Tuesday’s markets: Apple vs. Iran vs. the Fed
WASHINGTON, April 28, 2015 – Trading on Wall Street was down, sideways and up Tuesday morning as averages tried to parse news reports flying fast and thick across the political and investing landscape.
Apple posted blowout earnings last night with the iPhone 6 the star of the day in terms of sales and profitability. Also impressive (surprise, surprise) were sales of Macintosh computers, once again bucking the industry trend. iPad sales continued to disappoint, likely cannibalized on both ends by phone and lightweight laptop computer sales. But the lackluster numbers there were vastly outshone by those iPhone and Mac numbers. Apple Watch sales are still a cipher, and did not figure in the last quarter’s report.
Apple also announced it will be returning even more capital to its shareholders than previously announced. According to a CNBC report this morning,
“The firm also announced Monday that it would expand its capital return program to $200 billion from a previously announced $130 billion. This estimated figure comes from Apple increasing its share repurchase authorization to $140 billion from the $90 billion announced last year, and boosting its dividend 11 percent to 52 cents per share. The planned program goes through March of 2017….”
Naturally, after trading up after-hours trading Monday, Apple’s stock (symbol: AAPL) was down in heavy Tuesday morning trading, a longstanding tradition in this company’s trading pattern. Analysts are divided in their opinion of AAPL going ahead. But then again, Apple analysts are so often wrong that they’re not much worth listening to any more.
Despite this good piece of news, traders were flustered and confused by other scuttlebutt and reports. Tuesday morning, a brief report from Saudi news network Al Arabiya insisted that “Iran has fired at a U.S. cargo ship and has directed it to Bandar Abbas port on the southern coast of Iran.” Al Arabiya asserted that “up to 34 American sailors are believed to be onboard the ship….”
propagandists reporters at Iran’s Fars News Agency chirped up in agreement, asserting that Iran had confiscated an “American trade vessel.” Another reason to trust these guys with nukes, we presume.
CNBC later said that the Maersk Tigris, apparently a U.S. charter vessel, cited a Pentagon report asserting the ship “did not have any U.S. citizens aboard and was traveling through the Strait of Hormuz when the incident occurred.”
U.S. warships are allegedly steaming toward the scene of the incident, according to other reports, but it’s difficult to corroborate anything for sure at this point. So let’s just say that something happened on the Middle Eastern high seas this morning and Iran is likely involved and probably up to no good.
Whatever the case, though, that news/rumor/report gave an initial boost to the price of oil, which had begun to flag badly in Monday afternoon trading. Since the negative hype on this story seems to have been throttled back by Tuesday noon (EDT) – at least for the moment – West Texas Intermediate crude (WTI) has slipped back down two cents to $56.97 per barrel. So it goes. Days like this are a high-frequency trader’s dream.
The U.S. dollar, either because of or in spite of the alleged incident with Iran, is continuing its recent spate of weakness Tuesday, trading now at $1.09 and a fraction per euro, its lowest level in at least three weeks by our rough estimate after recently hitting an earlier, close-to-parity high of $1.04 and a bit.
It seems very clear to us that TPTB (The Powers That Be) in the U.S. and the Eurozone determined some time in late March or early April that the dollar had strengthened too much and too fast against the euro over the last six months or so and had to be stopped for at least the moment. Otherwise, the current move down in the dollar makes no sense, as Europe is just embarking on QE style money printing while the U.S. is allegedly close to a decision by the Federal Reserve to begin tightening interest rates on this side of the pond.
Speaking of the Fed, those gabby, speechifying central bankers are meeting again this week and are slated to issue their latest pensées on the meaning of the financial universe Wednesday afternoon at 2 p.m. EDT. Of course, as we all know, all the appropriate insiders, having been informed of the latest news in advance, could be trading on the Fed’s latest oracular pronouncements as early as this afternoon.
It’s virtually a slam-dunk at this point that the Fed won’t schedule an interest rate increase for June. But fear of what they will or won’t say is the third element roiling Tuesday’s markets. Watch the averages, particularly tomorrow and particularly from, say, 1:30-1:50 p.m. Where they’re going at that point, and how fast they’re getting there will, as nearly always, be a clear tell on what the Fed is about to release to the rest of us peons out there in individual investor land.
Meanwhile, not very far in background and due apparently in equal measure to the ineptitude of some Baltimore policemen and the city’s even dumber mayor (not to mention the current Administration’s embrace of race-baiting as a winning electoral strategy), Washington’s near-neighbor to the northeast erupted in full race riot mode last night, forcing Maryland’s governor to call in the National Guard. This adds a wild card of urban uncertainty to the ongoing mix of rumor, innuendo and news that’s got the markets baffled this week.
We’re sure Al Sharpton will soon be on hand in Baltimore sometime this week to throw some surplus U.S. fossil fuel on the flames. We wish he’d stay home and finish computing his back taxes. Alas, that will never happen during this administration. But that’s another business story entirely.
Given today’s somewhat surprising mix of deep uncertainty, we’ll dispense with trading tips today. The Maven needs to transcend his current state of total confusion before he makes any more moves here, aside from maintaining a fairly high cash position.
More as it happens.