Our third-quarter results reflected a continuing tough economic environment…The world of computing is in the midst of a period of breakthrough innovation and creativity. – Paul Otellini, Intel president and CEO.
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The New York Times reports,
The results, analysts said, were unlikely to reassure investors concerned about the global outlook for technology spending. In a conference call with analysts, Mark Loughridge, I.B.M.’s chief financial officer, said the revenue shortfall came from a slowdown in business, especially in September, in certain markets including the United States, where revenue fell 5 percent.
“It was surprisingly disappointing,” said A. M. Sacconaghi, an analyst at Sanford C. Bernstein. “All the businesses were light.”
In after-hours trading, I.B.M. shares fell $7.10 a share, or 3.4 percent, to $203.90. In the regular session, the company’s stock price rose 1 percent, or $2.07 a share, to close at $211.00 a share.
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Italians are getting back on their bicycles….for the first time sense WWII the number of bicycles sold in Italy has over taken the number of cars….
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After returning to our desks last week, we posted,
…been out (golf trip) and totally unplugged for the past few days and come back to yesterday’s major reversal in Apple (see chart) and a big flip in the polls in favor of Governor Romney. Equities are selling off and approaching short term trend support with the Nasdaq already breaking its 50-day moving average…
We are also watching the presidential polls carefully as markets may begin to internalize the momentum moving in favor of Romney, which could spark a decent rally into the election.
The trend support was tested and held and whatta’ you know Governor Romney is beginning to pull ahead in the polls. Here’s today’s Gallup tracking poll,
October 16, 2012
Romney 50%, Obama 46% Among Likely VotersObama down sharply among men, college grads, and Southern voters vs. 2008
by Lydia Saad
PRINCETON, NJ — Half of likely voters now prefer Mitt Romney for president and 46% back President Barack Obama in Gallup interviewing through Monday.
No political statement here. We just think the equity market ramps hard into a Romney victory. After all, to paraphrase Keynes, it’s not who we think is the best looking candidate is in this beauty contest, we’re just trying to anticipate what average opinion expects the average opinion thinks of both candidates. Got it?
We also recognize the margin of error in the polling data and it may just be statistical noise. We do believe the enthusiasm levels are lower in the Obama camp, however, and the polls may be over estimating the President’s support.
On the other hand, equities could also be rallying on the prospect the S.F. Giants win the National League pennant, no? Prove us wrong.
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Apple $15 plus bounce today comes after a triple test of the $623-625 level. The stock seems to like the triple test of support as it similarly did after the July sell-off. The stock, in our opinion, still needs some technical healing (ala Marvin Gaye) before we get too lathered up on the trading side. We are long the stock with our finger on the trigger, however.
A close above $680 would negate the head and shoulders pattern. Stay tuned.
P.S. We were at the local Verizon store to purchase a new iPhone5. They had just a few in stock with no white phones. Three week back order.
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Reuters Breakingviews’ Rob Cox spoke to Vikram Pandit and says the CEO left Citi on his own accord after he felt he had rebuilt confidence and capital in the bank.
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Alvin E. Roth and Lloyd S. Shapley shared the 2012 Nobel Prize in Economic Sciences for their work on matching supply and demand for everything from single men and women to organ donors and their recipients…
Shapley, 89, designed theoretical constructs and algorithms to study and compare different matching methods. Roth, 60, built on his work, using experimental economics and market design to solve real-world problems, including matching 20,000 doctors annually with U.S. hospitals during their first year of employment and 90,000 teens with New York City high schools.
Roth, who has been a professor of economics and business administration at Harvard in Cambridge, Massachusetts, since 1998, is leaving the school at the end of the year for a new position at Stanford University, where he is currently a visiting professor of economics. Shapley is Professor Emeritus at the University of California, Los Angeles.
– Bloomberg
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The IMF’s World Economic Outlook is out with some great charts and we post one of them right here.
Last week the Fund’s managing director, Christine Lagarde, issued a chilling warning on the global debt overhang,
Ms Lagrde had earlier said that public debt in developed countries standing at “wartime levels” is the biggest threat to the global economy as they left governments at the mercy of the markets and needed to be reduced.
“Let us not delude ourselves. Without growth, the future of the global economy is in jeopardy, and perhaps the greatest roadblock will be the huge legacy of public debt, which now averages 110 percent in advanced economies, pretty much wartime levels,” Ms Lagarde said.
“And this leaves governments highly exposed to subtle shifts in confidence,” she said.
“We have seen it. We are seeing it in the eurozone for instance. It also ties the governments’ hands, especially as they seek to build the infrastructure of the 21st century while keeping the policies, particularly the social promises of the 20th century,” she said.
(click here if chart is not observable)China’s Q3 GDP data due Thursday could send further worrying signals about the world’s second largest economy, just as a new leadership is poised to take the helm. Tara Joseph reports.
– ReutersVideoMoney quote:
…It is very clear the China growth rate has declined so fast and so substantially the government has already started relaxing. But… how to move forward is not clear…
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This is a critical week for most major global equity indices. Many are right at or just through their trend support lines and ironically have been selling off since the September 13th announcement of further quantitative easing.
With the Fed now all in we’re a bit concerned the markets may perceive Mr. Bernanke is out of bullets, which could result in a decent short term correction if the trend breaks are confirmed this week. Earnings and the U.S. presidential election are the primary events that will drive the markets in the next few weeks.
We’re watching, staying flexible, don’t have a lot of conviction and will go where the market leads.
Now to the charts!
S&P500
The S&P500 has pierced its uptrend of the summer rally and sits right at the 50-day moving average. After making a new high a few days after the announcement of QE3, the index has been made a higher low and lower low. The S&P500 opens the week at a critical level and really needs to prove itself.
Dow
Ditto for the Dow.
Nasdaq
Led by the 10 percent sell off in Apple the Nasdaq is down almost 5 percent from its Sept. 21st high and has clearly broken trend closing the last four days under its 50-day moving average. The next support level is 3,000 and then the 100-day at 2865, which, if realized, would result in a 10 percent correction. Watch the price action in Apple, which needs to hold Wednesday’s low at $623.55.
Russell 2000
The Russell 2000 looks much like the S&P500 and Dow. It did, however, close below its 50-day on Friday.
German DAX
The German DAX remains the best performing major global equity index we monitor, which is up 22.62 percent YTD. It has yet to break its uptrend but does look like it wants to at least test the 50-day moving average at 7,160., which would result in just a little over 4 percent correction from its recent high.
France CAC
France’s CAC looks to be carving out a head and shoulders top and closed the week below its 50-day moving average. The index is down 5 1/2 percent from its September high , but managed to bounce off critical support at 3,350 last week.
UK FTSE
The FTSE looks a lot like the U.S. indices.
Brazilian BOVESPA
The BOVESPA was one of the few global equity indices up last week, rallying on a mid-week interest rate cut. The key question is can Brazil break away from the drag of the Chinese economy? Large domestic infrastructure spending is coming as the country prepares for the World Cup and 2016 Olympics.
Hong Kong Hang Seng
The Hang Seng is one of the best performing indices since the QE3 announcement, up almost 11 percent since September 6th. The country’s exchange rate peg acts as superconductor to U.S. monetary policy. The positive performance of Hang Seng is a positive for global equities as we view the index as the indicator species for global risk appetite.
China Shanghai Composite
After a week off the Shanghai managed to rally almost 1 percent last week, closing above its 50-day moving average four consecutive days. It has broken its ugly downtrend line but needs to prove itself. Let’s see if it rolls over again going into the November 8th leadership transition. Support is at 2,000.
Japan NIKKEI
Nikkei ugly! Watch 8,239 the low made in early June.
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