The DJIA will see 12,000 before the end of 2009. Tech, financials and material stocks will rally very hard before the end 2009, and this recession will be over before the end of 2009. And what I mean by recession is the only objective way to define it - we’ll see an end to negative productivity by the end of 09. Mark my words. Apple is a buy in the $90’s and a strong buy in the $80’s. It’s an absurd by in the $70 range.
Andy, you may be right about the end of the year but this environment is toxic and it’s going to get worse before it gets better. Hell, AT&T just announced 12.000 job cuts. Dupont sees a 4Q loss vs. a earlier forecast profit, etc.
This past weekend gas prices dropped here about .25cents and then quickly shot back up on Monday. Asked the local station mgr. why and he said that Walmart dropped their price way under cost for the weekend. Now why would they do that? To drive BF sales numbers. They are trying very hard to crush the competition and may be one of the few to come out unscathed in this mess.
Here locally the state’s finances are starting to have an effect on a largely recession-proof town (big University and hospitals) . Schools are unfunded because the state is late making payments that were due in August. Hospitals are laying off people because Medicaid payments from Gov. are late.
These Black Friday numbers and Cyber Monday numbers are smoke and mirrors IMO. How can sales be up when so many people have lost jobs? Just doesn’t make sense. My take is that retailers aggressively discounted everything under the sun to stave off the inevitable. I saw people doing a lot of non-traditional Xmas shopping this weekend. The line in housewares was way longer than it was in the clothing depts. Numbers are being loaded upfront but won’t be sustained for any significant amount of time. (talk about your False ticks!)
Obviously Apple’s weathering the storm better than most and when thinsg stabilize I expect it to come back with a vengeance. But in the meantime it’s all about the economy and jobs. How are we going to stabalize the job market? I look at the Big 3 bailout as a lose/lose because my guess is that either way it’s going to amount to large job cuts (if they fail or as a concession to getting $).
As I type this, we’re hearing that Nov. same store comps for retailers are down almost across the board. Not even this past weekends giveaways could save that.
Andy, you may be right about the end of the year but this environment is toxic and it’s going to get worse before it gets better. Hell, AT&T just announced 12.000 job cuts. Dupont sees a 4Q loss vs. a earlier forecast profit, etc.
This past weekend gas prices dropped here about .25cents and then quickly shot back up on Monday. Asked the local station mgr. why and he said that Walmart dropped their price way under cost for the weekend. Now why would they do that? To drive BF sales numbers. They are trying very hard to crush the competition and may be one of the few to come out unscathed in this mess.
Here locally the state’s finances are starting to have an effect on a largely recession-proof town (big University and hospitals) . Schools are unfunded because the state is late making payments that were due in August. Hospitals are laying off people because Medicaid payments from Gov. are late.
These Black Friday numbers and Cyber Monday numbers are smoke and mirrors IMO. How can sales be up when so many people have lost jobs? Just doesn’t make sense. My take is that retailers aggressively discounted everything under the sun to stave off the inevitable. I saw people doing a lot of non-traditional Xmas shopping this weekend. The line in housewares was way longer than it was in the clothing depts. Numbers are being loaded upfront but won’t be sustained for any significant amount of time. (talk about your False ticks!)
Obviously Apple’s weathering the storm better than most and when thinsg stabilize I expect it to come back with a vengeance. But in the meantime it’s all about the economy and jobs. How are we going to stabalize the job market? I look at the Big 3 bailout as a lose/lose because my guess is that either way it’s going to amount to large job cuts (if they fail or as a concession to getting $).
As I type this, we’re hearing that Nov. same store comps for retailers are down almost across the board. Not even this past weekends giveaways could save that.
My 2 cents.
Mac
I read the same news you read, and see the very same economic data you see. I’m basing my conclusion on my years of experience as a trader and market observer. I will write on this issue when I have some time. Trust me when I say this, I’m being totally non-biased here too. I have a massive amount of capital coming into the market within the next couple of months and obviously would not want to see the market’s rally before then. Yet, I simply cannot ignore my own intuition and experience with these things. Apple’s tenure under $100 is coming to a quick end. I’m afraid the time to take a position in Apple under $100 is almost up. Earnings are going to be a huge blowout this quarter. I still see Apple beating revenue expectations by $800 million to $1.2 billion depending on how iPod sales due. I’m very confident that Apple will post sales of 2.8 million Macs and 6-7 million iPhones. Whether Apple blows out earnings by $800 million or $1.2 billion will depend on where iPod sales end up. I strongly believe Apple will no longer be trading under $100 after it reports its numbers. As a matter of fact, I don’t think Apple will see sub-100’s for a very long time if ever after it reports in January. I might just keep my mouth shut this quarter and let the shock of earnings take its course. I gave my preliminary numbers at the outset of the quarter and the current data seems to support those conclusions. Hopefully I could get my money in Apple before they report earnings. *Have my fingers crossed*
Andy, are you expecting a sustained (multi-week, possibly months) bear rally, like many market observers?
As you may know from your previous threads, I am very confident that Apple shares should regain high levels in a year or two. I also share your belief that the holidays / Q1 will be better than most expect. That sets us up for a nice rally. And I expect many other equities to do well in January.
But I still expect a period of consumption stagnation and even decline to set in after the holidays. That would help end the bear rally at some point next year (late winter? spring?).
Like everyone else, I’d like to maximise the number of AAPL shares I buy at the ‘bottom’. Perhaps I’ve already missed it (21 November: 79.14). The high 90s to 100+ leave me somewhat paralysed because I can’t shake the sense that we’ll be revisiting the 80s sooner or later.
Edited: just to clarify, the winter bear rally could easily see AAPL surpass 120 and then drop to 100. You may be right that our sub-$100 buying opportunities are nearing an end. Thus my anxiety…
[ Edited: 04 December 2008 10:53 AM by Winterpool ]
Andy, are you expecting a sustained (multi-week, possibly months) bear rally, like many market observers?
As you may know from your previous threads, I am very confident that Apple shares should regain high levels in a year or two. I also share your belief that the holidays / Q1 will be better than most expect. That sets us up for a nice rally. And I expect many other equities to do well in January.
But I still expect a period of consumption stagnation and even decline to set in after the holidays. That would help end the bear rally at some point next year (late winter? spring?).
Like everyone else, I’d like to maximise the number of AAPL shares I buy at the ‘bottom’. Perhaps I’ve already missed it (21 November: 79.14). The high 90s to 100+ leave me somewhat paralysed because I can’t shake the sense that we’ll be revisiting the 80s sooner or later.
Here’s the issue as I see it. If Apple beats by as much as I expect, the market put Apple in a particular trading range within the scope of the market. A beat on revenue by $800-$1.2 billion is so big that will not be ignored. While the markets might trade down to sideways, I think Apple will move up above $100 and trade above that line much as it tends trade in the $80-$90 range today. Yet, I do think the markets will rally and this bear market will be over FAR earlier than everyone thinks. There seems to be this growing sentiment on Wall Street that this bear market is going to last for years. I see it ending before the close of 2009 - probably earlier. Even if the economic data is muted over the next 4-6 months, the market will rally far before we reach a bottom in the economy itself. I see money flowing into the markets no later than the second half of 2009 and see an absolute bottom in the markets no later than that period. I see a bull market beginning in late 2009/ early 2010.
... I think Apple will move up above $100 and trade above that line much as it tends trade in the $80-$90 range today ... I see a bull market beginning in late 2009/ early 2010.
Eric Landstrom,
Can you comment on above? Sound similar to what you’ve been saying since Sep. AAPL trades in a range above $70s while market continues to decline.
... I think Apple will move up above $100 and trade above that line much as it tends trade in the $80-$90 range today ... I see a bull market beginning in late 2009/ early 2010.
Eric Landstrom,
Can you comment on above? Sound similar to what you’ve been saying since Sep. AAPL trades in a range above $70s while market continues to decline.
I’m comfortable with AAPL in the nineties but higher and I’ll short it if I cannot find a better idea unless the economic mood or Apple’s financial facts change. I agree with Andy that the market will snap back when we start pricing in an economic recovery but that whipsaw will be to move equity pricing up to fair market value and not from an overarching optimism. The reason is that history suggests that Joe plumber will continue to feel economic pressure upwards of two years after The Street bottoms. FWIW, I’m still expecting a bottom by Augustish by next year. However, keep in mind that I was wrong: July 15th wasn’t the low water mark on the financials because the .gov was inconsistent. If .gov continues to surprise and act inconsistently, then I’ll back off of my Augustish date because I know the entire Street will be freaked out. For example if .gov doesn’t bail out the autos this month all bets for next year are off because an auto failure will make Lehman’s failure that led to AIG’s, Fortis failure, unprecedented economic pressure, any number of personal BKs and a few insolvent countries look like a cake walk.
... For example if .gov doesn’t bail out the autos this month all bets for next year are off because an auto failure will make Lehman’s failure that led to AIG’s, Fortis failure, unprecedented economic pressure, any number of personal BKs and a few insolvent countries look like a cake walk.
Please elaborate. Pardon my ignorance of the auto industry. I agree with you that we’re in the hands of .gov. IMHO: AAPL range bound between $70s to $120s is worse case scenario. AAPL should lead the market. Bear in mind, it didn’t lead the market down, it declines in Dec 07 after the market decline from Oct 07. AAPL should be the last to fall and first to advance.
... For example if .gov doesn’t bail out the autos this month all bets for next year are off because an auto failure will make Lehman’s failure that led to AIG’s, Fortis failure, unprecedented economic pressure, any number of personal BKs and a few insolvent countries look like a cake walk.
Please elaborate. Pardon my ignorance of the auto industry. I agree with you that we’re in the hands of .gov. IMHO: AAPL range bound between $70s to $120s is worse case scenario. AAPL should lead the market. Bear in mind, it didn’t lead the market down, it declines in Dec 07 after the market decline from Oct 07. AAPL should be the last to fall and first to advance.
Case in point Senator Sheby and his field of fear is asking the auto execs how they drove to Washington and if they will drive back to Detroit. Are you kidding me? Rome burns and this is what he wants to know about? They hitchhiked, Shelby, and if I could short him, I would!
At any-rate, it is estimated that if any of the Big 2.8 failed within a year America would lose 1.5M jobs. Apple’s range has been $110 to $79.
... At any-rate, it is estimated that if any of the Big 2.8 failed within a year America would lose 1.5M jobs ...
What I don’t understand is are these jobs lost within a year or over a couple of years? Don’t company file under BK protection still operating? Also, those downstream suppliers and contractors serve not only one auto company right? Don’t they carry parts and provide services for all cars not just the big three? I believe those big threes are exaggerating. They’re using the same scared techniques as Paulson and Bernanke when securing the $700 B bailout.
... At any-rate, it is estimated that if any of the Big 2.8 failed within a year America would lose 1.5M jobs ...
What I don’t understand is are these jobs lost within a year or over a couple of years? Don’t company file under BK protection still operating? Also, those downstream suppliers and contractors serve not only one auto company right? Don’t they carry parts and provide services for all cars not just the big three? I believe those big threes are exaggerating. They’re using the same scared techniques as Paulson and Bernanke when securing the $700 B bailout.
Jobs lost are directly from the autos themselves but a huge industrial complex surrounds the autos as parts suppliers. Those guys would also begin failing as well. For example one company supplies 35% of the OEM wheels. If GM is knocked out, they are knocked out and Honda needs a supplier. Moreover the people who lose their auto related job slow in their household spending increasing pressure in service-related jobs not directly associated with the autos.
Thanks though I don’t believe failure of big threes can cause a depression. Put under BK protection is not closing down. Can’t see why so many jobs are lost immediately.
“Several lawmakers in both parties, including Dodd, have pressed the automakers in recent days to consider a so-called “pre-packaged” bankruptcy in which they would negotiate with creditors in advance and downsize, then file for Chapter 11 protection in hopes of emerging quickly as stronger companies. The Big Three have publicly shunned the notion, but executives have indicated in recent days that it might ultimately be necessary.” Source.
We might have actually hit a bottom, assuming things don’t deviate significantly from the current “conventional wisdom” or whatever as to the economy’s projected trajectory. It’s been said that the stock market prices things into the future, so that might also help. I’d thought given recent patterns that we might see a 8000 to 8500-9000 band for the Dow, and it looks like it may stay that way absent unexpected bad news.
Of course, we’ve never really seen a financial crisis like this before, so who knows.
Refer to this weekly chart. Share prices tend to hang around past supports and resistances. If $80 level doesn’t hold, the next zone is $73.80 to $57.67. I’m praying everyday for AAPL to conquer $98 convincingly to go back to the previous $111.62 to $148.92 zone. Current price behavior seems to support the idea that $79.14 is an intermediate term (multi-month) bottom. It is by no means the multi-year bottom, which should be in the $73.80-$57.67 zone, hard to believe now but not if economy deteriorates a lot more. We’re in the hands of .gov. I hope Obama and his economic team would do a better job. If .gov did a good job, $79.14 would indeed be the multi-year bottom. ATM, is highly unlikely. One last thing, share price is not influenced solely by fundamentals, money supply and market psychology are great influencers.
Jobs lost are directly from the autos themselves but a huge industrial complex surrounds the autos as parts suppliers. Those guys would also begin failing as well. For example one company supplies 35% of the OEM wheels. If GM is knocked out, they are knocked out and Honda needs a supplier. Moreover the people who lose their auto related job slow in their household spending increasing pressure in service-related jobs not directly associated with the autos.
Eric, are you aware of American’s other auto industry?
“There’s no natural law that America must have a Detroit automotive industry, any more than steel had to be made for all time in Bethlehem, Pennsylvania or textiles in New England.”
Why would not americans move to the other car companies? Those companies are eager to grow, capitalism is like water. Workers would get assimilated.
Jobs lost are directly from the autos themselves but a huge industrial complex surrounds the autos as parts suppliers. Those guys would also begin failing as well. For example one company supplies 35% of the OEM wheels. If GM is knocked out, they are knocked out and Honda needs a supplier. Moreover the people who lose their auto related job slow in their household spending increasing pressure in service-related jobs not directly associated with the autos.
Eric, are you aware of American’s other auto industry?
“There’s no natural law that America must have a Detroit automotive industry, any more than steel had to be made for all time in Bethlehem, Pennsylvania or textiles in New England.”
Why would not americans move to the other car companies? Those companies are eager to grow, capitalism is like water. Workers would get assimilated.
Okay. Let us presume that we allow our domestic autos to fail. I’ve already friends whose shops are operating at 45% of last year’s sales. We’re already assuming that the market will continue to slow but do we want to increase pressure by allowing an additional estimated 3M auto-related jobs to go south in the first year?
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