rely on iPhone inflation for revenue growth as unit sales quarterly year-on-year growth was flat for the 12th consecutive quarter.   The almost 30 percent increase in iPhone revenue is due to price increases.

Unit sales growth for the iPad and computers were negative year-on-year.

Assuming, for example, iPhone prices rose at the rate of inflation of 3 percent (and, of course, assuming away quality upgrades),  the company revenues would have increased by only 5.7 percent instead of 20 percent.

Relying on price increases is not sustainable and may be why the stock is taking a beatdown after the close.

I have a friend who works in retail smartphone who swears the Google smartphone is a superior product to the iPhone at the fraction of the price,   If consumers become a smidgen more cost conscious, Apple’s “annuity” revenue stream comes under pressure.

Moreover,  Apple shrank their shares outstanding by about 6 1/2 percent over the past year.   The market will eventually prioritize electrical engineering over financial engineering.

How long will the market stick with the stock?  Your guess is as good as ours.

Don’t get us wrong, Apple is a great company with great products.

We loved it pre-2016 and have missed the last 30 percent.

We suspect if unit sales do not increase this holiday season,  the stock could be in trouble. Just our calculated guess.

Apple is also so huge, the company has to wake up every January 1st and generate annual revenues larger than the size of Portugal or Peru’s GDP,  that is more than 77 percent of the world economies monitored by the International Monetary Fund.   That’s a big, big nut, folks!

Tim Cook is running out of time.

Update:  November 1 @ 6.25 pm eastern

Apple will stop reporting how many iPhones, Macs and iPads it sells each quarter, beginning with the December quarter, Apple CFO Luca Maestri said on the company’s earnings call Thursday.  – CNBC

Do you wonder why?

 

Apple_Earnings_3

 

Apple_Earnings_2

 

Apple_Earnings_1

 

 

Posted in Apple, Uncategorized | Tagged , | Leave a comment

Key S&P500 Fibonacci Retracement Levels

Watch this space.   The battle taking place right now at 2,732.42.

No sense to even think about getting long for a swing until it clears and closes through the .500 at  2772.   Mr. Market desperately needs to close above 2732.42 today.   Baby steps.

Oh yes,  watch bond yields.

 

Fibos

Posted in Equities, Uncategorized | Tagged , | Leave a comment

The Taylor Swift Boating Of The Midterms

The term swiftboating (also swift-boating or swift boating) is a pejorative American neologism used to describe an unfair or untrue political attack. The term is derived from the name of the organization “Swift Boat Veterans for Truth” (SBVT, later the Swift Vets and POWs for Truth) because of their widely publicized—and later discredited—campaign against 2004 U.S. presidential candidate John Kerry –  Wikipedia

But this (Taylor) Swift Boating is kinder and gentler, an exercise in decency, fairness, good citizenship, and the best of democracy — getting the young people out to vote.

 

Swift

 

Taylor Swift’s Savvy, Smiley Instagram Voter Drive

Please, please educate yourself on the candidates … and vote based on who most closely represents your values,” she [Taylor Swift] wrote in an Instagram post that likely contributed to a surge of more than 100,000 young adults registering at vote.org. Some might have guessed that this awokening would be a one-and-done affair before she returned to mere tour promotion. But instead, Swift has doubled down on her campaigning—though within clear and careful parameters. – Atlantic

So far, looking effective and generating results.   Ms. Swift’s instagram account has more than double the twitter followers of President Trump — 112 million versus 55.5 million, respectively.   Polls show the youth vote is set to almost double its highest turn out ever.

Youth Voter Turnout in the Midterm Elections Could Be Historic

Young voters could turn out to vote at record-breaking levels in the midterm elections next month, according to a new poll.

The poll, released Monday by the Institute of Politics at Harvard’s Kennedy School of Government, found 40% of 18 to 29-year-olds say they will “definitely vote” in the midterm elections on Nov. 6.

Youth voter turnout has historically been dismal in midterm elections, which tend to draw fewer voters overall than presidential election years. The highest rate of youth voter turnout in past midterm elections was 21% in both 1986 and 1994, according to the Harvard report, which cited U.S. Census data. – Time

These young people don’t like the “politics of mean.”   I know first hand, I have two.

We sense a political earthquake coming Tuesday.   Female, young, and left.   Brace yourself, folks. 

 

 

Posted in Politics, Uncategorized | Tagged , , | 3 Comments

Exit Mr. Rocktober

Ugly month.

The fourth worst October performance for the S&P500 since 1950.   Could have been much worse if not for the bulls skate save over the past two days.

Rare that stocks down so much yet 10-year yield 8 bps higher.    Something is cooking.

 

Mr. Rocktober_2

 

Mr. Rocktober_1

 

Posted in Uncategorized, Week in Review | Tagged , , , , , , , | Leave a comment

“What will Brazil’s role in Venezuela be with Bolsonaro’s Presidency?”

Carlos Milani, Associate Professor at the Rio de Janeiro State University’s Institute for Social and Political Studies (IESP-UERJ) “Bolsonaro”s election is very worrisome for our young democracy”

Visit our website: http://www.france24.com

Posted in BRICs, Uncategorized | Tagged , , | Leave a comment

Welcome To The Club, Mr. President

An antagonistic free press is part of the job description, no?

LBJ

President Trump – October 26, 2018

 

Whenever the press quits abusing me I know I’m in the wrong pew. I don’t mind it because when they throw bricks at me — I’m a pretty good shot myself and I usually throw ’em back at ’em.”  – President Harry S. Truman,  1958 

 

It seems, therefore,  essential the POTUS resume must include the following: 

Welcome to the Club, Mr. President

 

Posted in President Trump, Uncategorized | Tagged , , , , | Leave a comment

Republicans Set For Historical Thumping In Midterms

Updated October 30 @ 1:15 a.m. –   Data correction 

Summary

  • President Trump’s Gallup approval rating has collapsed over the past week
  • We have updated our simple single factor model, which now projects the Republicans will lose 53 House seats next Tuesday
  • We are taking the over
  • Oil prices have fallen, though not yet reflected in gas prices, which may help the president on the margin

We have updated our single factor Congressional midterm model based on the latest Gallup polling data of the president’s approval rating, which is now plunging, falling 4 points in the past week.  Bad time for a swoon.

President Donald Trump’s job approval rating plunged 4 percentage points last week amid a wave of violence, the latest troubling signal for Republican chances in upcoming midterm elections.

Forty percent of Americans approved of Trump’s performance as commander in chief, according to Gallup polling during the week ending Oct. 28. That was down from 44 percent the prior week, an unusually steep decline for the poll, which is based on a survey of 1,500 U.S. adults conducted Monday through Sunday each week.  – Bloomberg

President Trump enters the week before the midterm election with the lowest approval rating of any full first-term president in modern day polling — 4 points below President Obama before losing 63 House seats in 2010, and 6 points lower than President Clinton before losing 54 House seats in 1994.

Trump_midterms_5

The presidential approval model predicts the Republicans are set to lose 53 House seats next Tuesday.   Ouch!

Of course, the midterm election will be determined more than just President Trump’s rating.  Moreover, the single factor model is simplistic, though it does have a decent R-squared of .64,  history may not be prologue, and the data points are a bit imprecise.

Nevertheless, we believe President Trump’s doubling down on the Caravan and “they are coming for us”  narrative, and moving the military to the border is going to backfire politically.  Though our perspective doesn’t infect the model, but we firmly believe it is the major factor in the collapse of President Trump’s approval rating.

Country Looking For Healing And A Leader To Unite

Here is what the traditionally conservative Dallas Morning News wrote, even before the tragic events of the past week,  in endorsing of the young RFK-esque Beto O’Rourke over Ted Cruz to represent Texas in the Senate.  It sums up the mood of the country, in our opinion.

In looking at the race for United States Senate in Texas, we recognize that this country stands on a precipice.  Whether we fall off the edge depends on how we answer this question: Can we set policy differences aside, even for a moment, and agree to treat each other with the respect befitting a great nation, with acknowledgment of the humanity of each person?  

We have been at divisive political moments before, and we know those often end when leaders emerge who find ways to get along personally even when they are engaged in grand, tectonic political debates. That is one of the underappreciated stories of the 1980s, when President Ronald Reagan and House Speaker Tip O’Neill worked together.  Even when they fought it out on tough issues, they fostered an enduring friendship.

For this reason more than any other, we favor U.S. Rep. Beto O’Rourke for U.S. Senate.  The pivotal issue before our country is public leadership, and here we believe O’Rourke’s tone aligns with what is required now. This inclusive and hopeful tone, along with O’Rourke’s approach of starting with shared principles and working toward solutions, offset any policy differences we have with him. Leadership is more than policy, and whether we are addressing the very real challenges before us now turns on our ability to find points of agreement.  – Dallas Morning News

 

Trump_midterms

 

Oil Prices And The Midterm

Oil prices have fallen since our last analysis, which may help the president on the margin.  Though, anecdotally, we don’t see it showing up in a drop in the price of gasoline at the pump.

Stay tuned, folks.  Prepare for Mr. Toad’s Wild Ride!

Posted in Politics, President Trump, Uncategorized | Tagged , , | 1 Comment

Why The 2018 Stock Market Corrections Are Different

Just a quick note and some data to bolster our last post and concern that Treasury yields are not coming in  during this stock market correction.

The table illustrates that the this year’s two S&P 10 percent corrections have coincided with a rise in the 10-year  Treasury yield.   This is very rare, at least in recent history, and has happened only once in the last 20 years, and that was a special case due to a massive flight to quality and complications around the Russian Debt Default and LTCM crisis.

Flight To Quality

In general, when stocks fall by 10 percent, there is a flight to quality and yields fall on Treasury securities.

Yes,  the 10-year is down from its peak of 3.25 percent but higher than when the S&P500 peaked in September.  One can fiddle with the data and use intraday highs and lows, but you get our point, we hope.

The Gathering Storm In The Treasury Market  

If you haven’t read our beast of a post on the structural changes in the Treasury market, we suggest you run to it now!   Click right here:  The Gathering Storm In The Treasury Market 2.0

We also recommend our most recent piece,  Where The Next Financial Crisis Begins.

Keep this on your radar folks,  we think it signaling there are structural changes taking place in the global capital markets.

Updated:  October 29 @  4:06 pm Eastern

S&P_500_Corrections

 

 

Posted in Equity, Interest Rates, Uncategorized | Tagged , | 33 Comments

S&P500 Key Levels

The oversold S&P is off 30 points from its morning high.  It’s imperative it has a strong close today.

We do think a test of the February low of 2532. 69 is a done deal, that is another 5.4 percent from current levels.

What concerns us most is that today’s 10-year yield Treasury yield is higher than where it was when the S&P500 peaked on September 21.   To be fair, the move in the 10-year to 3.25 percent triggered this stock market slide.

he markets may be signaling the global economy is sacked with too much debt.    Very rare do Treasury yields rise during a 10 percent stock market correction.

Here are key levels to watch:

S&P_500

Posted in Equities, Uncategorized | Tagged , | 5 Comments

Go Irish!

A beacon in a world that grows darker by the day.

 

Posted in Uncategorized | Leave a comment