Lower Oil = More Money In People’s Pockets = Higher Economy = Better Earnings = Better Stock Market

I think that formula says it all… although, it may seem a bit odd given the absolute crushing of the market recently.

No doubt, I have my backside waving in the wind right now.

P.S.  Since the price of oil affects virtually 100% of the cost of everything, this means we’ll all have a few extra bucks in our pockets… and since consumer spending is 70% of the U.S. economy… and the U.S. economy is the commerce engine of the world… this turns out to be a very big deal indeed.

Misleading headlines happen all the time.

The big headline this morning from the Wall Street Journal:

Larger Apple iPad to Be Delayed

That’s what everyone picked up.  You might think, “wow, Apple’s really blowing it… yet another problem!”

If you read the article, though… or even just the subhead below the headline:

Apple Suppliers Concentrating on Meeting Demand for New iPhones

… you’ll find the real reason for a potential delay:  Because they’re swamped just trying to fill iPhone demand.

That’s a tremendous problem to have… unfortunately you’d never pick that up from the headline.

 

UPDATE:  Someone finally got it right!  From the BusinessInsider:

Apple Delays Plan To Make A Giant iPad So It Can Pump Out More iPhones

See the difference?  One suggests something negative… the other gets to the heart of the story — that overwhelming demand for the iPhone is causing Apple to juggle manufacturing — something that is clearly positive in the big picture.

 

What has always amazed me is how quickly — even viciously — sentiment can change.

Yesterday… even this morning… AAPL just felt… stuck.

Truth is, AAPL has been treading water for about three months now.

Certainly it’s had its share of outstanding news… but in the battle of bulls vs. bears, the bears were able to make the most out of some pretty flimsy stuff over the last month… iPhone’s bending (a grand total of 9 out of 10,000,000)… iOS 8 growing pains (pretty standard for any major new OS)… China getting delayed (until next week, not 2015 as they were suggesting)… downgrades that weren’t downgrades (someone lowered their target price above the current AAPL share price and still called it a downgrade?)… and so on.

I have to admit that yesterday, as the market was tanking, things felt a bit bleak.

Maybe that’s what they mean by “capitulation”?

Because… just a few hours later… AAPL now feels like it’s ready to e-x-p-l-o-d-e.

Here’s what is different:

(1)  Carl Icahn announced that he’s going to start being an activist pain-in-the-ass again.  Wall Street bulls love when he does that… and no one seems to do it better than Carl these days.

(2)  Apple — for the first time ever — is one of the top 5 suppliers of PC products.  Not bad for an after-thought business.

(3)  While the PC numbers aren’t the major earnings driver at Apple, I think a few analysts may take the time to raise overall estimates yet again… and this time include the somewhat overlooked fact that iPhone 6 demand in China is through the roof.

(4)  There’s a big announcement October 16th… most people think it’s to refresh the iPad and laptop line-up… but some news sources are saying that we’re about to get… Apple TV… !  Anyone that reads my blog know I think this is the next major, major, major revenue driver for Apple.

(5)  All of this drives (frenzies?) into AAPL earnings on Monday, October 20th… which is about as big an event as there is on Wall Street.

I always believe things swing too far in any one direction.  The last three weeks have been downers for the major markets.  Given the Fed comments today, I think we’ll see things swing in the other direction for a bit… which, adding that to the five points above, means I think AAPL is going to go on a mini tear.

 

 UPDATE:  Oppenheimer looks to be the first firm out-of-the-gate to raise AAPL estimates… and up price target to $115.

Could It Be… Apple TV?

Posted: October 8, 2014 in Apple, Apple TV, Business, Farros, iOS, Royal

Could it be… Apple TV?

From Investor’s Business Daily:

Long-rumored Apple TV app store could be reality soon

I’ve written about this for a while (here and here)…

… like AAPL did to the entire cellular phone industry, I’ve been eagerly awaiting when APPL turns the even-more-massive broadcast world on its head.

Maybe sooner than later?

 

Here’s a lesson about what not to do as CEO:  Trash your own stock.

TSLA… which was headed into $300-$320 territory… just hit an iron wall.

Unbelievably, Elon Musk came out with the following statement last night:

“I think our stock price is kind of high right now,” Musk said Thursday, responding to a question from CNBC at the news conference in Carson City. “If you care about the long term, Tesla, I think the stock is a good price. If you look at the short term, it is less clear.”

Stock price goes up and down by itself… it’s never, never, never a good idea to actually open your mouth about stock price, though… as TSLA is learning this morning with it sharply falling.

Wonder how all those folks that put their butts’ on the line to support Musk’s vision feel now?

Employees dreaming of buying cars & houses with well-earned stock appreciation?  Seems like there might be some morale issues around the ‘ole water-cooler this morning.

How about analysts like Stifel Nicolaus’ James Albertine, who recently gave TSLA a full vote of confidence with a $400 price target?

Elon, the proper answer to the question of whether your shares are overpriced is:  “It certainly reflects the enthusiasm that investors — and our customers — have for our products.”  

Duh.

What a terrible thing to do to shareholders.

Everyone is asking when the market will crash.

They’re pointing to overvaluation… interest rates… the bull running way too long… P/E ratios… unemployment… wages… Europe and International melting down… etc., etc. *

Long-time readers know that I care most about one single, solitary metric:  The price of oil.

When oil spikes — like it did in 2008 — it affects the price of everything… and I mean absolutely, positively every item & service in the global economy.

That, of course, affects consumer purchases, which account for about 70% of all purchases and are truly the engine of the aforementioned global economy.

That, of course, affects corporate earnings, which affect stock price.

So, while everyone comes up with ever-increasing and complex ways to predict the market, I just keep my eye on oil… as I do every single day.

While the price of oil is subject to change at a moment’s notice… it’s been behaving for a while now.  That’s my signal that it’s safe to stay in the water.

 

*  P.S.  They’re also talking about global military actions and terrorism… which absolutely do have the ability to derail the market in the short run… those are — depending on whether you are short or not — unfortunately or fortunately constant wildcards in this connected, modern world we live in.

There’s a great maxim in investing:  Buy the rumor and sell the news.

It means that things go up in anticipation… but when the news is released, reality usually puts the hype in perspective.

It will be interesting to see “if it’s different this time” (so to speak)… that is, if AAPL keeps rising after the expected September 9th iPhone 6 introduction.

I think it will.

Because Apple isn’t making just one introduction this year… they have more queued up… the iWatch… a payment system… and — hopefully before it’s too late — iOS TV.

Even the iPhone 6 could be a multiple shot… since everyone in the world will be speculating how many zillions they sold in the first 30 seconds of introduction… over the first weekend… by the end of the year… etc.

Guess we’ll know the answer soon enough.