WASHINGTON, March 12, 2013 – Although it’s down at this morning’s opening bell, Apple’s stock got a welcome boot upwards yesterday after its months-long decline, courtesy of…what? There was no news on the stock, though there was some speculation on a new or enhanced product announcement later this month. Around the close and after the bell, another rumor floated that Apple would soon announce stock buybacks, an increased dividend, a stock split, you name it.
Here’s a problem, though. Somebody knows in advance that something positive is likely to come from Apple soon. Volume picked up and the stock, which had been its usual moribund self yesterday, suddenly leaped off the operating table in a rather convincing fashion. If some kind of big news does transpire over the next few days or a week or two, you can bet that they (our longtime term for the Big Boys who always get to know more than your or moi) totally know what it is and are positioning themselves for maximum profit.
This phenomenon is otherwise known as insider information. And it’s a huge no-no on Wall Street. Except, of course, for them. Granted, this little episode may not play out the way we think. But if it does, we’re wondering whether our asleep-at-the-switch SEC—you know, the government entity that’s supposed to protect us from the kind of Big Boy predation that’s embedded in the Street’s DNA—will ever find and prosecute anyone. Just like we’re still waiting to see Countrywide’s Angelo Mozillo do a perp walk, or waiting to see if rich, shady ex-Goldman, ex-U.S. Senate, ex-N.J. Governor Jon Corzine ever gets fined even one Benjamin for his client-ruining shenanigans. Stay tuned, but don’t get your hopes up. These are rhetorical quasi-questions.
On the upside yesterday, at least for us, another rich Wall Street kingpin, Hizzoner, New York’s Mayor Michael “Nannie” Bloomberg, took it on the chin yesterday when a New York State Supreme Court Justice sensibly “invalidated New York City’s regulation to ban the city’s food services businesses from serving sugary drinks larger than 16 ounces, the American Beverage Association (ABA) and other business groups opposing the ban declared victory,” according to CNBC which has been all over the story.
The report note rubbed Nanny B’s nose in the ruling, quoting the ABA—“just one of several organizations that opposed…Bloomberg’s proposal”—as it indulged in a modest victory dance. “‘The court ruling provides a sigh of relief to New Yorkers and thousands of small businesses in New York City that would have been harmed by this unpopular ban,’ the ABA said in a statement. ‘With this ruling behind us, we look forward to collaborating with city leaders on solutions that will have a meaningful and lasting impact on the people of New York City,’”
Another key player chimed in as well. “This is a great victory, particularly for thousands of restaurant operators and industry suppliers serving New York City who would have experienced financial hardships had the ban been enacted,” said Dawn Sweeney, President and CEO of the National Restaurant Association. “We are extremely pleased that the judge recognized that the Board of Health exceeded its authority when it initially passed the ban.”
Playing to type, Bloomberg, like all rich Democrat faux-socialist elites, pouted and dug in his heels, vowing to appeal the ruling, which also forced educational requirements on restaurants serving those dreaded sugary soft drinks. Bloomie can’t understand what the fuss is all about anyway, insisting that the cost for his phony health drive is trivial for restaurants and consumers who were to be banned from serving or buying “Big Gulp” style bargain soft drinks. This is typical of people who’ve been so rich for so long that they no longer have a clue as to how the rest of the country—even Manhattanites—really live.
The cost is not trivial if you start adding it up. New rules, new printed matter, new glass sizes special ordered, and, obviously, a greater cost per ounce to the consumer add up over time, particularly if you’re not as rich as Nanny B is. But Nanny dismisses this anyway, roughly 2/3 of the way through this CNBC video, which begins with a funny faux pas:
So New York’s taxpayers, having already shelled out for this latest round of legal expenses, along with restaurants, the National Restaurant Association, and who knows who else, will have to pick up the tab for a useless appeal.
Even though this is generally a column that deals with stocks and investments, we’re jumping on our soapbox here for a very specific reason: Bloomberg is just the metaphorical tip of the iceberg for “moderate” and low information voters who think that electing this kind of false prophet is just fine for them, for business, and for the country. But what’s wrong with the country, the economy, and the tax system right now is that no one in political office, save maybe Paul Ryan, is paying any attention to this. They’re running off instead to campaign on trivial nonsense like soft drink sizes when we’re paying them the big bucks to fix the massive problems that they and their cronies have caused.
This is a huge disconnect. But such infantile crusades as Mayor Bloomberg’s, or the Obama Administration’s 24/7 vilification campaign against those few Republicans who actually want to help their constituents repair their balance sheets, are launched for only two reasons: First, they give the elitist crusader the appearance of virtue; and Second, they do so with little or any political cost.
In other words, such crusades garner generally positive reviews from a compliant press. But they do absolutely nothing to solve any of our core economic problems. Such intractable issues are viewed by these elites as ultimately too politically risky to tackle in any meaningful way. So they head off on anti-soft drink crusades and the like, creating the appearance that they’re actually doing the jobs they were elected to do, which they most assuredly are not.
The Maven feels better now. Let’s head to the exchanges now, which, after moping about for the first half hour are trying to get positive again, except, at 10:14 a.m. EDT, for the NASDAQ.
Trading today’s market:
It’s hard to get a handle on this morning’s action. Quadruple Witching Week generally dictates that activity increases and usually to the plus side, though that’s not universally true. Things might not stay true to form this week since Congress is working on another budget/continuing resolution/whatever to prevent the allegedly dreaded government shutdown that will happen later this month if they don’t get the job done which they won’t.
This is the uncertainty the market currently confronts. Right now, the market is complacent, figuring, against all odds, that Washington will actually do something constructive. That could change the moment the Administration decides to ratchet up its still-constant anti-Republican rhetoric, which is all this President thinks about.
For this reason, we think, Wall Street’s financials (banks, insurance companies, brokerages and the like) which have been strong are wobbly this morning. In answer to this, some of the Dow’s big stocks are relatively strong, but the NASDAQ—with Apple back in gimp mode—and the more broadly based S&P 500, can’t find their mojo.
We will likely stay on the sidelines today, although we are sidling up to the IPO of Silver Spring Networks (proposed ticker symbol SSNI) which is supposed to be priced tonight. Standard literature available almost anywhere on the net right now briefly describes Silver Spring Networks as providing a “networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. The smart grid connects millions of devices that generate, control, monitor and consume power, providing timely information and control to both utilities and consumers.”
These kinds of products have actually been available for years. A company I worked for tried to get involved in this area in the mid-2000s, but this industry was then in its infancy and no deal emerged. The industry has caught on now, but there’s still not enough critical mass for it to be profitable. So, not surprisingly, Silver Spring (no connection with the Maryland suburb near DC), while booking decent revenue, has yet to turn a profit either in its over ten years of existence.
Nonetheless, there has been life at the margins of the energy and utility industries, and Silver Spring is a legitimate player here. That makes it not an investment, but a possibly decent spec. If the price range remains the same later today, or if the issue is priced down, we will likely take a pass. If the issue is priced up significantly, that would indicate wider interest and we might take down a small lot of shares.
Guessing on stuff like this is tricky, however, in a market that still seems as if it wants to correct on the least excuse. So this one is only for those who have a little mad money to play with. The issue will be priced some time after this afternoon’s close, likely mid-to-late evening. If you have interest, check first to see if your broker has any to sell. If he has all you want, that actually could be a bad sign.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
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