While people are trying to figure out Apple’s latest numbers, here is Ice Cap Management’s latest on Secular Bear markets, P/E ratios, inflation/deflation and much more.
1982 was the best year ever. The crazy disco craze was finally over.Spielberg’s E.T. was hitting the big screens and Van Halen was just 2years away from learning how to jump.Yet, the biggest reason for celebration was the end of 16 tortuousyears of stock market losses. Since 1966, investors in the stockmarket had lost -10% of their money. Imagine that, a -10% loss fromthe stock market over 16 years.Well, at least these 1970 era investors were not invested during the1937-41 market. These unfortunate souls lost -38% of their hardearned savings over a 5 year period.Better yet, the only good news for these pre-war investors was thatthey managed to avoid the 1929-32 market when the luckiestinvestors only lost -80% of their money.These 3 prolonged stock market slumps are forever known as SecularBEAR Markets. And to be fair, and balanced, the stock market hasalso banged out 4 equally opposite periods where investors madeboat loads of money during Secular BULL Markets.Unknown to many, and ignored by the rest, we are right in the middleof another long and dragged out Secular Bear Market which hasseen investors lose -7% since the year 2000. That ’s 12 years of highhopes for nothing.
That may sound flippant, but it reflects the reality of the role that Apple Inc. (AAPL.O) plays for both the stock market and especially for technology stocks. In the fourth quarter, the company sold an astounding 37 million of its iconic iPhones – far more than analysts had expected – generating some $25 billion in revenues. Sales of its iPads – introduced to the market only about two years ago – also have exploded; in the fourth quarter, sales totaled 15.4 million units, up from 11 million in the third quarter. That translated into blockbuster earnings for the company for 2012. (For more insight into Apple’s performance, the sources of its earnings growth, and its impact on the market, please see the package of interactive graphics, below.) Full must read article here.
Before you start claiming you bought the bottom. This Euromezz surely is a stubborn one. With Spain in total denial, yes, they are still not acknowledging their huge problems, and the fact that so many real estate zombies can’t even pay the interest on their loans, the Spanish situation won’t be resolved easily. The country seems trapped in a Quijotian catch 22 situation. Beware of cathing those falling knives. From Spiegel.
Everything is going according to plan, no reason to worry, the threat has been contained. When Europe’s monetary watchdogs resort to such catch phrases, investors and politicians alike know that the situation is serious.
Last week, it was apparently very serious as top-ranking Brussels officials practically lined up to disseminate their reassuring phrases to the people of Europe. “I don’t think Spain will need any kind of external support,” said Euro Group chief Jean-Claude Juncker, who is also the prime minister of Luxembourg. And European Commission President José Manuel Barroso insisted: “I am absolutely confident that Spain can meet its economic challenges.”
Golem delivers another great summary of what is actually going on in Europe. The only growth around is the growth of counter party risk….
There are so many reasons for believing that the European ‘recovery’ plan is not working now and will continue to not work no matter how long we are forced to subsidize it. Today we can add one more reason – Mr Francois Hollande is now the favourite to beat Mr Sarkozy and become France’s next President.
The very prospect that Mr Hollande might replace Mr Sarkozy is enough for all the European markets to head straight down. Germany and Spain are both down over 2.7%. Why should this be so? Because Mr Hollande has made it clear he will ‘renegotiate’ France’s role in Europe’s various bail out plans. Any such renegotiation would leave Europe’s bail-out fund fiction in tatters.
Mr Hollande evidently does not believe the pious fiction that underpins almost the whole European and in fact global fiction of recovery, namely that there is now, or will be soon – quite soon, fairly soon, just over the next hill… some growth. Growth is what is supposed to allow Greece to become solvent, allow Spain to cope with the bursting of the dam of regional debt that is presently engulfing its banks and forcing its CDS rates to unsustainable levels. Mr Hollande is the first but will not be the last to say that the growth plan is not working. The Dutch Parliament yesterday collapsed because they too could not agree to go along with the fiction. We do not have growth. What we have are cuts in public spending while we have increases in public funds being siphoned away to pay for more and yet more bank bail outs.
Guest post by Azizonomics.
A hilarious BusinessWeek piece from 2005 asked:
Is the U.S. in a savings crisis? We think not, though one may be brewing if attitudes toward the budget deficit don’t change in Washington. The fact is that for the past 20 years, America has grown faster than Europe and Japan, two of the world’s highest savers. Year after year, U.S. deficits are financed, bills are paid, and living standards rise. If anything, America is awash in money. So where’s the crisis?
2008 answered that question pretty well, I think. They asked for a crisis, and they got one. This is the same slack-jawed cocaine-addled bozo thinking that led some very serious analysts to declaim that subprime was “contained” in 2007 (of course, we know now that thanks to the cult of endless syphilitic re-hypothecation nothing can be contained), and the same brand of thinking that leads some very serious economists today to claim that the threat of an alien invasion would trigger an economic recovery.
Here’s the dreamland fantasy:
Suppose you were alive back in 1945 and were told about all the new technology that would be invented between then and now: the computers and internet, mobile phones and other consumer electronics, faster and cheaper air travel, super trains and even outer space exploration, higher gas mileage on the ground, plastics, medical breakthroughs and science in general. You would have imagined what nearly all futurists expected: that we would be living in a life of leisure society by this time. Rising productivity would raise wages and living standards, enabling people to work shorter hours under more relaxed and less pressured workplace conditions.
Why hasn’t this occurred in recent years? In light of the enormous productivity gains since the end of World War II – and especially since 1980 – why isn’t everyone rich and enjoying the leisure economy that was promised? If the 99% is not getting the fruits of higher productivity, who is? Where has it gone?
The few lucky ones that bought the SPX or the DAX in the very first week of January are positive on the year. Anything else you bought (including the DAX and the SPX at a later stage) you are negative on the year.
All in all, momos are now long and wrong.
Chart for the sober look presented without further comments.
Everybody knows Spain is in real trouble. What few seem to grasp though, is the fact the figures don’t add up. Trying to revive the economy with austerity, and expecting people to believe the figures, is a fairytale. Wonder just how the banks are valuing the ever increasing property book? They still seem to apply those “was” prices. More on the impossible mission, via El Pais.
Spain has set its course and there is turning back” has been Prime Minister Mariano Rajoy’s mantra since taking office in January after committing himself to reducing the budget deficit from 8.5 percent of GDP to three percent by 2013 in a bid to avoid an ECB and IMF bailout, as has happened in Greece, Portugal, and Ireland.
The prime minister said on April 13 that it was “not possible” for the EU to rescue Spain: “If we don’t meet the deficit targets, they will stop lending to us, and if no one lends to us, they will have to rescue us. Because the government rules out the possibility of a rescue and intervention, that’s why we’re implementing reforms.”