Apple and NFP Misses

MEGA8s continue to bounce

We wanted to wait to post till after the NFP this morning and now we know, both Apple and the NFP missed their targets. Let’s start with Apple where we have been super critical of their lack of innovation and we can only believe its their cash hoard that is contributing to this laziness. One doesn’t have to worry about competitors when you have a cult following that doesn’t demand anything really, but having so much cash in reserve buys a lot of time to sit back and observe. One day Apple won’t have that luxury, but that is not today. So let’s look at their numbers from Zhedge:

• EPS $1.46 vs. $1.29 y/y, est. $1.39

• Revenue $89.50 billion, -0.7% y/y, est. $89.35 billion (4th consecutive quarter of annual declines)

  • Products revenue $67.18 billion, -5.3% y/y, missing estimates of $67.82 billion

  • IPhone revenue $43.81 billion, +2.8% y/y, just barely beating estimates of $43.73 billion

  • Mac revenue $7.61 billion, -34% y/y, missing estimates of $8.76 billion

  • IPad revenue $6.44 billion, -10% y/y, beating estimates of $6.12 billion

  • Wearables, home and accessories $9.32 billion, -3.4% y/y, missing estimates of $9.41 billion

  • Service revenue $22.31 billion, +16% y/y, beating estimates $21.37 billion

  • Greater China rev. $15.08 billion, -2.5% y/y, badly missing estimates of $17.01 billion

• Gross margin $40.43 billion, +6.1% y/y, beating estimates of $39.79 billion

• Cash and cash equivalents $29.97 billion, +27% y/y, missing estimates of $31.77 billion

All in all Apple was down over $6 in after hours trading hovering near $171.50 but has recently moved back toward $175 where we know option market makers will most likely try to keep this below, but will see. We also know Apple has a massive derivatives book now and is showing $11bn in losses, same as in 2022 and we find that very interesting considering the move in interest rates higher, so we need to keep an eye on that. Apple becoming Apple bank and financing as opposed to technology innovator is what doomed GE.

On to Non Farm Payrolls where the excel trick of the death/birth model added a fictitious 412k jobs to give today’s print of 150k jobs added well below the 180k expected. We all know every month the BLS cooks the numbers to create a higher positive number than then revises them even lower the very next month its downright atrocious and manipulative but we don’t expect anything less:

Source: Zerohedge

All in all we are getting closer to our negative non farm payroll print, which is our last pillar to drop before the FRB is forced to act or allow the US economy to move toward a hard landing. We know bond yield have started to fall and yield curves have dis-inverted quite a bit, however yesterday the yield curves paused that dis-inversion as the long end was the clear winner falling nearly 15 bps:

So the yield curve is telling us the FRB is done raising rates, Non-Farm Payrolls is moving toward the negative print direction, however equities continue to push higher with the Nasdaq back up 30% again. We have noted the propensity for the MEGA8s to be the only weapon of choice by which very large players continue to push their chips all in, selling overall index options to perhaps hedge, but also selling volatility to fuel the higher for longer equity move. These moves always look strange to individual traders but if you look at them from the Trillion dollar asset manager, well, they aren’t so unusual. For instance Geode Capital, an investment firm many have never heard of is a Trillion dollar manager that offers such strategies. We have been following @DarioCpx on X and we suggest you do to, he does a great job in covering the market players. Anyway when you have firms like this with virtually unlimited funds, well you now know why markets can move faster, harder and longer than your individual mind can perceive. When we look at our MEGA8s tracker our options are now working against us, however the hedged return is still well above the basket total return:

Alright onto the settlements from yesterday’s for those keeping track the markets we follow are all seeing risk on coming back into play buying:

As far as the Futures Positions Tracker, no changes of note but are will be adding a QR or YM next week should we see a decent profit taking in the equities on a given day:

Ok that is it for now, notice how things started to rebound as our US Congress started to get the money flow going again to support our overseas effort, also notice how the BOJ is fighting inflation with a $110Bn stimulus package…nothing fights inflation better than doling out billions of Dollars and ¥en! These central bankers are out of their minds and its why they all fight Bitcoin, because you cannot play the debt funny money games with a fixed supply of money. So its spend spend spend, no more worry of any inflation, the FRB will be on hold and cut, markets will love it and the Nasdaq will be up 40% by year end, the SP500 15% and the commoner will be laid off, but who cares about the commoner, only the stock market matters and its trickle down wealth effects.

Here is a quick snapshot of the market currently Bond yields are lower led by the 5Y down 15bp, Nasdaq +135, SP +38, So goes the theory that bad news is good news now for markets don’t try to fight this mantra, you won’t win:

Data Source: TradingView

Till next time…

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