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With analyst expectations almost 50% above Apple’s current price, and only 1 “sell” recommendation among the 52 analysts covering the “no brainer” stock, one has to wonder how long it will be before the 45 “Buys” downgrade their permabullish perspective..

 

BGC’s Colin Gillis and ABG Sundal Collier’s Per Lindberg deserve some special recognition as the 2 least bullish analysts, but here is the Top 10 before last night’s call…

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Last week, we noted that Italy is rushing to defuse a €200 billion time bomb in the country’s banking sector as investors fret over banks’ exposure to souring loans.

“Italian banks’ share prices have been volatile YTD, given the market’s renewed fears over asset quality and potential developments on a possible bad bank creation,” Citi wrote, in a note analyzing which Italian banks are most exposed. “Total gross NPLs in Italy have increased by c160% since 2009 and now represents c18% of loans (vs c8% in 2009).”

Essentially, Italy was slow to tackle its NPL problem relative to other countries and the chickens have now come home to roost.

The idea was to create a “bad bank” for the “assets” (because that’s worked so well in other countries), but the plan was stalled by the European Commission due to concerns about whether Italy was set to run afoul of restrictions around when countries can provide state aid to the financial sector.

In short, creditors at Italy’s banks would need to take a hit before PM Matteo Renzi’s government would be allowed to extend state aid. That is unless Italy could devise some kind of end-around, which is precisely what Renzi was attempting to do last week.

As a reminder, this would have been easier had it been negotiated last year before new rules on bank resolutions came into effect in 2016. That’s why Portugal pushed through the Novo Banco bail-in and the Banif rescue in December.

In any event, Italy has indeed managed to strike a deal with Brussels to help alleviate banks’ NPL burden.

Essentially, Italian banks will securitize their souring loans, sell them to investors, and the government will guarantee the senior tranches of the new paper.

“The price of the guarantee [will] be set based on the price of credit default swaps on Italian issuers with similar risk profiles to the loans in question,” FT writes, adding that “ the price would gradually increase, to reflect the growing risk of holding bad loans over time, and to incentivise buyers of the non-performing loans.”

Now obviously, that’s not as comprehensive a “solution” as a traditional bad bank scheme, which is presumably why some Italian banks have plunged and were halted limit down. 

• UBI BANCA HALTED, LIMIT DOWN AFTER FALLING 5.6% IN MILAN
• UNICREDIT HALTED, LIMIT DOWN AFTER FALLING 3.7% IN MILAN
• POP. MILANO HALTED, LIMIT DOWN AFTER FALLING 2.7% IN MILAN

Beleaguered Monte Pashci – whose shares are worth a tiny fraction of their 2007 highs – managed to rally on the news but the FTSE Italia All-Share Banks Index traded down as much as 2.6%. 

“The new scheme aims at helping banks free up capital and liquidity to increase lending and support the recovery [but] its effectiveness remains to be ascertained,” Citi wrote this morning. “The details of the new framework are still lacking, in particular the price banks will have to pay for the state guarantees, which will be crucial to assess the effectiveness of the whole scheme.”

In other words, Italy’s hands were tied here thanks to restrictions around state aid and the market isn’t happy with what’s being viewed as a watered down version of a traditional bank rescue. Here’s more from Citi:

“A too high price [for the fees banks pay to the government for the guarantees] would make the transfer of the NPLs to the bad bank not convenient for the banks and it would potentially open up new capital shortfalls. A too-low price would violate the state-aid rules and involve losses for banks’ investors (and potentially for depositors). It is important to note that the Italian version of the “bad bank” is very different from those set up in other EU countries since 2008 (e.g., in Spain, Ireland) where banks were forced to sell part of (or all) their bad loans at a set price to the government-backed bad bank vehicle. The Italian scheme is a much lighter version and as such it is likely to have a more muted impact on banks’ balance sheets, in our view.”

Right. Of course it also remains to be seen if this scheme actually ends up being riskless for the Italian public. “This intervention will not create any burdens for our public finances,” the Italian finance ministry said on Wednesday.

Maybe, but that depends on whether losses – and make no mistake, there will be losses – reach the senior tranches of these deals. Italy is confident that won’t happen. In fact, the finance ministry thinks they’re going to turn a profit off of this. “We predict that the commissions paid to us will exceed the costs, and therefore there will be positive net revenues,” a spokesperson says.

Make a mental note of that assertion because it could end up being comedy gold at some point in the not-so-distant future.

A year from now, when the cost of insuring these securitizations ends up adding a few percentage points to Italy’s budget deficit, we’ll be interested to see if the European Commission will be in a forgiving mood given that they approved this new scheme. 

via Zero Hedge http://ift.tt/1QrWOH5 Tyler Durden

The bounce of the last few days has investors wondering if the bottom is in.

 

Unfortunately, it very likely is not.

 

High Yield bonds have lead stocks to the upside. They are now leading to the downside, and the High Yield bond market indicates we have further to fall.

 

 

If this is not compelling enough consider that the microcap index, the Russell 2000, which leads the S&P 500 indicates stocks have a LONG ways to fall.

 

 

Finally, consider that the S&P 500 has broken its bull market trendline going back to 2009 AND cut through critical support (green line) on a monthly basis.

 

 

Another Crisis is coming. Smart investors are preparing now.

 

We just published a 21-page investment report titled Stock Market Crash Survival Guide.

 

In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.

 

We are giving away just 1,000 copies for FREE to the public.

 

To pick up yours, swing by:

http://ift.tt/1HW1LSz

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

 

 

via Zero Hedge http://ift.tt/1QrWRCx Phoenix Capital Research

Apple's guidance was considerably worse than expected, but always spinning positively, analysts proclaim somehows that it was "better than feared." It appears not as AAPL is now down almost 4% despite every sell-side analyst's pleas that "the bottom is in." The ultimate "no brainer" stock is now down over 28% from its highs last year and analyst targets are still at $137 on average – a nearly 50% gain from here. And finally, as if a crashing stock was not enough, Apple's Safari browser is reportedly crashing if users attempt to search – not a great day for Tim Cook.

It appears Tim Cook forgot to email Jim Cramer about how bad China had become…

We know the conditions in China have been a source of concern for many investors. Last summer, while many companies were experiencing weakness in their China-based results, we were seeing just the opposite with incredible momentum for iPhone, Mac, and the App Store in particular. In the December quarter, despite the turbulent environment, we produced our best results ever in Greater China with revenue growing 14% over last year, 47% sequentially and 17% year-over-year in constant currency. These great results were fueled by our highest-ever quarterly iPhone sales and record App Store performance. Notwithstanding these record results, we began to see some signs of economic softness in Greater China earlier this month, most notably in Hong Kong.

Here's Goldman…

AAPL reported 1Q earnings post close. The bottom line from our trading desk (not GS research): “Results are pretty much smack in line with how most of the street previewed the stock. Our sense is the reaction to the print will be somewhat muted.”

Hhhmmm no…

 

A smattering of Wall Street "Bullish" advice…

FBR (Daniel H. Ives)

AAPL’s March guidance “better than feared"; co. likely has ‘‘tough’’ qtrs ahead of iPhone 7 introduction later this yr
Co.’s software ecosystem, services segment remains ‘‘core advantage"; likely to help gross margins, profitability in next 12-18 months
Rates outperform, cuts PT to $130 from $150

PACIFIC CREST (Andy Hargreaves)

Sustained pricing power, recovering iPhone unit growth in FY17 likely to result in margin expansion, increased profit
Strong iPhone prices show consumers likely not ‘‘trading down’’ to cheaper models as smartphone market matures
Customers still ‘‘extremely loyal”
Rates overweight, PT $132

BARCLAYS (Mark Moskowitz)

1Q results, 2Q outlook “not as bad as investors feared”
Stock likely attractive to L-T investors in case of any near-term weakness; sees iPhone 7 prototypes in 2Q, expanded capital allocation in 3Q as potential catalysts
Rates overweight, cuts PT to $142 from $150

MACQUARIE (Ben Schachter)

Sees March qtr as “bottom” for iPhone unit growth; iPhone 7 likely to return AAPL to growth
Co. likely to continue to gain share, especially if it introduces products that create new “use cases” for iPhone, other devices
Rates outperform, PT $117

RAYMOND JAMES (Tavis C. McCourt)

Weaker 2Q guidance reflects maturing smartphone mkt, forex concerns
Shares likely to stay within “recent range” until growth trends stabilize
Rates market perform

And finally, if it weas not enbough that the stock was crashing, now the browser is too…

Apple's Safari search browser is crashing for some users when they run a search from the address bar in both iOS and OS X devices, the Verge reported.

 

The problem appears to be affecting iOS and OS X devices worldwide, the Verge reported on Wednesday.

 

Apple's iPhones and iPads run on iOS, while its Mac computers operate on OS X.

 

The problem, which is related to Safari's search suggestions feature, can be rectified temporarily by disabling the feature or using the private mode option in the browser, the Verge reported, citing an iOS developer Steven Troughton-Smith.

Meanwhile, this is what really happened:

iPhone units were < 75M, but that included 3.3M of incremental units into channel inventory (a year ago, Channel Inventory came down) – so, sell through was down 4% Y/Y on reported Flat Sell-In.   Apparently, the email to Cramer alerting him to the slowing in China over the last few weeks, which Cook copped to on the call, got caught in the spam folder.

iPads were pretty bad too,  with units at least 2M below the consensus, and Y/Y declined worsened to ~ 25% from ~ 20% last quarter. This is with something like 3M iPad Pro’s shipped, quasi-new product to the category.

Apple’s Mac figure was down like 4% Y/Y, IDC had Mac’s up like 4% Y/Y. This is 2nd straight quarter of relevant delta between these figures, again no idea why.

Guidance

The sellside had been cutting like crazy over the last month, and yet nobody got down < $53B in Sales vs. the guided mid-point of ~ $51.5B. Guide implies < 50M iPhone Units, which is where people were starting to model, although not clear what Apple plans for Channel Inventory.

 

via Zero Hedge http://ift.tt/1Sj5m4W Tyler Durden

It must have been scary for Boeing for those few months in which the all important Ex-Im bank was taken offline. The result: moments ago BA announced Q4 earnings which while beating expectations (which were sharply lowered in recent months) of $1.27, were still a 31% drop compared to Q4 of last year, driven by a 4% drop in the top line, leading to a substantial decline in gross profit from $3.8 billion to just 2.9 billion, and a whopping 38% plunge in operating cash flow to just $3.1 billion (and $2.5 biliion in FCF).

The sharp decline took place even as Boeing benefited generously from America’s numerous wars around the globe, leading to a 7% increase in military aircraft revenue in the fourth quarter, however it was not enough to offset a 7% drop in commercial aircraft deliveries, which at 182 were 13 lower from the 195 a year ago.

But the biggest hit to Boeing was its slashed guidance, which came in far below consensus estimates:

• Boeing’s 2016 Core EPS guidance of between $8.15 and $8.35 was far below the $9.42 expected;
• Boeing’s 2016Revenue of $93-$95 billion was also well below the $97.3 billion expected.

The rest of the guidance was uneventful:

 

But the cherry on top was a reported that came not in the earnings report but a few hours earlier, when the Seattle Times announced that “Boeing is likely to announce Wednesday morning another production rate cut, this time for the 777 program, according to a senior executive with a 777 customer whom Boeing consulted as it prepared its plan.

Just last week Boeing announced that due to slow sales it would cut the rate on the 747 jumbo jet program, starting in September, to one plane every two months. The company said it would book an $885 million pretax write-off as a result of that rate cut.

 

Another multimillion-dollar charge would need to be added if the 777 is cut. A second source also indicated that the announcement could come Wednesday, when the company reports its quarterly earnings.

 

Boeing currently doesn’t have enough sales to fill all the 777 delivery slots between now and when production of the new 777X kicks into high gear after the turn of the decade. Most Wall Street analysts have been predicting a 777 rate cut from the current 100 jets per year — but after the 747 cut, they’ve assumed a 777 announcement wouldn’t come until later in the year.

Which explains our confusion when one month ago we reported that a “Used Boeing 777 Sells For 97% Off List Price“

In short, it is clear that the manufacturing recession is now hitting such Dow Jones stalwarts as Boeing, and speaking of “hit”, BA was down almost 6% at last check, and since it accounts for 5.4% of the Dow Jones, the aircraft maker will weigh on the entire market for the rest of today’s session.

But the biggest surprise is that BA did not announce some massive debt-funded buyback program: is management, or its bankers,  getting worried that levering up massively to repurchase stock is no longer the smartest strategy.

via Zero Hedge http://ift.tt/1PjhuBW Tyler Durden

• Global stocks, dollar struggle ahead of Fed as oil falters (Reuters)
• Bond Bulls Bank on Fed Mention of Market Chaos as Drag on Growth (BBG)
• Fees on Mutual Funds and ETFs Tumble Toward Zero (WSJ)
• China Climbs Back Up Janet Yellen’s Worry List (BBG)
• The World’s Favorite New Tax Haven Is the United States (BBG)
• New Jersey Gov. Christie backs Atlantic City takeover plan (Reuters)
• U.S. Universities Raised a Record $40.3 Billion Last Year (BBG)
• With China weakening, Apple turns to India (Reuters)
• Cash Is King as Europe Adapts to Negative Interest Rates (BBG)
• Trump pulls out of Republican debate in Iowa (Reuters)
• French Justice Minister Taubira Quits Over Constitutional Change (BBG)
• Clock ticks down on EU passport free travel dream (AFP)
• Yuan Bears Denounced as Delusional, Doomed by China State Media (BBG)
• States Asks High Court to Delay EPA Carbon-Emissions Rule (WSJ)
• AIG Passes JPMorgan, Approaches Wells Fargo on Buybacks (BBG)
• NYSE’s $2 Trillion ETF Business Sees Heightened Competition (BBG)
• World’s Biggest Wealth Fund Speaks Out on Liquidity Banks Miss (BBG)

 

Overnight Media Digest

WSJ

– A group of 26 states on Tuesday filed a last-ditch request at the Supreme Court seeking the delay of a key Obama administration environmental rule to cut carbon emissions from power plants. (http://on.wsj.com/1Sa4BwF)

– A jury found John Bills, former assistant transportation commissioner, guilty of fraud, bribery and extortion charges for receiving hundreds of thousands of dollars in cash and perks in exchange for helping Redflex Traffic Systems Inc build Chicago’s red-light ticketing system into the one of the largest in the nation. (http://on.wsj.com/1Sa4FwE)

– Apple Inc said iPhone sales grew at the slowest pace since its introduction in 2007 and forecast that revenue in the current quarter will decline for the first time in 13 years, signaling an end to its recent period of hypergrowth. (http://on.wsj.com/1Sa4SQj)

– Iran is pushing to find new ways to extract and export its vast natural-gas reserves, including developing facilities to liquefy the commodity and ship it to Europe in two years, now that Western sanctions have been lifted, according to a top Iranian official. (http://on.wsj.com/1Sa54iF)

– Federal regulators soon are expected to propose overhauling rules for television set-top boxes, a move aimed at lowering bills for cable viewers and providing more access to Internet-based programming. (http://on.wsj.com/1Sa5be2)

 

FT

Cupertino, California-based Apple Inc has forecast first ever decline in sales for the iPhone due to growing volatility in some markets, including China.

Social networking site Facebook Inc is resisting attempts by tax authorities in Britain to coax it into paying back-taxes, a move that may increase public anger against the Palo Alto, California-based company.

Elzbieta Bienkowska, the European commissioner responsible for car industry regulation, said she would relentlessly pursue German car giant Volkswagen AG to pay compensation to millions of car owners in Europe affected by the diesel emissions scandal.

Dixons Carphone is scheduled to close more than 130 of its stores in Britain as it embarks on its plan to merge its three main brands in one store.

 

NYT

– Despite global economic turmoil, many economists argue that the American currency’s rise is mostly a good thing. But there are downsides, and not all in the United States. (http://nyti.ms/1SiBfKM)

– If accepted, Fox Searchlight’s offer for “The Birth of a Nation,” about Nat Turner, would be one of the highest prices ever paid for a film making its debut at the film festival. (http://nyti.ms/1OY8K0G)

– Apple Inc’s quarterly revenue fell short of Wall Street forecasts, and it issued a disappointing forecast for the current period. (http://nyti.ms/1KElJTe)

– The insurance giant American International Group Inc brushed aside Carl Icahn’s push for a breakup, saying it would sell or spin off some businesses and create nine operating units. (http://nyti.ms/1PiUyCM)

 

Canada

THE GLOBE AND MAIL

** Canadian National Railway on Tuesday beat analysts’ expectations with an 11 percent rise in fourth-quarter profit and raised its dividend by 20 percent. (http://bit.ly/1NzX3v9)

** Alberta suffered its worst year for employment losses since the dark days of the national energy program and early 1980’s recession, according to revised labor figures from Statistics Canada. (http://bit.ly/1NzX95S)

** The Ontario government has reached inward for the next leader of the Ontario Securities Commission, nominating the agency’s executive director, Maureen Jensen, to replace departed chair Howard Wetston. (http://bit.ly/1NzXg1c)

NATIONAL POST

** The office of federal environment commissioner, Julie Gelfand, said in a report Tuesday that the National Energy Board has a serious problem tracking whether pipeline companies meet conditions for project approvals. (http://bit.ly/1NzXt4s)

** Food price inflation has been driving Canadians into the frozen food aisles, according to the CEO of grocery chain Metro Inc, Eric La Flèche. (http://bit.ly/1nnda9X)

** Quebec City Mayor Régis Labeaume supports the Energy East pipeline project but he blasted the promoter Tuesday for an “incompetent” sales job. (http://bit.ly/1NzXSUE)

 

Britain

The Times

EasyJet has conceded that it will achieve its lowest rate of profit growth this year since the arrival of Dame Carolyn McCall as its chief executive in 2010. (http://thetim.es/1OXm45h)

Mark Carney may remain as the governor of the Bank of England for a full eight-year term, despite pledging to serve just five. Yesterday he revealed that he had not made up his mind but would “by the end of the year”, causing consternation among MPs. (http://thetim.es/1Si3RDY)

The Guardian

MPs have launched an inquiry into the UK’s tax system after the government was accused of allowing Google to pay too little in a £130 mln deal. (http://bit.ly/1PNNhHq)

Brakes Group, one of the UK’s largest food distributors, is understood to have postponed plans for a stock market flotation in London that could have valued it at up to £2.5 bln. (http://bit.ly/1WMIIT3)

The Telegraph

The spread-betting group CMC Markets is seeking a value of between £678m and £794m as it prepares to join the London stock market.(http://bit.ly/1ZRqy2r)

Tesco investors are set to launch a huge damages claim, saying they lost tens of millions because of the accounting scandal at the supermarket. (http://bit.ly/1VpyR4k)

Sky News

Denmark’s parliament has voted in favour of seizing the assets of asylum seekers to help pay for their stay while their claims are processed.(http://bit.ly/1TlRoQG)

A patent holder is demanding $500m (£351m) from Apple because it says the firm has used its intellectual property without permission. (http://bit.ly/23rYc3q)

The Independent

Two former Disney employees have filed separate class-action lawsuits against the entertainment giant claiming they conspired to replace their jobs with cheaper immigrant workers on temporary U.S. work visas. (http://ind.pn/1ZRrzHM)

Twitter is experimenting with not showing ads to some of its most “high value” users. (http://ind.pn/1PAmWSW)

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