Major Apple Manufacturer, Jabil, Warns of ‘Abrupt Downturn’ In Sales

The futures have firmed and markets are set to continue higher, in spite of the fact that this Jabil warning could, potentially, be the proverbial canary in the coal mine for the world’s largest company: Apple. About 24% of Jabil’s revenues comes from Apple. Their quarterly miss was significant. More severely, their commentary regarding the tone of the quarter sounded ominous. To use sharp language like  this can only mean that things are deteriorating rapidly and future warnings are likely to occur.

“We faced sharper than expected declines in product demand within our DMS segment, resulting in a revenue shortfall of $150 million for the quarter,” Mark Mondello, Jabil CEO, said in a conference call with analysts. “The modest declines we experienced during the second quarter have now turned into an abrupt downturn, significantly impacting our third fiscal quarter.”

Jabil, the second-largest publicly held company in Tampa Bay, now is projecting $18.5 billion in sales for fiscal 2016, which covers the period Sept. 1, 2015 to Aug. 31, 2016, a press release said. That’s down $1.5 billion from earlier guidance.
Core diluted earnings per share for FY 2016 are now expected to be $2.12, down from an earlier projection of $2.65.
The reduced forecast came even as Jabil reported second quarter earnings for fiscal year 2016, the three months ended Feb. 29, that topped those of a year earlier:

Revenue for Q2 FY16 was $4.4 billion, compared to $4.3 billion in the previous year
Net income for Q2 FY16 was $78.9 million, compared to $52 million a year ago
Earnings per share for Q2 FY16 were 41 cents, compared to 27 cents in last year’s second quarter

Nevertheless, keep buying stocks. The dollar is lower. Oil is higher. The world is your fucking oyster.

According to Loomis Sayles, bond hedge fund managers are complete morons. They’re bets in junk bonds have gone awry in a most horrendous fashion. Apparently, losses for the industry are of the record breaking varietal.

“It is probably going to be the worst quarter in history for a number of the fixed income-oriented hedge funds,” Fuss said at an event in Tokyo on Thursday. “A few are already known but there are some that were wiped out and just wound down.”

Hedge funds that bet on bonds prices falling were caught off guard as individual investors poured money back into junk debt funds in February, according to Fuss. The funds that used borrowed money to short the debt found they couldn’t cover those wagers as institutional holders were unwilling to sell and there were fewer dealers at investment banks to act as market makers, he said.

“The market is going, I think, to stay thin” he said. “Volatility will stay high any time you have a major change like this.”

European markets are being poleaxed right now, as the euro soars vs the dollar for the second day in a row. As a matter of fact, the dollar is now at 5 month lows.

The DAX is leading to the downside, undergoing substantial selling, mostly due to currency adjustments. The British markets have escaped this misery because they’re not a euro based economy.

Nasdaq futures are actually down 30 and not what this graph says below. It’s not taking fair value into account.

Both gold and crude are stronger.

This stock has been on fire since the beginning of the year, in the hopes that China wasn’t that bad and the slowdown in crude was meh.

Well, gents, the market is an ass and CAT just vomited all over itself with a St. Patrick’s Day earnings warning.

Via briefing.com

Co issues downside guidance for Q1 (Mar), sees EPS of $0.65-0.70, ex items, vs. $0.95 Capital IQ Consensus Estimate; sees Q1 (Mar) revs of $9.3 to 9.4 bln vs. $10.22 bln Capital IQ Consensus Estimate.

Representatives of the Company also stated that they remained comfortable with the full year guidance for 2016 sales and revenues and profit per share as most recently stated in a Form 8-K Caterpillar filed with the Securities and Exchange Commission on January 28, 2016. (was for FY16 (Dec) EPS of $4.00 vs. $3.73 Capital IQ Consensus Estimate; sees FY16 (Dec) revs of $42 bln at mid-point vs. $41.5 bln Capital IQ Consensus Estimate).

Shares have led the Dow higher.

The reaction is muted, quite frankly. A reduction in guidance of this magnitude should engender a sharper response.

SPY futs are -10.

Look, it’s late and I’m tired. I’ve written and published 40 articles over the past two days. I can’t even begin to think about what this bow tied man just said in the video below. Since young, I’ve been brain-washed into believing that an acceptable level of inflation, approved by my overlords, was good for the economy. Now Grant enters the fray, being all smart and stuff, telling me the Matrix isn’t real and that everything I’ve known my entire life is a lie.

Quite frankly, it’s too much for me to bear.

After losing $700 in a single day of trade, Pershing Square sold a 20 million share block of MDLZ, one of their better acting, liquid positions.

They cite all sorts of bullshit reasons for the sale. But make no mistake, they are fighting for survival and trying to get tactical, in order to make up lost ground.

“After the close, we completed a block sale of 20 million shares of Mondelez International. As a result of the sale, we now own a 5.6% stake in the company, are the third largest owner, and have substantial uninvested cash. We reduced our stake because Mondelez had become an outsized position in light of its initially large size and its outperformance relative to other holdings. We continue to believe in the potential for operating improvements and margin expansion that we expect will lead to substantial further increases in value. As a result, it remains our largest exposure. We are reducing the position size for portfolio management purposes only. We have carefully reviewed the balance of our holdings and have concluded that they are appropriately sized. As such, we have no current plans to sell any of our other investments.”

I don’t see them enduring another 20%+ drawdown and surviving to tell the tale. All hands are on deck. Ackman is fighting for dear survival, while playing with a billion plus in his checking account.

Because nothing says ‘we’re killing it’ like $38 crude.

I promise you, without a shadow of a doubt, these gains are unsustainable.

I offer you an analogy to explain the current situation in the energy sector.

Imagine that you’re living in a giant mansion. You bought the dwelling at the peak of your business cycle. You were fat, greedy, a gluttonous human being of extreme indecorous depravity. You moved your bratty family into a 10,000+ sq ft home and spent upwards of $100k per month in general upkeep and mortgage.

You spent your days and nights living like a fucking Caeser, ordering subjects to fetch things for you, grill you some steaks, wash your car and bicycles. Then everything changed for the worse. Your business cratered by 90%. Your savings quickly depleted under the heft of your absurd expenditures. Then you enjoyed a small respite. Your revenues bounced 40%, from $10k per month to $14k, well below the $100k needed to maintain your hedonistic lifestyle.

Bankruptcy is inevitable. This is the current state of the oil markets.

Good day.

It would be foolish to think the market is topping right now. The reaction to the Fed’s position on rates is having a deleterious effect on the dollar, now down more than 1% v the euro, which is buoying commodities, and by extension, stocks.

Massive gains are abundant without pause in all of the commodity sectors. My favorite tell is FCX, a company racked with debt and massive exposure to copper and also oil. We are rallying because the bears are weak, flaccid, pathetic sub-humans. Any interest rate hike will cause panic and sheer horrors for this market, yet the specter of it seems so far away.

Irrespective of what the market is bound to do here, or throughout the month of March, I do not believe there is a significant downside to this tape. If anything, we will grind higher and continue to climb the wall of worry. However, come late April and early May, dislocations will be more than a maybe, but a certainty.

Enjoy these last few weeks of hedonism and be sure to save for a rainy day, for a deluge is coming and you’re gonna need an ark to survive it.

WTI crude is higher by an astonishing 6% to $38.5. Gold is higher by almost 2% and copper 1% to the good. This is happening, as the dollar plummets v the euro to the tune of 0.6%, because of an inferred dovish stance by the Federal Reserve.

NASDAQS have gone apeshit to the upside, now higher by 25.

Leadership sectors are all in commodities. Stocks like FCX, SM, CRZO, as well as a slew of gold stocks, are leading the fray higher.

Market breadth is improving, now 67%.

The market is hockey-sticking higher on news that the Fed sees just 2 rate hikes, instead of 4. Duh. We already knew that. More to the point of two rate hikes, the market is delusional if it thinks it will enjoy those, whenever in fact they do occur.

However, I think the noteworthy part of this statement is the proverbial bending of the will to the market. Nevertheless, these statements are red herrings, meaningless drivel designed to provide succor to a market that has hitherto gotten everything it has asked from the Fed, and more.

Let this be as a stark reminder to you: you will not like any rate hikes, not even one.

Nevertheless, markets are rejoicing in their own feces, now higher by 5 whole NASDAQS.

Sell the news; board the ark.