Apple earnings silence critics, Walgreens to buy Rite Aid

Markets set to open up… until they start worrying about today’s Fed minutes. Will the Fed raise interest rates now or in December. Maybe not, say pundits.

Apple logo and money.
The color of money is whatever Apple says it is. Composite image by the author, derived from public domain graphics.

WASHINGTON, Oct. 28, 2015 – What a difference a day makes, more or less. Apple (symbol: AAPL) earnings, reported Tuesday afternoon after the closing bell, silenced all its habitual naysayers. The company’s Q4 earnings and revenue “topped analysts’ expectations” noted numerous sources, although you heard that right here from the Maven in yesterday’s column.

Some of these analyst/clowns still seem stuck in the 1990s, when they jeered the Apple Macintosh, comparing those machines unfavorably to the clunky, early Microsoft Windows-driven machines they all owned—and struggled with. Those times have long since passed. But those aging analysts and pundits who gained their early reputation in part by bashing Apple are one-trick ponies, as was demonstrated once again late Tuesday afternoon.

Once again, Apple and its stock were all gonna die, a sentiment once shared by none other than cheap-PC maven Michael Dell, who in the late 1990s urged Apple to just give it up and go out of business for God’s sake. How’d that work out for ya, Michael?

As for those Apple numbers? The company posted earnings per share of $1.96 on revenue of $51.5 billion, easily topping analysts’ consensus estimates of $1.88 per share on $51.11 billion in revenue. Shares were up over 2 percent Tuesday in after-hours trading after the results were posted, after having closed down fractionally in regular trading.

Apple reported having sold 48.04 million iPhones and 9.88 million iPads in Q4. Those reflexively pro-Microsoft analysts, however, were expecting “more” and so characterized these sales as “disappointing.” Really? How about the earnings per share they generated? Apple knows that the sale of its expensive yet popular phones is bound at some point to gradually decelerate. So it maintains its margins by constantly figuring out ways to innovate and cost-save on production.

Analysts were also “disappointed” in Apple’s forward guidance. The company expects Q1 2016 sales of $75.5 billion as opposed to analyst estimates of $77.17 billion. Fact is, Apple probably already figures to beat its conservative numbers. As the refrain of an old anti-capitalist song once lamented, “When will they ever learn?”

In other big news, the ripple effects of the Obamacare-forced wave of mass consolidation in the health insurance industry has now hit America’s biggest drugstore companies. The Walgreens pharmacy chain, aka the Walgreens Boots Alliance (WBA) is buying the long-struggling Rite Aid chain for $9 per share in what’s being described as an “all-cash deal.”

As in the health insurance industry, this kind of consolidation in the drugstore business is accelerating as those in the healthcare industries in general seek economies of scale.

Whether this is a good thing or a bad thing for consumers, however, remains to be seen. If drug costs in particular come down a bit as a result of this, fine. But all this consolidating is winnowing competition down to fewer and fewer players, gradually limiting consumer choices and creating a high potential for healthcare cartels that can begin to set anticompetitive prices. Yet that’s just another potential and negative consequence of a socialized medicine plan that was

Not very well thought-out from the beginning, and

Meant to turn into a single-payer, federally controlled graft machine anyway.

Markets in general today are set to go up, at least for awhile, potentially inspired by AAPL’s numbers, boring critics notwithstanding. But the positive action should peter out some time after the first hour and perhaps start going negative approaching noon as nervous traders await what’s likely to be the Fed’s latest non-announcement—namely, that they haven’t yet decided to up those interest rates, even an eensy-weensy bit.

There are a lot of reasons for this, but the main one is that foreign governments, primarily the eurozone, Japan and China are desperately trying to goose their own flagging and likely deflating economies with more and more free money—just like we did here—meaning that if the Fed does raise rates, it risks a horrendous overreaction both here and on world markets, all of which would likely crash short term.

It’s a dilemma, all right, but we’ll know the answer when the Fed oracle is made officially public at 2 p.m. EDT this afternoon. But expect insiders to start trading on that info, which they already have, between 1:30 and 1:45. They always do, tipping us off as to the Fed’s general content.

Under the uncertain circumstances, no trading tips today.

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