Apple's Year End Cash Equivalent Of $97.6 Billion Makes It The 58th Largest Economy In The World
After
generating $37.9 billion in cash, short and long-term equivalents in
2011, and a record $16 billion in Q4 alone (of which $11.8 billion in
Long-Term Marketable Securities: Treasurys? Pretty soon Apple will be a
bigger monetization force than the Fed), the company's total cash and
equivalents horde is now just shy of $100 billion, or $97.6 billion. And
with cash growing at 20% in the quarter, extrapolating into the
future, means that the company will hit $1 trillion in cash by Q1 2015.
Looked at otherwise, if Apple were a country, and its cash was equivalent to GDP, it would rank as the world's 58th largest economy,
above such countries as Slovakia, Iraq, Luxembourg, and Syria. At
least now we know where all that money that is not going to pay
mortgages, is going. Next question: how long until uncle Sam demands
windfall tax, or until the FoxConn workers learn to read press releases
and politely request a pay raise or they all jump?"Dreams Versus Reality" - Former IMF Chief Economist On Europe's Last Stand
Successive
plans to restore confidence in the euro area have failed. Proposals
currently on the table also seem likely to fail. The market cost of
borrowing is at unsustainable levels for many banks and a significant
number of governments that share the euro. In three short sentences, the Peterson Institute for International Economics' (PIIE) Simon Johnson introduces the clear and present danger that Europe has become in a comprehensive article on the deepening European crisis.
The circular nature of the realization of sovereign credit risk
realities and the subsequent effective insolvency of banks exacerbates a
credit crunch and exaggerates problems in the real economy - most
specifically in the periphery. Johnson outlines five measures that are
needed to enable the euro area to survive but the big bazooka of
up to EUR5tn just for the PIIGS is what the PIIE senior fellow fears
as the ECB is pushed down a dangerous path. The coordination
of 17 disaparate nations leaves the former IMF man greatly concerned as
the unique nature of this crisis leaves "four economic, social, and
political events as possible causes of systemic collapse with each at
risk of occurring in the next weeks, months, or years and these risks will not disappear quickly."
As European sovereign bonds are now deeply subordinated claims on
recessionary economies, it is no surprise that Johnson ends by noting
that Europe's economy remains in a dangerous state.European turmoil /Portugal/Illinois/
Good
evening Ladies and Gentlemen:
Today we had the risk is off trade as Europe is in turmoil due to the
lack of progress in dealing withGreece and other PIIGS nations. They
announce a deal for the new mechanism for funding yet no deal can be
found written anywhere. These will be discussed in the body of the
commentary but first let us head over to the comex.
The price of gold closed at
Barrick Downgraded - down goes the HUI - again.
Barrick Gold was downgraded this morning to sector perform by some of the
"analysts" citing concerns over delays and cost escalations at new mines
under construction. Tie that in with weakness in both gold and silver,
which ran into long liquidation and some fresh selling after failing to
better the chart resistance levels noted yesterday, and that has resulted
in the HUI sinking down to the bottom of a critical support level on the
price chart once again.
The gold shares in general are becoming dogs that cannot hunt or in the
case of some, not even bark.
The same hedge funds that ... more »
Buffet Spoons With Obama; Holder Spoons With Big Banks
*“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a
spokeswoman for Burlington Northern, a unit of Buffett’s Omaha,
Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If
Keystone XL “doesn’t happen, we’re here to haul.” *
I had been trying to figure out why Obama nuked the pipeline proposed by
Canada's TransCanada Corp that would have transported oil from oil sands in
Canada to refineries in the Gulf of Mexico. The cover story was
"environmental factors." Hmmm. I don't believe that I've ever in my life
heard any politician or environmen... more »
Guest Post: Paychecks, Perception, Propaganda & Power
Humans
are a flawed species. Our minds are easily manipulated. We don’t like
pain. We prefer instant gratification. We are susceptible to mass
delusion. We will often choose hope over critical thought. Those with
higher IQs will regularly attempt to take advantage of those with lower
IQs. Fear and greed are the two motivations used by the minority in
power to control and manipulate the majority. The American people have
been led astray by a small group of powerful men. We were herded
through a door in the wall of perception that promised an American dream
of material goods, entitlements and pleasure with no obligations or
responsibility to future generations. There is only one choice that can
save this country from ruin. Each individual must make a choice to
either to continue supporting the manipulative, corrupt status quo or
coming back through the Door in the Wall.“The man who comes back through the Door in the Wall will never be quite the same as the man who went out. He will be wiser but less sure, happier but less self-satisfied, humbler in acknowledging his ignorance yet better equipped to understand the relationship of words to things, of systematic reasoning to the unfathomable mystery which it tries, forever vainly, to comprehend” – Aldous Huxley
Cash For iClunkers? Some Observations On Sequential Apple Revenue Growth
Without trying to take away from Apple's blow out earnings, a quick look at the Apple data sheet breaking down revenue and unit sales by
geography points to something rather curious. While unit sales in Q4
were fine, with a modest drop in the US, even as European sales posted
the biggest sequential increase on record at 306K (from 1,176K to
1,482K), one wonders just how sustainable this in itself is, now that
Europe has officially entered a recession, especially since the
incremental revenue in Europe in Q4 was also a record $3.9 billion (of
the total $18 billion sequential increase). Yet nowhere was this
quarterly surge more evident than in the US: the increase in American
sales was a unprecedented $8.1 billion sequentially, from $9.7 billion
to $17.7 billion (which means margins are blowing out: how long until
FoxConn has something to say about this?). While most of this is to be
attributed to the iPhone 4S launch in the quarter, the question then is
just how sustainable is the new trendline growth if one normalizes for
product cadence (yes, we hate that word too), or the ability of the
company to reinvent itself quarter after quarter. With the iPad 3
expected this quarter, and the iPhone 5 the next, will Apple be a
"product to product" company going forward, and what happens with
baseline revenue growth ex-new product innovation? Or how about
self-cannibalization? Not like we are saying anything new here, but the
value of Apple is in product innovation, which is nowhere better seen
than in the sequential Q4 revenue. Will this innovation ability stay
with the new management? And how much of the Q4 sales surge was, sad to
say it, the Steve Jobs death factor? Finally, the fact that in Q4
AsiaPac revenues were less than a year prior, does this mean that even
with the 4S release, Apple has now lost the Asian market to cheaper,
pirated, or Google-based competition? Finally, in a tried and true
tradition of instant gratification (credit funded naturally), how much
of the explosion in the December 31 quarter sales is simply a "cash for
clunker"-like forward shifted of purchases that would have otherwise
happened in the first quarter of 2012?Apple Blows Away Top And Bottom Line
The suspense can now end- Revenues of $46.33 billion, expected at $38.99 billion
- EPS of $13.87, expected at $10.14
- APPLE SEES 2Q REV. ABOUT $32.5B, EST. $31.87B
- APPLE SEES 2Q EPS ABOUT $8.50, EST. $7.96
- APPLE 1Q IPAD UNITS SOLD 15.43MLN , UP 111%
- APPLE 1Q GROSS MARGIN 44.7%, EST. 40.8%
- APPLE SOLD 5.2 MILLION MACS DURING QTR, EST. 5.1M
- APPLE SOLD 15.4 MILLION IPODS IN QTR, EST. 13.9M
- APPLE SOLD 37.04 MILLION IPHONES IN THE QUARTER, REPRESENTING 128 PERCENT UNIT GROWTH
- APPLE GENERATES $17.5 BILLION IN CASH FLOW IN THE QUARTER
Post-Europe Close, Volume Disappears And EUR Rally Fails To Inspire
With
quarter-to-date volumes at the NYSE 20% below Q4's average, we wonder
just how much bank's earnings will be impacted as today saw the credit
derivative index market 'disappear' this afternoon also. IG and HY
traded (or at least were quoted) in an extremely narrow range post the
European close (as ES also traded in a 2pt range for two hours post
Europe before making a slightly bigger move). Stocks (and HYG) outperformed IG/HY today but ES has not been levitating as much as credit post OPEX.
EURUSD rallied post the Europe close (as for the 4th day in a row,
European equity and credit markets reversed direction pre- and post-US
day session and then EUR reversed direction on Europe's close). The
EUR-implied USD weakness did nothing to drive risk assets too much
though HYG (the high-yield ETF) was active and positive on the day as we
see HY credit and stocks as close in 'value' as they have been in
almost 8 months. It seems obvious that between AAPL earnings (down
today), the SOTU, and a Greek fiasco any moment that most 'traders' are
either fully positioned and biting their nails or simply in
wait-and-see mode. Copper outperformed on the day as Oil, Gold, and
Silver all fell on the day (with Silver in a frenzy last evening). Gold
and Silver are lower from Friday now and while TSY yields did drop
into the close, they remain3-4bps higher on the week. The
modest rally to almost unch in ES into the close was not supported by
broad risk assets which were stable to modestly lower after holding high
correlations all day.This Is Where The Gold Is(n't) - The New York Fed Guide To The Most Valuable Vault In The World
Much
has been said about the secretive vault situated 80 feet below ground
level at 33 Liberty street, which contains over 20% of the world's gold
(allegedly*), currently estimated at over $350 billion. Some have even
robbed it: with the barrier between fantasy and reality a blur,
courtesy of the total farce we live in which has rendered the IPO of
TheOnion impossible, there is nothing wrong with actually believing Die
Hard With A Vengeance did in fact happen. But if your knowledge of the
vault is limited to the perspective of one John McClane, you are
missing our on a lot. Which is why the new York Fed, in those rare
occasions when it is not monetizing debt, and/or telling Citadel which
securities to buy, has been courteous enough to put together "The Key To
The Gold Vault" - the official brochure of the warehouse where more
gold is stored than at any other place in the world.Desperate Spain Wants European Rescue Fund To Be "The Bigger The Better"
No, there is no desperation in Spanish PM's Rajoy statement at all. The head of the economy, whose unemployment rate just
soared to a ridiculous 23% in the past quarter, registering the
largest drop since the Lehman collapse, pretty much made it clear that
without European (read German) fiscal aid viagra, the unemployment rate
may soon reach that of Chicago,
only without the typo. Reuters reports that Spain favours the creation
of the largest possible European financial rescue fund to prevent
future crises, Prime Minister Mariano Rajoy said on Tuesday, adding
that his government will meet its budget deficit target this year. "We
support a rescue mechanism, the bigger the better, for it to act as a
dissuading element for certain things that we've been going through
lately," Rajoy told reporters after meeting his Portuguese counterpart,
Pedro Passos Coelho. He said Spain will meet its budget gap goal of
4.4 percent of GDP this year. Judging by the Spanish (un)employment
chart, and specifically recent trends therein, we will take the under.
And the over on the Enzyte jokes.Das Kapitulation
The
biggest market-moving event so far this year is undeniably the
positive (so far) aftershock from Germany's capitulation on monetary
expansion and as Michael Cembalest of JPMorgan goes on to note that the
ECB, directly and indirectly, is giving its governments and its banks
the money that the rest of the world has been taking away. Between the
ECB's LTRO largesse and its 'crisis management' initiatives (for
example: collateral standards, watered down Basel III, lower bank
reserve requirements), it seems clear that the resignation of
the German contingency (Stark and Weber) from the ECB last year was a
signal of the laying-down-of-arms by the Germans relative to the
Periphery (perhaps for fear of the 'powerful backlash' that
Monti among other has warned about). While the JPMorgan CIO understands
the market's positive reaction (as Armageddon risk is reduced/delayed)
he remains a skeptic broadly given the structural reforms and any
expectations of growth among most euro-zone economies this year. He
reminds investors that it should not be lost on anyone that first prize
in the Central Bank balance sheet expansion race is not necessarily
one you want to win and we wonder just how aware the German press and public are that this is happening under their watchful (if not frustrated) gaze.Guest Post: Yet Another Reminder That Democracy Is An Illusion
With over 150 million registered users, the file sharing site MegaUpload.com is one of the most popular on the Internet. At least, it was. The site has now been seized by the US government and its homepage converted to an FBI anti-piracy warning. Its founder, a high tech entrepreneur named Kim Dotcom (yes, he had it legally changed), was arrested in New Zealand after his homes were raided and assets seized. These actions were all at the behest of the US government. And it's just the latest example of Big Brother overextending its authority across the entire world. Last week, we discussed the grassroots efforts to stop passage of the SOPA/PIPA legislation that would give the US government jurisdiction over the Internet. Wikipedia blacked out its English language pages to raise awareness of the issue, and people went completely nuts. Congress subsequently withdrew the bills amid popular outcry, and the public rejoiced that their efforts successfully thwarted further encroachment on their liberty. Or so they thought. On the exact same day that everyone was celebrating victory over SOPA/PIPA, the US government simply used another set of regulations to nab Dotcom and seize his assets. The fact that SOPA was scrapped turned out to be completely irrelevant, they just found other rules to apply (or break).
"Dreams Versus Reality" - Former IMF Chief Economist On Europe's Last Stand
Successive
plans to restore confidence in the euro area have failed. Proposals
currently on the table also seem likely to fail. The market cost of
borrowing is at unsustainable levels for many banks and a significant
number of governments that share the euro. In three short sentences, the Peterson Institute for International Economics' (PIIE) Simon Johnson introduces the clear and present danger that Europe has become in a comprehensive article on the deepening European crisis.
The circular nature of the realization of sovereign credit risk
realities and the subsequent effective insolvency of banks exacerbates a
credit crunch and exaggerates problems in the real economy - most
specifically in the periphery. Johnson outlines five measures that are
needed to enable the euro area to survive but the big bazooka of
up to EUR5tn just for the PIIGS is what the PIIE senior fellow fears
as the ECB is pushed down a dangerous path. The coordination
of 17 disaparate nations leaves the former IMF man greatly concerned as
the unique nature of this crisis leaves "four economic, social, and
political events as possible causes of systemic collapse with each at
risk of occurring in the next weeks, months, or years and these risks will not disappear quickly."
As European sovereign bonds are now deeply subordinated claims on
recessionary economies, it is no surprise that Johnson ends by noting
that Europe's economy remains in a dangerous state.
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