Financial topics

[Higgenbotham]

If oil prices go up and stay up then eventually the cost of everything else will move up. Food and transportation depend directly on oil (fertilizer for food). Everybody and everything depend on food and transportation. So if oil prices are up and staying up then inflation is coming. If inflation is coming there will be more pressure on the Fed to not print so much money. Also, higher inflation tends to push up nominal interest rates, which lowers bond and stock prices. So it makes sense that high oil prices can pop the stock or bond bubble.

Nice chart of average retail gas prices.

http://gasbuddy.com/gb_retail_price_chart.aspx

Clicking on the 5 year link on the top right, the past tipping points seem to be about where gas prices are now. My guess had been the tipping point would be lower this time because the consumer and the economy are weaker.

Vince, we know that when those tipping points were reached the past two times, bonds went up and stocks went down. However, if this time is different, and I think it is, bonds will go down and stocks will go down. This would be another clue that hyperinflation is beginning to take hold as the more likely outcome down the road, if bonds do go down from here.

[Higgenbotham]

http://www.standardandpoors.com/indices ... --p-us-l--

% Weight Largest Constituent 4.27%

Top 10 Constituents by Market Cap (as of 16-Mar-2012)

Constituent Symbol GICS® Sector Price ($)
Apple Inc. AAPL Information Technology 585.57

http://bigcharts.marketwatch.com/advcha ... &x=40&y=11

Steven Paul Jobs
Died October 5, 2011
Palo Alto, California, U.S.

It's interesting that the price of Apple stock has gone into a bubble since Steve Jobs died. Since he died, the price of Apple stock has gone from about 360 to about 600. Since Apple is the largest constituent of many of the stock indexes, the Apple bubble has a large effect on the entire stock market.

[vincecate]

It's interesting that the price of Apple stock has gone into a bubble since Steve Jobs died. Since he died, the price of Apple stock has gone from about 360 to about 600. Since Apple is the largest constituent of many of the stock indexes, the Apple bubble has a large effect on the entire stock market.

It is very strange that it has gone to a bubble after Jobs died. I wonder why. I can imagine there were a bunch of shorts who expected it to go down when he died. So maybe this is a short squeeze? I don't know. Strange.

[Trevor]

Maybe he tried to hold back the fraud. Jobs was well-known for being a giant prick that didn't put up with anything. If they're going into a bubble, it means they'll crash along with everything else.

There's nothing wrong with investing in a Ponzi Scheme. Just make sure you get in first.

[Higgenbotham]

Apple's sales and income went flat for a few quarters, then the quarter after Steve Jobs died there was a large jump. If the increase can be maintained, the stock price is probably justified.

31-Dec-2010 31-Mar-2011 30-Jun-2011 30-Sep-2011 31-Dec-2011
Sales/Revenue 26.74B 24.67B 28.67B 28.24B 46.15B
Gross Income 10.3B 10.22B 12.08B 11.38B 20.47B
Net Income 6.00B 5.99B 7.31B 6.62B 13.06B

Whether the large increase in revenue can be maintained when per capita incomes are flat to down (after energy and food inflation are taken into account) and debt is still high is questionable in my mind. The market may assume it can until proven otherwise. I'll be curious to see if the market gets nervous before the upcoming earnings. I would want to have my sell orders ready to go next time Apple releases earnings.

[Trevor]

I admit, I know little about Apple, so I probably can't make an informed decision. Perhaps they'll actually be able to survive the coming depression.

[Higgenbotham]

Maybe he tried to hold back the fraud.

Nothing would surprise me. To me, the numbers either look unsustainable or fraudulent.

http://www.marketwatch.com/investing/st ... deractions

The CEO sold about $10 million worth of stock on March 10. That may or may not be significant. Insiders do tend to sell when they think prices are on the high side.

And I've read recently that insider sells to buys are at a very high ratio in general - high enough to warrant caution.

http://www.cbsnews.com/8301-505123_162- ... ic-levels/

The ratio of insider selling to insider buying is even more pronounced on a value basis, hitting its highest level in a year recently, according to data from Thomson Reuters. Taking the total market into account, insiders sold $44.77 worth of stock for every dollar they bought in February. That's the highest insider sell-to-buy ratio since February 2011, when it hit $44.53 to $1.

March, meanwhile, is so far running at $29.48 to $1. Taken together, the current streak of insider selling most closely resembles the levels hit in April and May of last year -- just as the market rolled over on Arab Spring oil-price spikes, the debt crisis in Europe and the earthquake and tsunami in Japan.

[OLD1953]

The reason Apple is rising is clear, Steve Jobs wanted service and a relationship to customers and shareholders just came along for the ride. Tim Cook "manages" the market, which produces immense gains for a while, but eventually kills the company through allowing that customer relationship to die off. Check out articles on "Cook remarks hint at Apple dividend" and those articles Forbes has been running on companies that foster customers vs companies that manage markets - they do it much better than I can.

[Higgenbotham]

“In all of these areas, strong leadership is an absolute necessity,” he writes. “A great deal of stupidity has chipped away at the massive advantages of Western civilization, which could terminally decline if it remains on the current path. But these problems can be solved — and swiftly — if the right leaders emerge.”

Such vociferous language is typical for Mr. Singer, who runs a $19 billion hedge fund that made investors about 4 percent in returns last year, beating most industry competitors. Mr. Singer is generous with his ire, directing it at the United States, the European Union and Japan, and offering a critical assessment of the sorry state of affairs in the world marketplace.

"Here is a current snapshot of the U.S., Europe and Japan: the financial sector is overleveraged and opaque. Fiscal, tax, and regulatory policies are unsound and not oriented toward growth and efficiency. On a long-term balance sheet basis, these countries are insolvent, with no hope of paying presently promised benefits regardless of the level of growth achieved or tax rates charges. Monetary policy is extreme and experimental. None of these assertions is refutable."

As he often has in recent letters, Mr. Singer spends pages railing against the Federal Reserve for buying bonds, printing cash and keeping interest rates at or near zero percent.

“This policy is arrant idiocy and is likely to ultimately lead to serious inflation, a risk that governments continue to ignore at their peril,” he writes.

http://dealbook.nytimes.com/2012/02/24/ ... eadership/

Only one difference I can see between what Singer is saying and what I've concluded. That is, that it is too late to save Western Civilization. I don't see any way that any leadership, no matter how good, can undo the damage that has been done in the past few months. Or what person of any intelligence would want to try to engage in such futility. Or even if such a person emerged that the electorate would have the intelligence to vote for that person - they don't.

[Higgenbotham]

Total motor vehicle sales in February rocketed to their highest level since February 2008, jumping from 14.18 mln SAAR vehicles in January to 15.10 mln SAAR.

For the first two months of 2012, sales have averaged 14.6 mln SAAR. That is well above industry expectations, which predicted only 13.7 mln vehicles would be sold in 2012.

Domestic sales inched higher, from 10.73 mln SAAR in January to 11.35 mln SAAR in February. That is the strongest domestic sales level since February 2008.

Domestic car sales increased to 5.48 mln SAAR in February from 5.00 mln SAAR in January. Domestic truck sales increased to 5.87 mln SAAR from 5.73 mln SAAR.

Read more: http://www.briefing.com/Investor/Calend ... z1pUGqI4HO