Things you should know
- Apple kills it! Iphones sales down, BUT IServices are Booming
- FED announcement today – expect NO change in policy (even as Donny screams for a cut)
- May Day Holiday results in muted trading today…S&P makes another new High!
It’s crazy how the headlines can create a story and completely miss the point………..yesterday afternoon – after the close – Apple reported earnings….the estimated number was $2.36 and they reported $2.46 or $58 bil in sales in a qtr….(that’s 3 months), they saw a surge in ‘wearables’ (think Iwatch and Airpods), they saw a surge in ‘online services’ (think Icloud and Apple Music), CEO Timmy Cook – makes this beautiful presentation and highlights the fact that Iphone sales are down (that has been the trend for over a year now) – Iphones were 53.5% of total sales down from 61.4% one year ago – BUT the online services business is booming! Say what you want – Apple has over 900 million Iphones out there – and Apple owners are loyal owners (no question) and so it is….Timmy is transforming this company from mostly Iphones sales to something much bigger….and it’s all good…..and while the trader types took 2% out of the stock yesterday in anticipation of falling Iphone sales – they reacted too quickly…..because once Timmy had ‘The Reveal’ the tone changed……the stock SHOT up 10% in the moments after the announcement and if you didn’t know better if you picked up today’s WSJ – this is the headline you would see:
“Apple Posts Declines in Profit, Revenue as Iphone Sales Fall 17%”
And that would make you think it was a disaster…..the first 3 paragraphs sound the alarm bell – negative, negative and negative…..words like “first back to back drop in quarterly sales and revenues”, “Profit dropped and Revenue slid”, “Sales of Iphones, long its biggest driver fell 17%”….I mean it’s ridiculous really (Is it true? YES, but this guy Trippy Mickle (author) must be short the stock!) as he paints the story as if it is negative – when in reality – the story couldn’t be MORE POSITIVE……Timmy Cook has managed to turn this story from one of falling Iphone sales over the past year or so, to one of new growth….and BOOM – off we go……This morning the stock is quoted up $12 in the pre-mkt session at $211.56/$212.08……Expect the tech sector and the Nasdaq to benefit – (Nasdaq futures are up 55 pts this morning)…..Recall that yesterday morning the story was all about how GOOGLE screwed up -which caused angst across the group sending the Nasdaq down by 0.80% or 67 pts…..oh and on top of all that good news – they announced an additional $75 bil buyback (on top of the $100 mil already in play) and they increased the dividend – returning even more money to shareholders which will surely cause Sens Chucky Schumer, Bernie Sanders, Nancy Pelosi and Congressperson AOC to have a stroke! But hey – that’s another story……
And the party continues…….the US stock mkt has had a spectacular year in just 4 months, with the Dow up 14%, The S&P up 17.55%, the Nasdaq up 22% and the Russell up 18%…and my how the tone has changed since the meltdown in October/December…..and that speaks right to the power of the FED – once they backed off their commitment to raise rates 3 or 4 times in 2019 – investors went all in……realizing that US companies could continue to grow and invest in expansion better in a low rate environment vs. a higher rate environment. Now look, though, let’s be realistic here……you have to expect that the mkt will turn a bit, consolidate, sell off, re-group, which only means you shouldn’t chase stocks even higher….now the algo’s will, because they are programmed to follow a mathematical formula, and when the tone changes, watch how fast the algo’s will turn – case in point – October and December of 2018…..the swift 20% selloff created by automation and algo’s rather than human assessment – and when the selling picked up speed, the algo’s went into overdrive creating short term pain and devastation……and now – it is just the opposite….the move higher (while welcomed) is beginning to feel just a bit ‘frothy’ – so sit back a while, re-evaluate what your portfolio has done, peel some money off the table in stocks that have way outperformed and created an ‘overweight’ for you…..KEEP a core position in the name if you like it, but peel back a bit and either hold the money on the sidelines or put it to work in names that are lagging or in sectors that have now gone to ‘underweight’ in your portfolio….Because remember – the names that have exploded higher will be the ones that get slammed first in a downturn, I mean why would you sell something that is only up 8% or 9% vs. something that is up 25% or 30% when the tide turns? Again think about what names got slaughtered in the December rout? Just sayin’
It is May Day and many European mkts are closed today….France, Germany, Italy and Spain are all closed…London is open and the FTSE is off small….(you should ignore mkt action today just because most of the players are off). Focus is mainly on individual company reports and waiting to see what the FED will do (nothing).
US futures are pointing a bit higher this morning – The S&P + 7, the Dow +83, the Nasdaq +52 and the Russell + 5 as the mkts digest the latest Donny Tweet from yesterday……..something about how the FED should cut rates by 1% and launch another QE program…..- this was just about 24 hrs ahead of today’s FED announcement……Now let’s be serious here….there is absolutely no reason for the FED to cut rates by 1% and there is no reason to offer up another QE (Quantitative Easing) program – but the Twittersphere was all ablaze yesterday after he offered up his two cents…..Did you even read his tweets? I mean our friend Larry Kudlow has suggested a 50 bps cut (because inflation is not an issue at all and he thinks the FED could lower rates a bit without igniting inflation while being good for the economy) – and yesterday Donny doubles down on that suggesting a 1% cut……with a QE kicker! Oh boy…..Expect the FED to do nothing today – other than hold rates steady, but do not be surprised if there is some concern about ‘deflation’ and what that may mean in the months ahead…..
Other Eco data today includes – Mortgage Apps they came in at -4.3% on top of last week’s -7.4%, ADP employment – exp of +180k jobs, ISM manf -exp of 55 (Expansionary), and Construction Spending of 0%.
Oil is down a bit as the API (American Petroleum Institute) reports that US crude inventories rose by 6.8 mil barrels week over week to a total of 466 mil barrels of inventory. Now none of the other issues have gone away – so oil remains in the $62/$67 range. Trading is quiet today because of the May Day holiday across Europe.
Take good care
Kp
Homemade Apple Pie & Vanilla Ice Cream ( I mean come on! – You have to hand it to Timmy)
For you this you need – one box of the Pillsbury pie crust (yeah – it’s just easier), 6 cups thinly sliced, peeled golden delicious apples, ¾ cup of sugar, 2 tablespoons of all-purpose flour, ¼ tsp of salt, 1/8 tsp of nutmeg, ¾ tsp of cinnamon and 1 tblspn of fresh lemon juice.
Heat oven to 425°F.
In large bowl, mix the apples, cinnamon, nutmeg, salt, flour and sugar and lemon juice. Set aside.
Unroll one of the crusts and place in an ungreased 9-inch glass pie plate. Pressing firmly against the side and bottom – no air bubbles.
Now – spoon into the crust-lined pie plate. Unroll the second crust and top the pie – wrapping the excess top crust under bottom crust edge, pressing edges together to seal. Cut slits in several places in top crust.
Bake 40 to 45 minutes or until the crust is golden brown. Remove and let cool at least 2 hours before serving. Make sure to have enough vanilla ice cream to go around. Does it get any more American that this?
Buon Appetito.
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