AAPL Weighs On Nasdaq

The markets are mixed this morning with the S&P 500 making fresh highs while the Nasdaq languishes under the weight of AAPL shares.

I read the earnings release for AAPL and listened to the conference call and the results do not lend themselves to a -10% plunge in the share price.  It's tough to watch this as an investor but it really comes down to high expectations.  Traders were hoping for a bigger beat on the EPS number as well as higher unit sales for iPhones and Macs.  Mac sales were definitely light, as the company said they were capacity constrained on production.  So I'm not sure it's a softening demand issue. 

I think shares of AAPL remain very cheap, but the stock had simply become over-owned.  Every fund manager was already overweighted in shares of AAPL, so there just are enough new buyers out there relative to sellers.  And that is why the stock still hasn't bottomed.  I am hopeful that this quarter will mark the lows in the stock.  I sure hope AAPL's management wakes up and starts buying back its own stock.  They did a poor job of stock buybacks during the quarter.  They have $130 billion in cash and buying back stock at these levels would be a nice way of helping shareholders.

Among other companies reporting earnings, I am seeing more stock showing positive reactions vs. negative ones.

Stocks rising on earnings: NFLX, MMM, MO, BMY, BGG, JBHT, GWW, AVT, AGU, PCP

Stocks falling on earnings:  AAPL, VAR, UNP, DBD, ARG, LMT

Asian markets were mixed overnight.  China fell -0.8% depsite its HSBC Manuf. PMI rising to 51.9, its best level in 2 years.  S. Korea GDP came in a bit low at 0.4%.  N. Korea said it is planning another missile test.

European markets are also mixed today after the Eurozone PMI came in at 47.5, and the services PMI was 48.3.  Spain's unemployment rose to a record 26% and the youth unemployment component hit a whopping 55%.

The dollar is lower today, but commodities are mixed.  Oil prices are higher near $96, but gold and silver are lower with gold falling to $1669.

The 10-year yield is a bit higher to 1.86%.  And the volatility index is still hovering around 12.60.

Trading comment: The S&P 500 is higher for a 7th straight day.  We looked at several different measures of market breadth yesterday, and the market is overbought on nearly every one of the indicators we looked at.  While the timing is never perfect, that usually means a short-term pullback is in the cards.  So we would prefer to wait for such a pullback before adding to new or existing positions.

KAM Advisors has long positions in AAPL, BMY

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A Nice Start To Earnings Season

The markets are mixed this morning after closing near their highs yesterday and marking a 5th consecutive up day for the market.  Earnings season really kicks into high gear this week, and so far we are seeing some nice positive reactions.

The big winner on the Nasdaq is Google (GOOG), which beat EPS estimates and showed some solid growth metrics.  The stock is up nearly 6% this morning near the $750 level.  Another large growth stock that beat earnings and is 10% higher today is Intuitive Surgical (ISRG).

The big winner in the Dow is IBM which is up 5% and back above the $200 level ($206).  The big disappointment of the day is Coach (COH), which missed earnings estimates.  Revenues and margins were also a bit light, and comp store sales were negative.

Stocks rising on earnings: GOOG, ISRG, IBM, CSX, UTX, WLP, SAP

Stocks falling on earnings: COH, GD, VIVO, MOLX, DGX, PX

The House of Reps is set to vote today on a bill aimed at extending the debt ceiling until May.

Asian markets were mixed overnight.  Japan was lower by -2.1% while China was 0.3% higher.

Europe is also mixed this morning.  The Bank of Spain said that Q4 GDP contracted -1.7%.

The dollar is higher today, and commodities are mostly lower.  Oil prices are flattish near $96.50 and gold prices are a bit lower to $1690.

The 10-year yield is a bit lower to 1.81%.  And the volatility index is still very lower near 12.57.

Trading comment: With the S&P 500 up 5 days in a row, we are due for a down day.  But the reactions to the earnings reports of the large growth stocks highlighted above is encouraging.  Tonight AAPL reports earnings, and we are really hoping for a positive reaction in the stock as well.  The selloff has been pretty relentless the last several months as portfolio managers and hedge funds all scrambled to reduce their positions at the same time.  Hopefully that has run its course and the earnings report will be a catalyst for the stock.  Away from AAPL the market remains short-term overbought but I wouldn't be surprised to see the same sort of sideways consolidation take place that we have seen recently.  Nothing like higher prices to make folks more bullish about stocks.

KAM Advisors has long positions in AAPL, COH, GOOG, IBM

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Back In The Saddle

The market broke out of its recent range last week to move to new 5-year highs.  Those types of headlines tend to make folks more bullish about stocks.  In the short-term, the market looks a bit overbought.  We are also getting into the meat of earnings season, which could lead to some pullback in the market.

In economic news, existing home sales for December hit 4.94 million units, but this was below estimates of 5.10 million units.

The big report we are waiting to see is Google (GOOG) which reports earnings after the market close today.

Stocks rising on earnings:  DD, VZ, KSU, PETS, FCX, TRV

Stocks falling on earnings:  JNJ, EAT, IIVI, WAT

Asian markets ended mixed after the Bank of Japan confirmed that it will pursue unlimited quantitative easing and a 2% inflation target to combat its two-decade plus bout with deflation.  China finished -0.6% lower.  China's Bank of Communication expects the country's 2013 GDP growth to reach 8.5%.

European markets were generally lower this morning.  Eurogroup head Juncker said Cyprus may receive a bailout in March, following elections.

The dollar index is higher this morning but this isn't hurting commodities.  Oil prices are higher near $95.85 and gold prices are up to $1690.

The 10-year yield is firm at 1.85%.  And the VIX is bouncing after Friday's plunge to multi-year lows.  It is currently up 6.5% to 13.25.

Trading comment: The market has a solid week last week.  Earnings season is heating up, so we could easily see more consolidation in the market.  But for now the market appears to be in that stair-step mode we have seen before where it rises, then consolidates the gains in a mostly sideways fashion before moving higher again.  No doubt we will have a bigger correction at some point in Q1, but its possible it will be from higher levels in the stock market and also higher levels in the bullish sentiment indicators we follow.

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Why Participate in IDC's Marketing Barometer Survey

The CMO Advisory Service at IDC is conducting its annual barometer survey. This is the 10^th year of the survey.  All respondents will receive a free copy of the report produced from the results of the survey and an invitation to IDC's exclusive Client Telebriefing.

During The CMO Advisory's 2012 Marketing Benchmarks survey we collected data from ~100 of the largest and most influential tech companies, their combined revenue totaled nearly $750 Billion.  The barometer survey provides a "finger in the wind" follow up to the Benchmark Survey providing detailed guidance to senior marketers. Areas of focus include: budget ratios, program spend, headcount allocation, and in-depth insights into key trends in the industry and forward looking roles and programs.   

If you are interested in participating: contact Sam Melnick at smelnick (at) idc (dot) com

Below are some answers to questions you might have:

Q: A free report and webinar, cool! Wait what type of information will they contain?

A: The results of the survey will be used to analyze the direction of marketing resource expenditures and priorities during the next 6-12 months. So questions like the following will be answered:

• How aggressively are marketing budgets increasing or decreasing in my sector this year?
• What marketing staff positions or programs should I look to invest in?
• What up and coming areas should I be looking into this year to create a world class marketing organization?
•  What are next week's Powerball numbers? (Ok we won’t answer that question, if we knew we probably wouldn't tell you…sorry).

Q: Who should take the survey?

A: Marketing executives who are in a position of responsibility for worldwide marketing practices.

Q: How long will it take?

A: Depending on several factors, as quick as 15 minutes!

Q: I can’t get this done today, when do you need to have it completed by?

A:  To receive the report and an invitation to IDC's exclusive Client Telebriefing participants need to complete the survey by Wed Feb 13, 2013. Also, all of the information must be accurately provided in order to be included in the study and receive the free deliverables.

If you are interested in participating: contact Sam Melnick at smelnick (at) idc (dot) com

Q: I can't answer this question, I need input from my colleagues…help?

A: No worries, if you leave the webpage it will save your progress.

Q: What types of companies participate in this survey?

A: Some of the largest tech and tech related companies in the world participate (again total revenue of participants reaches upwards of $1 Trillion), but plenty of companies who may not have as many 0's in their revenue line, but are growing quickly and have exciting products, do participate and receive great value from the deliverables!

Q: Some of this information is kind of confidential, I want to trust you, but can I?

A: As stated above, the CMO Advisory Service has been doing surveys like this for 10+ years. All answers will be kept confidential by IDC and all data will be aggregated for the purposes of trend analysis.  No client or other participant of the study will ever receive your company-specific data and there is no way that any company can "reverse-engineer" the analysis to derive your data input. Your responses will not be used for any other purpose within IDC.

Q:  Ok I completed the survey…so… when do I get the free research?

A: Heh, I knew you'd ask this one. You can expect the deliverables to begin coming out around late March. For clients who are attending our March Board Meeting we will have in depth discussion around the barometer findings (want to know more about these board meetings? Reach out to the CMO Advisory Group team or send me an email).

If you are interested in participating: contact Sam Melnick at smelnick (at) idc (dot) com

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What The FARC?

In 2011, the advertisement above was part of a much-lauded and Grand Prix winning campaign The agency declared that

The powerful, timely and well-located messaging encouraged 331 FARC guerrillas to demobilise and re-enter society—a 30% uplift on the previous year. In challenging circumstances, strategic planning drew together powerful insights to create a core, successful, thought – taking the spirit of Christmas to guerrilla strongholds.

The judges swooned and there were awards all round.

Yesterday, the FARC rebels ended their unilaterally-declared 2012 Christmas ceasefire with a series of attacks across Colombia. This marked a significant increase on the 52 that had occurred during the ceasefire.

 It would be wrong to wonder how many of the rebels had returned from spending Christmas with their families, but it ccertainly reminds us that "effectiveness" is a very odd concept and that the industry can be a little arrogant. Meanwhile,  people die.

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Gone Fishin'

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Midday Look

Got a late start this morning with one kid home sick and my being on drop off duty with the other one to school.  Anyway, the markets are still under some pressure in the first half of today's trading session.

AAPL continues to weigh on the market as it breaks below the $500 level.  This has some worried about what they might report in their upcoming quarter, but I would argue that the lower stock price removes some of the worry and makes it more likely that the stock rallies on solid earnings. 

Two other names that are lower this morning after reporting earnings are SAP and FRX.

In economic news, December retail sales rose by 0.5%, above the 0.2% consensus.  And the Empire Manuf. Index for January came in at -7.8, barely above last month's reading of -8.1.

Asian markets were mixed overnight, with China gaining 0.6% to six-month highs.

Europe is mostly lower today after disappointing GDP figures in Germany, where Q4 GDP contracted -0.5%.

The dollar is higher today, but commodities are mixed.  Oil prices are lower near $93.89 while gold prices are higher again to $1683.  Silver prices are higher but copper is lower, so the reactions to the dollar rising are mixed today.

The 10-year yield is lower to 1.82%.  And the VIX is just 1% higher to 13.67, remaining at very low absolute levels.

Trading comment: The market is continuing to consolidate its recent gains in a benign fashion.  Selling pressure has been pretty light on down days.  Last year we talked about the stairstep action in the market, and so far this year that looks like what we are seeing again.  Bullish sentiment is growing, and that is a yellow flag.  If I had to guess I would look for another push higher in the market which takes investor sentiment to extreme bullish levels before a correction sets in.  That's often how it plays out, and as usual timing is everything.

KAM Advisors has long positions in AAPL

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