Glenn Greenwald's Farewell (For Now) Letter: "Stand Against The Attack On Press Freedoms In The US"

Originally appearing in The Guardian:

On leaving the Guardian

Reporting the NSA story hasn’t been easy, but it’s always been fulfilling. It’s what journalism at its crux is about, and we must protect that


As many of you know, I’m leaving the Guardian in order to work with Pierre Omidyar, Laura Poitras, Jeremy Scahill and soon-to-be-identified others on building a new media organization. As I said when this news was reported a couple of weeks ago, leaving the Guardian was not an easy choice, but this was a dream opportunity that was impossible to decline.

We do not yet have an exact launch date for the new outlet, but rest assured: I’m not going to disappear for months or anything like that. The new site will be up and running reasonably soon.

In the meantime, I’ll continue reporting in partnership with foreign media outlets (stories on mass NSA surveillance in France began last week in Le Monde, and stories on bulk surveillance of Spanish citizens and NSA’s cooperation with Spanish intelligence have appeared this week in Spain’s El Mundo), as well as in partnership with US outlets. As I did yesterday when responding to NSA claims about these stories, I’ll also periodically post on my personal blog – here – with an active comment section, as well as on our pre-launch temporary blog. Until launch of the new media outlet, the best way to learn of new stories, new posts, and other activity is my Twitter feed, @ggreenwald. My new email address and PGP key are here.

I’m gratified by my 14-month partnership with the Guardian and am particularly proud of what we achieved together over the last five months. Reporting the NSA story has never been easy, but it’s always been invigorating and fulfilling. It’s exactly why one goes into journalism and, in my view, is what journalism at its crux is about. That doesn’t mean that the journalists and editors who have worked on this story have instantly agreed on every last choice we faced, but it does mean that, on the whole, I leave with high regard for the courage and integrity of the people with whom I’ve worked and pride in the way we’ve reported this story.

As I leave, I really urge everyone to take note of, and stand against, what I and others have written about for years, but which is becoming increasingly more threatening: namely, a sustained and unprecedented attack on press freedoms and the news gathering process in the US. That same menacing climate is now manifest in the UK as well, as evidenced by the truly stunning warnings issued this week by British Prime Minister David Cameron:

British Prime Minister David Cameron said on Monday his government was likely to act to stop newspapers publishing what he called damaging leaks from former US intelligence operative Edward Snowden unless they began to behave more responsibly.

 

“If they (newspapers) don’t demonstrate some social responsibility it will be very difficult for government to stand back and not to act,” Cameron told parliament, saying Britain’s Guardian newspaper had “gone on” to print damaging material after initially agreeing to destroy other sensitive data.

There are extremist though influential factions in both countries which want to criminalize not only whistleblowing but the act of journalism itself (pdf). I’m not leaving because of those threats – if anything, they make me want to stay and continue to publish here – but I do believe it’s urgent that everyone who believes in basic press freedoms unite against this.

Allowing journalism to be criminalized is in nobody’s interest other than the states which are trying to achieve that. As Thomas Jefferson wrote in an 1804 letter to John Tyler:

Our first object should therefore be, to leave open to him all the avenues to truth. The most effectual hitherto found, is the freedom of the press. It is, therefore, the first shut up by those who fear the investigation of their actions.

I hope everyone who believes in basic press freedoms will defend those journalistic outlets when they are under attack – all of them – regardless of how much one likes or does not like them.

Finally: thanks, most of all, to my readers and commenters who participate in so many ways in the journalism I do. I’ve always said that my favorite aspect of online political writing is how interactive and collaborative it is with one’s readers: that has always been, and always will be, crucial in so many ways to what I do.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/o-dSIb0Njew/story01.htm Tyler Durden

David Einhorn’s Advice On How To Trade This Equity Bubble (Spoiler Alert: Don’t)

Confused how to trade the second coming of the dot com bubble and a world in which irrational exuberance has hit irrationally exuberant levels? You are not alone. Here is some insight from none other than David Einhorn originating in his latest letter to investors.

The game of Earnings Expectation Conflation continues. It’s a bit like limbo – with a twist. Though the bar gets lowered every round, the goal is to make it over the bar, rather than go under it. Here’s what the current round looks like: At the end of June, third quarter S&P 500 index earnings were expected to grow 6.5%. In July, as actual earnings started to come in and companies lowballed the next quarter’s guidance, index earnings expectations were likewise adjusted lower. As more companies reported “beat and lower” earnings, market expectations continued to fall to the point where third quarter index earnings growth is now expected to be half of what was forecast in June. Of course, when earnings are announced in October and they “beat” the guidance set in July, everyone will celebrate with cake and ice cream. (Never mind that the earnings are actually in line with the original June predictions, or that they’ve lowballed guidance for next quarter – if anyone noticed that, they wouldn’t be able to move to the next round by lowering the December bar, which is currently set at 13% growth.) As the S&P 500 index has  advanced this year mostly through multiple expansion, the index is no longer cheap, particularly considering that we are now almost half a decade into an economic expansion and earnings growth is unexciting.

 

There is evidence of much more (and increasingly creative) speculative behavior. Some companies have convinced the market to embrace earnings reports that ignore what they must pay employees to show up to work every day, provided the employees accept equity rather than cash. We don’t understand how some investors view this as economically different from the company selling shares into the market and using the proceeds to pay workers. Then there’s the sizable group of companies (including a number of recent IPOs) that are apparently not subject to conventional valuation methods. Many have no profits and no real plan to make future profits. The market doesn’t seem to mind – in fact, it is hard to fall short of such modest expectations and the prices of these stocks have performed particularly well of late. Finally, there are the market participants whose investment process appears to be “bet on whatever has made money most recently.” They’ve noticed that stocks with large short-interest ratios have materially outperformed over the last year and they continue to invest accordingly. When “high short interest” becomes a viable stock-picking strategy and conventional valuation methods no longer apply for many stocks, we can’t help but feel a sense of déjà vu. We never expected to find ourselves in an environment like this again, given the savings that were lost when the internet bubble popped.

We are happy (and sad) to take the blame for #3 (see “Presenting The Best Trading Strategy Over The Past Year: Why Buying The Most Hated Names Continues To Generate “Alpha“). After all, when dealing with a stock market designed by a bunch of clueless Princeton academics specifically to cater to idiots, one must trade  accordingly.

Finally for those wondering…

At quarter end, the largest disclosed long positions in the Partnerships were Apple, General Motors, gold, Marvell Technology, Oil States International and Vodafone Group. The Partnerships had an average exposure of 109% long and 72% short.

We must say: we admire Mr. Einhorn’s testicular fortitude to hold a 72% short position in a world in which all “downside risk management” has been outsourced to the politburo in the Marriner Eccles building.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nydBALUzXzI/story01.htm Tyler Durden

David Einhorn's Advice On How To Trade This Equity Bubble (Spoiler Alert: Don't)

Confused how to trade the second coming of the dot com bubble and a world in which irrational exuberance has hit irrationally exuberant levels? You are not alone. Here is some insight from none other than David Einhorn originating in his latest letter to investors.

The game of Earnings Expectation Conflation continues. It’s a bit like limbo – with a twist. Though the bar gets lowered every round, the goal is to make it over the bar, rather than go under it. Here’s what the current round looks like: At the end of June, third quarter S&P 500 index earnings were expected to grow 6.5%. In July, as actual earnings started to come in and companies lowballed the next quarter’s guidance, index earnings expectations were likewise adjusted lower. As more companies reported “beat and lower” earnings, market expectations continued to fall to the point where third quarter index earnings growth is now expected to be half of what was forecast in June. Of course, when earnings are announced in October and they “beat” the guidance set in July, everyone will celebrate with cake and ice cream. (Never mind that the earnings are actually in line with the original June predictions, or that they’ve lowballed guidance for next quarter – if anyone noticed that, they wouldn’t be able to move to the next round by lowering the December bar, which is currently set at 13% growth.) As the S&P 500 index has  advanced this year mostly through multiple expansion, the index is no longer cheap, particularly considering that we are now almost half a decade into an economic expansion and earnings growth is unexciting.

 

There is evidence of much more (and increasingly creative) speculative behavior. Some companies have convinced the market to embrace earnings reports that ignore what they must pay employees to show up to work every day, provided the employees accept equity rather than cash. We don’t understand how some investors view this as economically different from the company selling shares into the market and using the proceeds to pay workers. Then there’s the sizable group of companies (including a number of recent IPOs) that are apparently not subject to conventional valuation methods. Many have no profits and no real plan to make future profits. The market doesn’t seem to mind – in fact, it is hard to fall short of such modest expectations and the prices of these stocks have performed particularly well of late. Finally, there are the market participants whose investment process appears to be “bet on whatever has made money most recently.” They’ve noticed that stocks with large short-interest ratios have materially outperformed over the last year and they continue to invest accordingly. When “high short interest” becomes a viable stock-picking strategy and conventional valuation methods no longer apply for many stocks, we can’t help but feel a sense of déjà vu. We never expected to find ourselves in an environment like this again, given the savings that were lost when the internet bubble popped.

We are happy (and sad) to take the blame for #3 (see “Presenting The Best Trading Strategy Over The Past Year: Why Buying The Most Hated Names Continues To Generate “Alpha“). After all, when dealing with a stock market designed by a bunch of clueless Princeton academics specifically to cater to idiots, one must trade  accordingly.

Finally for those wondering…

At quarter end, the largest disclosed long positions in the Partnerships were Apple, General Motors, gold, Marvell Technology, Oil States International and Vodafone Group. The Partnerships had an average exposure of 109% long and 72% short.

We must say: we admire Mr. Einhorn’s testicular fortitude to hold a 72% short position in a world in which all “downside risk management” has been outsourced to the politburo in the Marriner Eccles building.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nydBALUzXzI/story01.htm Tyler Durden

Dubai Gold Demand Increases Eightfold; October Eagle And Kangaroo Sales Strong

Gold slipped to one week lows today despite the U.S. Federal Reserve vowing to maintain its ultra loose monetary policies. Speculators may be taking profits from a recent run up in prices.


Gold in GBP, 5 Year – (Bloomberg)

Gold has risen 8% since hitting a three month trough on October 15 as value buyers bought gold.

The Fed yesterday sounded a bit less optimistic about economic growth as it announced plans to keep buying $85 billion of U.S. bonds per month. The central bank noted that the recovery in the housing market had lost some steam and suggested some frustration at how poorly the labour market remains.

Many of the world’s largest banks have been accused of manipulating the $5.3 trillion a day global foreign exchange market. Citigroup Inc. (C:US) and JPMorgan Chase & Co. (JPM:US) are putting their top London currency dealers on leave as regulators and the U.S. Justice

Department are probing the manipulation of foreign exchange rates. The investigation began examining the traders’ use of an instant-message group. The roster of banks in the group changed as the men moved firms and also included Barclays Plc, Royal Bank of Scotland Group Plc and UBS AG.

The five firms account for about 47% of the massive foreign exchange market. Two other traders, who weren’t part of the conversations and who asked to not be identified because they do business with those involved, said that they and others in the market referred to the message group as “The Cartel.”

Despite a slight drop in physical demand from China in recent days, physical gold demand remains robust in India, the Middle East and amongst coin buyers in western markets.

Demand for gold in the Middle East remains robust and there has been an eightfold increase or 700% increase in demand in recent years. Geopolitical uncertainty in the region, from Libya to Egypt to Syria and Iraq and Iran is leading to demand for bullion.

Thus, the Dubai Gold & Commodities Exchange plans to list a spot gold contract in the second quarter of next year. The bourse, which offers gold and silver futures, is talking to local merchants and industry organizations and aims to get regulatory approval for the product by early 2014, Chief Executive Officer Gary Anderson told BloombergDemand for bullion in Dubai expanded eightfold in the last six to 10 years, he said.

Dubai accounts for about 25% of global physical gold trade and the United Arab Emirates will grow as a precious metals trading hub partly because of its location near the largest consuming nations, according to the Dubai Multi Commodities Centre, which owns a majority stake in the DGCX.

The size of the spot gold contract will probably be 1 kilogram (32 ounces). While there are “no concrete plans” yet for other precious metals products, a silver spot contract and platinum and palladium contracts may be possible in the future, Anderson said.


Gold in EUR, 5 Year – (Bloomberg)

Sales of gold coins and bars recovered in October, figures from two of the world’s leading mints show, suggesting physical buyers remain robust despite bullion’s 20% fall this year.

While overall volumes remain well below this year’s peak, they are on track for a very robust year that will be close to or surpass levels seen in 2011.

Gold has fallen out of favour with speculators and some investors on expectations that the Federal Reserve will soon start scaling back its money printing programme. However, data regarding physical demand from Asia and mints around the world, shows that store of wealth demand remains very robust and physical buyers are using price weakness to keep accumulating bullion.

Australia’s Perth Mint gold sales – including the iconic Australian kangaroo coin series – up to October 25 reached 75,040 troy ounces, according to preliminary numbers obtained by CNBC.

They are on track for a near 10% month on month gain from 68,488 ounces in September.
Perth Mint gold sales surged to a record in April this year after the peculiar ‘flash crash’ that saw gold plummet in minutes due to a massive bout of concentrated selling on the COMEX. April sales surged to over 111,505 ounces which was more than double the sales in March.

Smart money accumulated on the dip, again.

Meanwhile, sales of American Eagle gold coins more than tripled on month in October to 46,500 ounces. While they remain well off the 209,500 ounce high recorded in April, according to daily updated numbers obtained from the U.S. Mint’s website, they are also on track for another good year.

April represented a banner month for sales in both the Perth Mint and the U.S. Mint after buyers jumped at the opportunity to accumulate gold coins, following gold’s biggest ever one day loss on April 15, when it tumbled $125. The concentrated selling on the COMEX precipitated the month’s sharpest decline since December 2011 and led to further allegations of manipulation of gold prices by Wall Street banks.

Physical demand from store of wealth buyers in Asia and internationally who continue to ‘stack’ or gradually accumulate physical coins and bars is supporting gold  and silver at these levels and should contribute to higher prices in the coming months.

Gold is down 20.2% year to date but has advanced 14% since reaching a 34 month low in June as lower prices led to increased demand for gold jewelry, bars and coins, particularly in Asia.


Download GoldCore’s Essential Guide To Silver Eagles here


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0-r_5eUCTbc/story01.htm GoldCore

Reggie Middleton’s Apple Q4 2013 Analysis: RDF In Full Effect As Analysts & Press Go GaGa Over Garbage!

I’d like to start this report off with an excerpt from the last report, which ironically excerpted the one before that – to wit:

Possibly the biggest indicator of past research being of high quality is the ability to regurgitate it in the future as new research and have said research be considered of value, or better yet of extreme value and high quality. With that being said, I’d like all to realize that Our Q1 Report Said It All – Let’s Revisit How We Started That Report…

“Apple Is In Trouble – Plain & Simple!”

Apple has successfully transformed itself from a portable and desktop computer company to a mobile device company, and managed to do so right at the crux of the mobile computing boom. As such, it has benefitted mightily, briefly becoming the largest and most respected company in the world. Alas, what goes up must eventually come down. The largesse revenues and margins gleaned by Apple brought massive competition, and in the case of Google’s Android, business models specialized in gutting the fat margins which caused Apple to prosper. As a result, margin compression ensued, but very few actually saw a sign of it until it was too late (referenceDeconstructing The Most Accurate Apple Analysis Ever).”

This quick traipse down memory lane is quite useful for Apple is now paying for the perceived above average margin displays of its recent past by reaping the extreme margin compression to be seen as it has now full transformed itself into a mobile device company. Again, as quoted from our Q1 report,

“Apple is now paying the piper for its shift into mobile by having its pipeline effectively saturated with mobile products, thus nullifying the margin expansion that the move into mobile products has brought on. Mobile products had higher margins than their desktop/laptop counterparts...

 The entire Apple story can be encapsulated in just two relatively simple charts. The first, found directly below, is profitability. Thus far, only the iPhone has been able to hold some ground but it has slowly been stripped of margin. The iPad business’s profitably is being gouged.

For those who haven’t done so, I strongly recommend that you read the last three Apple research reports. They have been absolutely on the money. Now, on to Apple’s most recent quarter…

Apple Still Has The Business and Financial Press Mesmerized With It’s RDF (Reality Distortion Field)

For some reason when I read management comments and financial statements I seem to see something totally different from Sell Side Analysts and the financial and business press. This is an excerpt from “Business Insider” on Apple’s Q4 earnings results:

Apple’s numbers are out, and they’re good. 

Revenue, EPS, and iPhone sales are ahead of expectations. iPad sales were a little worse than expected, but not too bad. 

The stock initially tanked after the numbers were out thanks to weaker than expected margin guidance. Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone. 

On the company’s earnings call, it explained why margin was lighter than expected and the stock came roaring back. At last check it was down slightly in after hours trading. 

Apple’s margin will be hit by a combination of factors. It is selling new iPads that cost more to make, new laptops, foreign exchange issues, and most importantly, a $900 million sequential increase in deferred revenue thanks to all the software it is giving away with iOS and Macs. 

On the earnings call, Gene Munster of Piper Jaffray said the real margin would have been closer to 38.5%, and Apple basically confirmed it. This sent the stock climbing. 
Read more: http://www.businessinsider.com/apple-q4-earnings-2013-10#ixzz2jDN1vWa4

Let’s parse this piece by piece.

“Revenue, EPS, and iPhone sales are ahead of expectations.”

Three and a half years ago I released analysis that puts this myth to rest. Apple is one of the most accomplished of sandbagging management. Paying subscribers, reference Apple Earnings Guidance Analysis 08/12/2010

apple sandbaging1 apple sandbaging1

 

 apple sandbaging3 apple sandbaging3

 

iPad sales were a little worse than expected, but not too bad. “

I wonder how one defines “not too bad”…

ipad sales miserable and getting worseipad sales miserable and getting worse

“Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone. “

I’ve warned, and warned, and warned…. 

Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone. 

Apple hardware costs spikingApple hardware costs spiking

On the company’s earnings call, it explained why margin was lighter than expected and the stock came roaring back. At last check it was down slightly in after hours trading. 

Apple’s margin will be hit by a combination of factors. It is selling new iPads that cost more to make, new laptops, foreign exchange issues, and most importantly, a $900 million sequential increase in deferred revenue thanks to all the software it is giving away with iOS and Macs. 

On the earnings call, Gene Munster of Piper Jaffray said the real margin would have been closer to 38.5%, and Apple basically confirmed it. This sent the stock climbing. 

Apple’s margins have been and will be hit harder as I’ve predicted.  This non-sense about the deferred revenue from giving away software and Gene Munster’s “real margin” comments are utter nonsense. Apple’s reported margin IS ITS “REAL MARGIN”! The reason it is giving away its core software products for free is to compete with the entry and the threat of Microsoft’s Surface 2 tablet that comes bundled with a real, the real, office suite – Microsoft Office. This makes it real deal contender in the enterprise, where Office is not on the de facto standard – it is the standard. It also has to compete with Google’s Android who bought Quick Office and is now giving that office suite for free. For those who don’t think that makes a difference, what OS do you think took the iPad from 92% market share in 2010 to 32% market share last quarter?

There is a lot more contained in the upcoming (as in a few hours) Apple analysis for subscribers. Apple will have a very active year next year. The reason(s) is contained in the subscriber only report, in explicit detail, to be released in a few hours. I will update this post with links when it is ready for download. Yes, the truth is now for sale, and in Apple’s case you can get a month of it for $275.

I refer my subscribers to the research documents below for the answers… 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

 The update from two months ago is also of value for those who haven’t read it. It turns out that it was quite prescienct!

 File Icon Apple 1Q2013 update – Pro & Institutional

 See also:

 What Sell Side Wall Street Doesn’t Understand About Apple – It’s Not The Leader Of The Post PC World!!!

 The short call – October 2012, the month of Apple’s all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made – Share Price, Market Share, Strategy and All


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/rpBq85N1Zxc/story01.htm Reggie Middleton

Reggie Middleton's Apple Q4 2013 Analysis: RDF In Full Effect As Analysts & Press Go GaGa Over Garbage!

I’d like to start this report off with an excerpt from the last report, which ironically excerpted the one before that – to wit:

Possibly the biggest indicator of past research being of high quality is the ability to regurgitate it in the future as new research and have said research be considered of value, or better yet of extreme value and high quality. With that being said, I’d like all to realize that Our Q1 Report Said It All – Let’s Revisit How We Started That Report…

“Apple Is In Trouble – Plain & Simple!”

Apple has successfully transformed itself from a portable and desktop computer company to a mobile device company, and managed to do so right at the crux of the mobile computing boom. As such, it has benefitted mightily, briefly becoming the largest and most respected company in the world. Alas, what goes up must eventually come down. The largesse revenues and margins gleaned by Apple brought massive competition, and in the case of Google’s Android, business models specialized in gutting the fat margins which caused Apple to prosper. As a result, margin compression ensued, but very few actually saw a sign of it until it was too late (referenceDeconstructing The Most Accurate Apple Analysis Ever).”

This quick traipse down memory lane is quite useful for Apple is now paying for the perceived above average margin displays of its recent past by reaping the extreme margin compression to be seen as it has now full transformed itself into a mobile device company. Again, as quoted from our Q1 report,

“Apple is now paying the piper for its shift into mobile by having its pipeline effectively saturated with mobile products, thus nullifying the margin expansion that the move into mobile products has brought on. Mobile products had higher margins than their desktop/laptop counterparts...

 The entire Apple story can be encapsulated in just two relatively simple charts. The first, found directly below, is profitability. Thus far, only the iPhone has been able to hold some ground but it has slowly been stripped of margin. The iPad business’s profitably is being gouged.

For those who haven’t done so, I strongly recommend that you read the last three Apple research reports. They have been absolutely on the money. Now, on to Apple’s most recent quarter…

Apple Still Has The Business and Financial Press Mesmerized With It’s RDF (Reality Distortion Field)

For some reason when I read management comments and financial statements I seem to see something totally different from Sell Side Analysts and the financial and business press. This is an excerpt from “Business Insider” on Apple’s Q4 earnings results:

Apple’s numbers are out, and they’re good. 

Revenue, EPS, and iPhone sales are ahead of expectations. iPad sales were a little worse than expected, but not too bad. 

The stock initially tanked after the numbers were out thanks to weaker than expected margin guidance. Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone. 

On the company’s earnings call, it explained why margin was lighter than expected and the stock came roaring back. At last check it was down slightly in after hours trading. 

Apple’s margin will be hit by a combination of factors. It is selling new iPads that cost more to make, new laptops, foreign exchange issues, and most importantly, a $900 million sequential increase in deferred revenue thanks to all the software it is giving away with iOS and Macs. 

On the earnings call, Gene Munster of Piper Jaffray said the real margin would have been closer to 38.5%, and Apple basically confirmed it. This sent the stock climbing. 
Read more: http://www.businessinsider.com/apple-q4-earnings-2013-10#ixzz2jDN1vWa4

Let’s parse this piece by piece.

“Revenue, EPS, and iPhone sales are ahead of expectations.”

Three and a half years ago I released analysis that puts this myth to rest. Apple is one of the most accomplished of sandbagging management. Paying subscribers, reference Apple Earnings Guidance Analysis 08/12/2010

apple sandbaging1 apple sandbaging1

 

 apple sandbaging3 apple sandbaging3

 

iPad sales were a little worse than expected, but not too bad. “

I wonder how one defines “not too bad”…

ipad sales miserable and getting worseipad sales miserable and getting worse

“Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone. “

I’ve warned, and warned, and warned…. 

Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone. 

Apple hardware costs spikingApple hardware costs spiking

On the company’s earnings call, it explained why margin was lighter than expected and the stock came roaring back. At last check it was down slightly in after hours trading. 

Apple’s margin will be hit by a combination of factors. It is selling new iPads that cost more to make, new laptops, foreign exchange issues, and most importantly, a $900 million sequential increase in deferred revenue thanks to all the software it is giving away with iOS and Macs. 

On the earnings call, Gene Munster of Piper Jaffray said the real margin would have been closer to 38.5%, and Apple basically confirmed it. This sent the stock climbing. 

Apple’s margins hav
e been and will be hit harder as I’ve predicted.  This non-sense about the deferred revenue from giving away software and Gene Munster’s “real margin” comments are utter nonsense. Apple’s reported margin IS ITS “REAL MARGIN”! The reason it is giving away its core software products for free is to compete with the entry and the threat of Microsoft’s Surface 2 tablet that comes bundled with a real, the real, office suite – Microsoft Office. This makes it real deal contender in the enterprise, where Office is not on the de facto standard – it is the standard. It also has to compete with Google’s Android who bought Quick Office and is now giving that office suite for free. For those who don’t think that makes a difference, what OS do you think took the iPad from 92% market share in 2010 to 32% market share last quarter?

There is a lot more contained in the upcoming (as in a few hours) Apple analysis for subscribers. Apple will have a very active year next year. The reason(s) is contained in the subscriber only report, in explicit detail, to be released in a few hours. I will update this post with links when it is ready for download. Yes, the truth is now for sale, and in Apple’s case you can get a month of it for $275.

I refer my subscribers to the research documents below for the answers… 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

 The update from two months ago is also of value for those who haven’t read it. It turns out that it was quite prescienct!

 File Icon Apple 1Q2013 update – Pro & Institutional

 See also:

 What Sell Side Wall Street Doesn’t Understand About Apple – It’s Not The Leader Of The Post PC World!!!

 The short call – October 2012, the month of Apple’s all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made – Share Price, Market Share, Strategy and All


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/rpBq85N1Zxc/story01.htm Reggie Middleton

The Fed’s Choice: A Balance Sheet That Is $4.5 Trillion Or $5 Trillion… Or Much More

Now that an October taper is out of the question, bored investors, in a world in which fundamentals no longer matter, are looking forward to the next possible FOMC meetings and potential taper announcement dates, with three specific dates sticking out: December/January, which are really one cluster, and June, as possible announcement dates. Why are these dates important: because while a September tapering announcement would have resulted in a $4 trillion final Fed balance sheet (assuming the tapering proceeded to a full QE halt) before even more QE was unleashed, any subsequent taper dates imply a nice round number to the final Fed balance sheet at the end of 2014: either $4.5 trillion, assuming a January 2014 taper, or $5 trillion if the Fed waits until June to announce a tapering.

This can be seen on the following chart from Bank of America.

BofA commentary:

Markets will be especially focused on the discussion around the timing and conditions of tapering. Our Chart of the day illustrates three scenarios, the first of which is a useful reference despite not actually happening: a September 2013 start to tapering that follows the June “framework” laid out by Chairman Ben Bernanke for a mid-2014 end to asset buying. In that case, the Fed’s asset holdings would have grown to around US$4tn. A January start and a slower pace of unwind results in nearly US$4.5tn in Fed assets, while a June start (and similar slow pace to conclude) yields nearly US$5tn. Those are sizable differences.

Another way of seeing the change in market expectations, is the following chart which shows what the current tapering path looks like.

There is of course an increasingly likely third possibility: forget $4.5 or $5 trillion – with increasing chatter of a Fed that is prepared to unleash NGDP targeting, or as it is better known without its technical term: even more turbo printing in an attempt to unanchor future 2% inflation expectations, the Fed’s balance sheet may just grow forever and ever.

And with every passing day in which the Fed demonstrates a complete lack of concern about the collapsing pool of high quality collateral which the Fed monetizes at an ever faster daily net basis, this becomes the most probable outcome.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6kApaTLwd60/story01.htm Tyler Durden

The Fed's Choice: A Balance Sheet That Is $4.5 Trillion Or $5 Trillion… Or Much More

Now that an October taper is out of the question, bored investors, in a world in which fundamentals no longer matter, are looking forward to the next possible FOMC meetings and potential taper announcement dates, with three specific dates sticking out: December/January, which are really one cluster, and June, as possible announcement dates. Why are these dates important: because while a September tapering announcement would have resulted in a $4 trillion final Fed balance sheet (assuming the tapering proceeded to a full QE halt) before even more QE was unleashed, any subsequent taper dates imply a nice round number to the final Fed balance sheet at the end of 2014: either $4.5 trillion, assuming a January 2014 taper, or $5 trillion if the Fed waits until June to announce a tapering.

This can be seen on the following chart from Bank of America.

BofA commentary:

Markets will be especially focused on the discussion around the timing and conditions of tapering. Our Chart of the day illustrates three scenarios, the first of which is a useful reference despite not actually happening: a September 2013 start to tapering that follows the June “framework” laid out by Chairman Ben Bernanke for a mid-2014 end to asset buying. In that case, the Fed’s asset holdings would have grown to around US$4tn. A January start and a slower pace of unwind results in nearly US$4.5tn in Fed assets, while a June start (and similar slow pace to conclude) yields nearly US$5tn. Those are sizable differences.

Another way of seeing the change in market expectations, is the following chart which shows what the current tapering path looks like.

There is of course an increasingly likely third possibility: forget $4.5 or $5 trillion – with increasing chatter of a Fed that is prepared to unleash NGDP targeting, or as it is better known without its technical term: even more turbo printing in an attempt to unanchor future 2% inflation expectations, the Fed’s balance sheet may just grow forever and ever.

And with every passing day in which the Fed demonstrates a complete lack of concern about the collapsing pool of high quality collateral which the Fed monetizes at an ever faster daily net basis, this becomes the most probable outcome.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6kApaTLwd60/story01.htm Tyler Durden

Weekly Consumer Comfort Index Tumbles To Lowest Since October 2012

If US consumers were miraculously supposed to regain all their confidence when the government reopened (even if companies completely ignored said shutdown according to the epic jump in the Chicago PMI – the biggest jump in 30 years), so far that has failed to happen based on the latest weekly Bloomberg consumer comfort index, which moments ago hit -37.6 down from -36.1 a week earlier, its lowest print since October 2012. With this drop the index has extended its five-week retreat that accelerated during the federal government’s partial shutdown and has slowed – but not stopped – in the two weeks since. Today the index is 21.3 points worse than its long-term average and 6.3 points worse than this year’s average. And what is more worrisome for The Fed, they have lost “the rich” as the comfort of the highest income survey participants has fallen to its lowest in 7 months – collapsing back to its ‘normalized’ divide with the ‘poor’.

 

The rich just aren’t feeling Mr. Chairwoman’s love anymore:

The CCI, produced for Bloomberg by Langer Research Associates, is based on Americans’ ratings of the national economy, the buying climate and their personal finances. At -68.0, the national economy subindex is little changed from last week’s -68.2, its worst since early October 2012. Consistently the most pessimistic gauge of the CCI, the subindex is 36.8 points worse than its average since late 1985. Forty-two percent call the national economy “poor” – the worst possible rating – the most in more than a year.

While better, the other two subindices are struggling as well. The buying climate subindex is its worst since early June, -41.0. The personal finances subindex, at -3.8 this week, matches its lowest since early December. They’re 12.5 and 14.5 points off their respective averages.

And while traditionally, it was the poor who had the least confidence in the economy, now the rich are catching up too:  The CCI stands at +13.7 among those with annual household incomes of $100,000 or more, in positive territory for 39 weeks straight but its lowest in six weeks. By contrast it’s -69.3, its worst since early September, among those earning less than $15,000; the 83.0-point gap is its largest in three months. The gap also remains vast among those earning less $50,000 (-57.8) vs. those with incomes of $50,000 or more, -8.7.

The details: At -37.6 on its scale of -100 to +100, the CCI has lost a steep 9.5 points since Sept. 22. An unusual 4.4-point, one-week drop in the midst of the shutdown eased to 2.0 points last week and 1.5 points this week – a deceleration that holds out hope the index can stabilize.  As Bloomberg adds, “the CCI’s trajectory is still downward, the future uncertain and history only a rough guide. The index lost 5 points in the first of the 1995-6 shutdowns, then stabilized promptly. In the second, it lost 8 points, half of them in the two weeks after that shutdown ended – then recovered.”

The CCI’s recent troubles represent a significant reversal of fortune. After a run in the -30s to -50s dating to February 2008, it broke into its recovery zone, the -20s, in mid-April, and held there for 17 of the next 19 weeks. It fell in August, then started inching back in September – until the budget battle and resulting shutdown hit.

Some other data show clouds. Retail sales were down 0.1 percent in September. Home prices rose, but at a slowed pace. And the National Association of Realtors’ pending home sales index, a strong correlate of consumer sentiment, dropped 5.6 percent to its lowest since December, its largest decline since May 2010.

Among groups, the CCI is its worst among political independents, -45.7, since mid-September 2012. It is higher numerically among Democrats (-27.2) than Republicans (-29.8) for the first time since late August (before which the index was higher among Democrats than Republicans for a record 75 weeks in a row). Suggesting that bruises from the budget battles may be catching up with the GOP faithful, the index has lost 14.5 points among Republicans since mid-September (when it hit its best since September 2008). Among Democrats, it’s up by a scant 1.9 points.

The stock market, for its part, is usually another correlate of consumer sentiment – but sometimes other forces induce them to part ways, as is apparent now. And when confidence no longer has a reflexive relationship with stocks, run Forrest, run.

The index has dropped among some traditionally advantaged groups recently. Its -33.0 among men is its worst since February, down by 16.5 points since just before the shutdown. That compares with -41.9 among women, much worse, but down by just 3.0 points in the same period. The gap between the two groups is its smallest since early June.

Among those who have been to college, the index, at -26.7, is down by 13.1 points since mid-September. It’s down by just 2.2 points, by comparison, among high-school graduates (to -48.0), with the gap between the two groups also its smallest since summer.
 
The CCI is lowest since at least early April among homeowners (-27.3, vs. -52.3 among renters); among full-time workers (-27.7, vs. -44.6 among those not employed for pay); and married adults, at -32.3, vs. -52.5 among those who are separated, widowed or divorced.

In other words: suddenly nobody is confident… five years into the Fed’s most aggressive wealth transfer plan ever conceived.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ATH6X-s-wxA/story01.htm Tyler Durden

Chicago PMI Explodes Most On Record To 31-Month High; Biggest Beat Ever

Sometimes you just have to laugh… Chicago, it would seem, felt not just no bad impact from the government shutdown (that so many asset managers and CEOs have proclaimed as the reason for any slowdown – and the need to avoid a Taper) but it roared to its highest since March 2011. This blew expectations away by the most on record (8-sigma). New orders are at the highest level since October 2004. October’s advance in the Barometer was its biggest monthly increase in over 30 years and only the third time in the past decade the Barometer has risen for four consecutive months. US equities are not happy about this apparent ‘taper-on’ improvement (and have dropped 8 points on the release) – though it appears seasonals are playing a major part.

 

 

and in context – this is an 8 sigma beat:

 

MNI notes however that two reasons stand out for this surge:

  1. Half the gains stem from seasonal adjustments, and
  2. October is the time when pre-Chinese New Year orders hit

 

 

US equities are not happy at this “good” news…

 

Chart: Bloomberg


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aMVB5gKCF88/story01.htm Tyler Durden