Joined Dec 1, 2015
135 Blog Posts

Apple Debt Deal Looks Huge. MOAR iDiocy! $AAPL

For a company that supposedly has more cash than it knows what to do with Apple sure raises a lot of debt.

This morning Apple filed with the SEC for a debt offering of an amount TBD. Details are sketchy…

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… but based the number of potential “flavors” listed it’s safe to assume the total amount borrowed won’t be insignificant. “Big” is the consensus. $6 to $10b range on Finance Twitter. I’ll guess $12.5, just to be extreme.

These deals are starting to add up for Apple. From 2013 to the end of last year Apple issued $55 billion in debt to fund buybacks and dividends. The rates are low. The company can afford it. For now. So could IBM, back in the day. That hasn’t turned out so well.


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The Problem

I’ve been conducting a one-man jeremiad all year, including about Apple in particular here. The broader fin-media world is starting to pick up the story, as expected. They aren’t quit getting it right.

The issue isn’t what Apple has made or lost repurchasing Apple shares. Apple doesn’t gain or lose anything on their P&L for repurchased stock. No company does. The shares are retired. The problem isn’t that Apple overpaid but that $38b in cash has been laid out in the name of “returning cash to shareholders” since the start of last year and Apple’s stock has been a disaster anyway.

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The only semi-justifiable reason for buybacks to using them to hide executive compensation. Remember, I said “semi-justifiable”. Share repurchases keep investors from getting diluted when executives cash out of stock option packages. That’s a good thing. It’s fair. A little oily, but fair.

Other than as a compensation dodge buybacks are economically indefensible. There is nothing wrong with Apple that can be fixed with a share repurchase. The stock is broken because the products are stale. As a long-term shareholder you’d rather they focus on fixing that problem than worrying about dilution.



Apple’s Buyback: Still iDiotic

Buyback Primer: Autonation, IBM, Apple, Chipotle and More….

Big Blues: IBM’s $70b Boondoggle



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China Says Buy! Should You Listen?

Stocks are having their biggest 2-day surge since January 28th and 29th. That would be a much cooler fact if January 29th hadn’t been followed immediately by a 7% plunge.

All of this happened just over the last few days, for those of you kind of spacing out on the markets at this point. Perhaps a picture will help:

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In case you’re new to this, it’s neither normal nor traditionally healthy for stocks to spike and drop 7% in less than 3 weeks of trading. For the S&P 500, 140 index points (I will not use “handles”) is more than a trillion dollars in market cap. That seems hard to justify on a fundamental basis.

When the S&P 500 is getting revalued by more than a trillion dollars every 10 days it’s best to sit back and wait, in my experience. We’ve already gapped into resistance. So you’ve got a ceiling up head and support way below current levels. The risk/ reward blows.

Another concerning omen: The Chinese have declared the Bull back in charge:

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That’s from my favorite government mouthpiece Twitter follow, @XHNews.

The Chinese are exceptionally bad propagandists. Unfortunately their record with stock calls isn’t great, either.

Here’s XHNews’ call from last July (from Jan 21st column):

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I’ll be selling rallies until further notice. Resistance for this one is 1895 (62% retracement) and 1950 (January 29th capstone).

I suspect the Chinese are just a little sheepish about this being the worst Year of the Monkey since 1932. Also, the whole naked currency manipulation, Shanghai Comp Crash, and GDP data tomfoolery. Regarding the last, this is still the best Chinese market cartoon of the year:

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Hero: Shkreli Offers Kanye $10m For New Album

Millionaire pharma-genius Martin Shkreli is trying to save the world from Kanye West.

Shkreli has offered Kayne West $10,000,000 in exchange for exclusive rights to West’s forthcoming album:

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Details of the offer were made public by Shkreli himself this afternoon via Twitter.

Simply by trying to delay the album Shkreli is doing more for America than any patsy since Lee Harvey Oswald was martyred to save the JFK Cover-Up. Godspeed, Pharma Bro. Godspeed.

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Panic! Stocks Cling To Support

In a time of uncertainty. In a world gone mad. One stock formation stood out as clearly as a shadow-puppet on a cloud: The S&P 500 3-month chart is forming a Brooding Affleck Stubby-Ear Batman Top:

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1820 was the Ebola-Low of October 2014. 1812 was the intraday low on January 20th. Any professional investor who claims to not be aware of those levels is either lying or bad at their job. For our purposes it doesn’t matter which. There are no non-chartists when stocks crash.

Below 1800 is nothing but air and regret down to 1708. A close below 1708 will be an Official Bear Market. There will be a TV special.

Click here for more on the Batman Portent of Doom

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Global Panic! Grim Open For Stocks

Stocks are much, much lower than where they were last night. That’s what air-pocket, overnight risk looks like.

Central Banks are a problem. This whole negative rate thing has equity markets tripping. Deutsche Bank’s “we’re rogered” memo was our tell. Here’s an entire MBA worth of economics for stock investors: The more traders are talking macroeconomics the deeper your bomb shelter needs to be.

Right now everyone is talking macro. The S&P 500 Head and Shoulders pattern has a neckline slice with a close below 1850. The 10yr yield is at 4 year lows (Congrats, TLT longs). Yellen is testifying before Congress.

We’re either going to make a very sharp bottom or suffer a hideous death. There is no in between.

Thank God it’s Friday*.

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For more please see 3 Rules for Bear Markets

* Crap

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Disney Hung-Up By Cord Cutters



Disney is praying for sweet release of death after hours

No one can say they’re surprised by ESPN (~50% of Disney’s profits) seeing slowing growth. In fact, every analyst on earth saw this coming. The only question was whether or not the miss was “in the stock”.

Apparently it was not. DIS is down 16% year-to-date.

This is why I sell stocks when they break up trends. Once upward momentum is gone in a stock chart all news tends to be seen as bad. Now I have a chance to add below $90, the flash low from last August. I probably won’t but it’s nice to have the option.

Here’s the Disney chart I posted January 4th. It was a happier, simpler time…




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Am I Wrecking Your Portfolio? Maybe!

Turnaround Tuesday is failing. Stocks are lower and a new theory from my Twitter stream suggests it’s my fault.

To understand this compelling argument go back to yesterday morning. On my influential and amusing Twitter stream I implied stocks were lower because Peyton Manning is a PED-using beer distributor hogging teammate Von Miller’s spotlight. Most of that was in the subtext of this graphic:


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Clearly I was kidding. Or was I…?

Sharp-eyed Twitter follower @ZagaInvestment quickly saw through my Jedi Mind Trick hi-jinks:


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My accuser was backed up by another follower, who noted the genuine out-sized influence my 26k [sic… it’s almost 27k] followers:


There are a few possibilities here.

One is that I have intentionally used my snarky genius superpower to trigger a $6 trillion decline in the value of global stocks since the start of 2016. In this case you can either oppose me and die or grab a seat and watch me make humanity dance like puppets at the end of my mind-strings.

Another possibility is that I’m doing this accidentally. Like Rae in “Star Wars: The Remake” I am only now discovering my power to control the fate of the world. If so, buckle up because there are going to be some changes made as soon as I get a handle on the Force contained in my blood(?).

I’m not going to lie; I like both of those options. A lot.

Sadly, I suspect the truth is people are losing money and seeking scapegoats. My value-add in that case is largely symbolic. If I am evil then their portfolios aren’t down because of decisions they made but rather due to something I said. They are not wrong, I am just a jerk. (Clearly these are not mutually exclusive but that’s a topic for another note.)

If it makes you feel better to blame me go right ahead and do so. Just know that at best you are surrendering all agency in your financial destiny to a guy (me) who thinks he’s trying to help but is actually killing you. At worst you are making a powerful enemy.

Either way, it seems like you’d want me on your side…



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“We’re Rogered”: Deutsche Bank CEO Letter Translated

Deutsche Bank Co-CEO John Cryan sent a memo to employees, calling his firm “rock-solid”.

Global markets recoiled in horror. DB shares immediately fell below 2009 lows and stock futures tanked.

You’ll hear about Cryan’s Crying all day. Here’s the memo, helpfully translated from German BS into human being:


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Stocks Rally -1.4pct!

Stocks could have have completely broke but they didn’t.

The S&P500 managed to claw back over 1850 by the close after falling just below 1830 during the day.

Everything else about the day was awful. So far this is the worst Year of the Monkey ever.





Buckle up, this market isn’t done with you yet.

Go home early and get some sleep. We’ll just start the whole week from scratch tomorrow.

Here are some pictures to color on the ride home…


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image image

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Facebook Of Death: Charting The Misery

The stock market is busted. You don’t need me to tell you that.

Please review Three Rules For Bear Markets. Rule 1 is Everyone Loses. You’re either losing money today, have lost money for years or will lose money tomorrow. You are not a special snowflake immune to portfolio meltdowns. Bear Market Rules apply to everyone.

Support for the S&P 500 remains 1850 on the close. Below that we’ve got the 2014 Ebola Low at 1820 and the Reversal of 1812 from January 20th. I wouldn’t pin too much hope on those latter levels. All bets are off in Gacy’s Basement

From Jan 14: The dreaded John Wayne Gacy's Basement formation...
From Jan 14: The dreaded John Wayne Gacy’s Basement formation…



Facebook shares were under $95 the day they reported earnings. Said earnings were absurdly good. The stock gapped higher the next day, eventually topping $117. As of this morning Facebook shares were back under $100. For my money, that’s close enough to Filling the Gap on the chart to make me interested on the long side.

Interested as in “Adding to existing long” not “back up the truck”.


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This isn’t advice because I have no idea what your portfolio looks like. If you’ve had cash on hand waiting for dip, well, this is a dip. Facebook filling the gap is textbook. Bull markets are about playing percentages, not swinging for the fences. FB under $100 with a stop at the pre-earnings lows seems like a decent spot to dip a toe into this eddy of pain.



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