Apple’s BIG Beat

Posted on January 24, 2012 by macromon

It is truly amazing how the world’s largest company can still grow revenues by 73 percent y/y and earnings by over 100 percent.   Apple blew away analyst estimates in today’s release by almost 40 percent, earning $13.87 in fiscal Q1 2012.  They also beat the Street’s revenue estimates by a margin larger than Nicaragua’s 2011 GDP!  Big numbers.

Our priors were that much of the revenue growth would come from Asia.  Not true.  In fact, Asia revenue growth was the lowest at just over 50 percent, which makes us even more bullish as China’s pent up demand will be saved for later quarters.

Still not  impressed?  Apple grew revenues in Europe in the quarter ending December 31 by 52 percent during the worst of the sovereign and banking crisis all while fighting the headwinds of a soaring dollar.    Stunning!

The company now holds around $103 in cash with no debt.   Maybe the market will, at last, put a decent multiple on Apple’s earnings, one that it has earned and deserves,  as the company continues to lead the world from the Information Age into the Wireless Age.   It’s that epic, folks, and not many recognize it.

Also, back by popular demand is the Apple GDP metric.

(click here if chart is not observable)

Posted in Apple, China, Earnings | Tagged , | 5 Comments

Dollar Yen Pierces Long-Term Downtrend Line

Posted on January 24, 2012 by macromon

Our friends over at Lighthouse Securities posted a nice chart and great analysis on today’s $/Yen’s break of its two-year downtrend line.    We’re sensing this could be one of the big macro trades of 2012.

As Europe works through their debt crisis the hunt will be on for the next vulnerable sovereign.  Remember, it’s all about confidence and if the Japanese financial institutions, who own most of the JGBs,  doubt the government’s debt servicing capacity,  it’s game over and sayonara, Mr. Yen.

The Bank of Japan will be forced to turn on the firehose and monetize the government’s debt is a humungo way.     Those who have tried this trade before have ended up with their family jewels caught in the walnut grinder, however.

Maybe…………………ummmm…………dare we say, “this time is different?”   Maybe.

P.S..   Have ’bout them Apples?  What a company!

(click here if chart is not observable)

Posted in Dollar, Sovereign Debt, Sovereign Risk | Tagged , , , | Leave a comment

Current Global Growth vs. Precrisis Average

Posted on January 24, 2012 by macromon

Interest chart from today’s IMF World Economic Outlook giving some big picture perspective of the current state of the global economy relative to where it was before the crisis.

Argentina is rocking relative to where it was before the crisis, but for how long?

We were also a bit surprised by Russia’s lack of recovery, which the IMF  explains is due to the “lack capital flows—which fueled credit, private demand, and growth before the crisis—have yet to return because investors remain wary of the political uncertainty in the
run-up to presidential elections.”

Here is the IMF’s lead into the chart.  Note the comment about the U.S.  “lack(s) a credible medium-term fiscal plan to reduce debt are draining confidence. We’ve always suspected Ms. Lagarde was half Ricardian.

The global economy has slowed, financial volatility and investor risk aversion have sharply increased, and performance has continued to diverge across regions (Figure 2.1). In the United States, weak growth and the lack of a credible medium-term fiscal plan to reduce debt are draining confidence. Europe is gripped with financial strains from the sovereign debt crisis in the euro area periphery. How these advanced economies confront their fiscal challenges will profoundly affect their economic prospects. Emerging and developing economies as a group continue to expand, a few
at rates well above their precrisis averages. However, growth will likely moderate as the slowdown in major advanced economies weighs on external demand.

(click here if chart is not observable)

Posted in Black Swan Watch, Economics | Tagged , | 3 Comments

Macrosynergy’s Excellent Return in a Very Difficult 2011

Posted on January 23, 2012 by macromon

Our friends over at  Macrosynergy Partners had a very nice 2011, posting a stellar return of 9.22 percent.   Even more impressive considering, according to the FT,  that half the hedge funds were down for year and more than two thirds are below their high-water marks, the level at which they earn performance fees.

Bravo to Nikos, Rob, and all!

Posted in Hedge Funds | Tagged , | 2 Comments

EU approves new sanctions on Iran

Posted on January 23, 2012 by macromon

How long before the Arab Persian Spring comes to Tehran?

(click here if video is not observable)

Posted in Black Swan Watch, Crude Oil, Geopolitical | Tagged , , | Leave a comment

The Dow in the Year of the Dragon

Posted on January 23, 2012 by macromon

Gong Xi Fa Cai!  恭禧發財

It’s now The Year of the Dragon and the Economist  has posted an interesting piece on the performance of the Dow Jones Industrial and the Chinese astrological calendar.

The Economist writes,

CHINESE people across the world ushered in their new year on January 23rd, which according to 3,000 year-old Chinese astrology is the year of the dragon. This critter is not a mythical beast. Physignathus cocincinus, to give its Latin name, is associated with power, authority and good fortune. For those looking for good news among the grim January headlines, this could bode well for stockmarket fortunes over the coming year. Between 1900 and 2011, the nine previous dragon years have seen America’s Dow Jones Industrial Average price index increase by an average of 7.7% in real terms, the second-best historical record of the 12 zodiac animals. Such fortune may be short-lived however; next year’s animal, the snake, has the second-worst historical record.

Nice cocktail conversation but we wouldn’t be betting the dudgeon on it.

Very few observations and the data is skewed by the zodiac sign either being caught in the Great Depression or not.  The last Dragon came to us during the period February 2000 to January 2001, which marked the dot.com market top.  Also the Dragon was fortunate to remain out of the Depression, catching the 1928 stock boom and not retuning until 1940 after most of the stock carnage had occurred.

Then again, like technical analysis, if enough traders believe in it, it becomes self-fulfilling,  no?    If only the Chinese would fully liberalize their capital account and allow their 500 million day traders (hyperbole) to play in Dow stocks.  If, only!

(click here if chart is not observable)

Posted in Charts, China, General Interest, Global Stock Performance, Technical Analysis | Tagged , , | 1 Comment

Is Gold About to Get a Monetary Blast (Off)?

Posted on January 22, 2012 by macromon

Watch gold as it pushes up against the downtrend line.  Any hints from the Fed of QE3 could send it “to the Moon, Alice!”  The Fed rejoining the party and the LTRO2 coming next month could be an explosive mix.

(click here if chart is not observable)

Posted in Gold | Tagged , , | 6 Comments

The Ugly Chart Contest

Posted on January 22, 2012 by macromon

Well not so ugly.  The dollar index is hovering around its short-term trend, but is now below the 20-day sma.  No clear break of trend yet.

Crude looks like it is rolling over.  We heard Fareed Zakaria say on his CNN show the morning that Israeli Prime Minister Benjamin Netanyahu even admits  Iran is starting to “wobble,”

ZAKARIA: We’ve got to go on. I wanted to change the subject entirely, Iran. Mort, one of the things the president has done over the last few weeks has been to really ratchet up the pressure on Iran. For the first time that I’ve ever heard Bibi Netanyahu saying the pressure is working. The sanctions are working. The Iranians are wobbling.

Short-term it’s all about what the EU does with sanctions.

The VIX is collapsing.  Complacency?  Or yield seekers selling volatility?

And the winner is….Natural Gas as it continues its epic collapse.   An “infinite supply” of natural gas is realigning the geopolitics of energy markets and may be the “the Next Big Thing.”

Finally another chart to keep on the radar.   The U.S. 10-year bond is at key support and not much support if it breaks.

(click here if chart is not observable)

Posted in Bonds, Crude Oil, Dollar, Ugly Chart Contest | Tagged , , , , | Leave a comment

Week in Review: Strong Trend, Way Overbought

Posted on January 22, 2012 by macromon

Most equity indices are in a nice uptrend with some moving into extreme overbought territory, which combined with the collapse of the VIX sets up the potential for a nice little correction, or, at least, a period of getting horizontal.   Google’s  miss and stock tank and the ugly action in Apple on Friday may be a leading indicator of some future weakness.   Or it could be just some big stock rotation,  into Mr. Softee, for example.

Nevertheless,  the markets have been trading like they’re  extremely short and long only money significantly under allocated.  Unfortunately, the new market microstructure — i.e.,  lack of liquidity —   does not allow those offside to easily square up and get to where they need to be without much pain.

Take a look at the 60 minute chart of the Euro last week, for example.  Very few red bars to allow the shorts to cover.  Just a nutcracking grind higher all throughout the week.

Ditto for the S&P500, which  traded in a similar pattern, opening on its low Tuesday and closing at the high on Friday.   Earnings have been a disappointment but investors want yield and stocks over zero percent cash.  The Power of Zero is winning the battle over fear, at least, for now.   As it has been said, “John Bull can stand many things, but he can’t stand two zero percent.”

The dollar is looking a bit wobbly around the trend line and crude oil looks like its rolling over.  Nattie continues its epic collapse.

We’ll  be buying equity weakness, especially on Greece and Portugal noise.   These restructuring deals are never easy, and, of course, there will be some vulture funds holding out.   We’ll worry if we start to see a sustained blowout in Italian spreads.

Remember, it’s the Year of the Draghi!    恭禧發財

(click here if charts are not observable)

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French Politics Heating Up….

Posted on January 22, 2012 by macromon

Looks like the elections in France are about to get very interesting.  François Hollande now holds 7 point lead in polls over Sarkozy.

(click here if video is not observable)

Posted in Euro, Politics, Sovereign Risk | Tagged , , , | 1 Comment