Wednesday, July 25, 2012

Apple Miss, Euro Trash Edition

Apple Earnings
Apples miss, excuse is the iphone 5 holding up sales, ipad sales are above estimates, but given the reception of nexus 7, for how long?  Samsung Galaxy 3 is having a huge impact on international sales, beating the iphone in the last quarter, people are obviously going for functionality over design here.  Given the current tablet holdups across global courts, when these issues are cleared, Ipad sales will also be hit by the Samsung Tablet.  I like google here better than apple.

Euro News
European markets continued yesterday’s slide after Moody’s put Aaa rated Germany, Netherlands and Luxembourg on credit watch negative as a result of the risks around the EU sovereign credit crisis.  The falls today were less severe than yesterday, and sovereign 10yr bond yields continued to rise despite Germany and Spain’s finance ministers having an emergency meeting in Berlin where they pledged to work towards deeper integration and stated that current bond yields don’t correspond to fundamentals of the Spanish economy. Spanish 10yr +12bp to 7.51% and Italian 10yr +25bp to 6.55%.  Not surprisingly the Spanish and Italian benchmark equity indexes fell the most sharply, giving up some of the recovery they made when the shorting ban was announced yesterday, IBEX 35 -3.6% and FTSE MIB -2.7%. Poor German economic data didn’t help, PMI Manuf 43.3 (cons 45.1 and prior 45) while PMI services 49.7 (cons 50.0 and prior 49.9) with both indicating contraction and also being below consensus.


US homebuilders
US Homebuilders saw significant underperformance today as the S&P Homebuilders down 2%. KB Homes (led the sector lower with a 5.2% decline dropping the stock back onto near-term support.  Looking for an entry into this sector soon.


Agriculture
Saw a large sell-off in grains last night, 5% - limit down, reports of the current drought being handled better than the 1988 drought may have spurred on the selling.