Financial, Real Estate, Stock Markets Trends and Current Affairs

Interesting Max Keiser episode. Many may be interested in the whole show, particularly the portions about Abu Dhabi sheiks, fraud, Robert Rubin and Citibank. Yours truly appearance starts at 13:02

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My latest appearance on RT's Capital Account last night brought about many topics that are making headlines today. Reference the video at the 3:20 and 16:05 markers.

 Arab influence and the worsening EU situation 

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Yesterday, I made announced that Abu Dhabi & the UAE Can Leverage PetroDollar profits to capitalize on the plight of EU nations. This is becoming more and more true day day as these quasi-"sovereign" nations become increasingly forced to part with strategic and financial assets to pare debt. I explictly stated that Greece would have to either default or restructure again, possibly immediately after the default/restructuring that took place week before last, rendering the entire exercise moot nad relative useless (it did kick the can down the road for a few quarters). See Beware The Overly Optimistic Greek Speculators Fall Like Icarus From the Sky in Flames,  then realize that after reading the BoomBustBlog piece we have the ever reliable ratings agencies following suit - reference this piece from Bloomberg: Greece May Have to Restructure Again, S&P’s Kraemer Says.

Of course, we all know how reliable and timely the rating agencies are, right? See Rating Agencies vs Reggie Middleton, Part 3 and the Interesting Documentary on the Power of Rating Agencies, with Reggie Middleton Excerpts

I am having my analysts work on the Spanish and Italian default/ bailout scenario now (we have worked up a scenario two years ago, but things are much worse now). Even a Citi analyst has chimed in to that effect. Let' not forget the Portuguese Liquidity Trap: Prime from the actions of Greece. As a matter of fact, it's evident that Greece Is Trying To Convince Portugal To Make FIRE Hot, hence I answered the inevitable question, So, What's The Next Step Towards The Eurocalypse??? 

The continued Apple lovefest conceals key facts

The MSM is still engorged on its lovefest with Apple, comparing the latest iPad 3 to the Transformer Prime (my current workhorse tablet) favorably, despite the fact that the Transformer runs circles around it in almost every category. Notice the comments from those who have actually used the Transformer, which was consistently sold out for a reason. The fact is, at least from my own research and personal observation, Apple's iPad Is Losing Market Share As Margins Compress (Click this link for the research behind this assertion): 

Again, as with the smartphones, the Android tablet tech is superior to that of iOS products and as iOS normalizes the difference, margins will suffer. Margins will drop (is dropping) faster for tablets because prices are coming down as fast as tech is increasing.

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Apple's Decision To Return Capital to shareholders is an indication that it feels the capital is put to better use in the shareholder's hands than that of management using it to actively grow. Granted, the amount is de minimus in the grand scheme of things, but the move marks a transition away from Steve Jobs' mantra immediately after his departure. 

Now, we have other analysts jumping in the BoomBustBlog bandwagon, after the fact of course...

Apple Inc. (Nasdaq: AAPL) is weak this morning and according to some this could be related to a negative research note at Wedge Partners.

According to tweets from Notable Calls, the analyst said:

"Taking the Sidelines Until March Qtr Report on Possible iPad Slide"
"We're concerned iPad sales may not be as strng as expectations, and we believe March cld disappoint."
"Full year production iPad expectations/forecasts may be pulled down as a result."
"Looking at overall demand picture, there doesn't appear to be much of a frenzy for the new iPad."

"The stock may be priced for perfection at current levels, but we feel we are seeing some scratches on the glass"

Our Apple analysis is now available to subscribers Apple Margin & Valuation Note (those who wish to subscribe should click here). This is a more comprehensive, more "scientific" update and approach to our piece from last year Apple - Competition and Cost Structure and contains extensive valuation scenarios considering several what if scenarios for Apple, including the likely events that I've been warning of for some time now. Next week (this was pushed back two weeks due to my middle east excursion), pro subscribers will see a downloadable version of the model behind this that will deliver more Apple stuff than you can ever digest in one sitting.

Last week I posted a comprehensive piece, The Coming Interest Rate Volatility, Sovereign Contagion, Geo-political Unrest & Double-Dip Recessions: Here’s The Answer To Valuing Global Real Estate Through This Mess. The goal was to outline the literal mess that those who decided to drag us through this “Great Global Macro Experiment”have left us in. Since then, in merely one week's time, we have bore witness to:

• The potentially imminent toppling of another multi-decade, long standing regime, the third in as many months. Gaddafi asserts control amid worldwide dissent - Libyan U.N. mission urges Gaddafi's downfall - Gaddafi son denies civilians bombed - Analysis: Libya could face chaos in post-Gaddafi era. Leading up to the Libyan affair, Tunisia and Egypt fell into the hands of virtually weaponless protesters (at least from a conventional weapons perspective) armed with simply laptops and cellphones (the new age computers and apparently the weapon of choice for those in uprise) to post messages on Twitter and Facebook, amassing solidarity with supporters to converge in certain areas to join the mass protests. Identifying, fearing, and failing to understand the true power of the Internet in toppling a regime, Libya has repeated the faux pas of Egypt in attempting cut the country off from cyberspace - attempting to halt the charge of an African bull elephant with an Acme Walmart (by way of China) fly swatter. It is apparent that Egypt's efforts to isolate its populace from the Internet, although failing to halt the toppling of its regime, did succeed in hiding the futility of such an effort from Quadafi, et. al. This not only forms another basis for contagion, but one that was actually foreseeable nearly a year in advance- see Egypt’s Social Unrest As A Pan-European Economic and Financial Contagion? It Can Happen!!! and First Tunisia, Then Egypt, Now Yemen: Will This Reach The Powder Keg That Is The EU & What Will Happen If It Does? Subscribers should reference Potential Spillover Effects from the Middle East to the EU. 
  

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As soon to be ex-president Mubarak demonstrates that he has essentially lost control of

Attention subscribers: A new subscription document has been released - Potential Spillover Effects from the Middle East to the EU.

his country, as is exemplified by the multi-million man march in the streets of Egypt, it brings to mind one of the major contributors to financial contagion, and that is government instability.The uprising in Egypt, brought over from Tunisia (whose president lost power) has now spread to Yemen: Yemeni president pledges not to seek another term:

Yemen's U.S.-backed president, in power for more than three decades, pledged Wednesday not to seek another term in office in an apparent attempt to defuse protests inspired by Tunisia's revolt and the turmoil in Egypt.

As I have stated in my posts over the last few days, financial contagion can spread rapidly and from relatively unexpected origins. The debt situation in the EU is a powder keg simply waiting for an ignition spark as the ECB and stronger EU parties attempt to spray water on the pile of gunpowder from an aerosol can.

We now know why I had my team specifically model in the fuzzy, yet quite relevant social unrest factors into our Sovereign Contagion Models. Egypt appears to have erupted, and I will illustrate the path in real time using the roadmap that we created to predict such an event igniting a powder keg much earlier last year. First let’s check out the headlines:

First, a quick news scan:

• Dubai Debt Delays Revive Fear of Financial Crisis
• US Markets Bracing for Selloff on Dubai Debt Worries
• Stocks Fall as Treasuries, Yen, Swaps Rise on Dubai Attempt to Delay Debt
• Yen Strengthens to 14-Year High, Prompting Speculation Japan to Intervene
• Fujii Says Japan May Contact U.S., Europe After Yen's Jump to 14-Year High
• Abu Dhabi Commercial Bank Is Said to Be Owed $1.9 Billion by Dubai World
• Treasuries Jump on Demand for Safer Assets After Dubai Asks to Delay Debt
• Sony, Toyota, Japanese Exporters Brace for `Breaking Point' as Yen Surges
• Japan's Hirano Says Rapid Currency Moves Are `Undesirable' as Yen Rallies (you betcha, reference the JPM links which highlight interest rate and currency exposure for JPM below)

My regular readers should remember my warnings on the currency trade risks (Japan's Hirano can testify), and interest rate derivative concentrations (let's see what happens to the counterparty daisy chain if Dubai defaults): "The Next Step in the Bank Implosion Cycle???". As excerpted:

Even more alarming is some of the largest banks in the world, and some of the most respected (and disrespected) banks are heavily leveraged into this trade one way or the other. The alleged swap hedges that these guys allegedly have will be put to the test, and put to the test relatively soon. As I have alleged in previous posts (As the markets climb on top of one big, incestuous pool of concentrated risk... ), you cannot truly hedge multi-billion risks in a closed circle of only 4 counterparties, all of whom are in the same businesses taking the same risks.

Click to expand!

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First the US bankers threw as much garbage at the world as they could lift, with the US ratings agencies throwing perfume on the trash mid-flight to manage the "stank". Then the Irish guaranteed their bank deposits to an unheard of limit, basically giving the middle finger to the other European banking authorities (you see, money flowed to the "perceived safety of government backed bank funds from an already weakened UK and EU banking system), and now OPEC is cutting product in an effort to elevate oil prices amid a guaranteed global recession. Another "eff you" to the world.

Most people don't realize that in the grand scheme of things, oil has not really went down in price. It is exactly where it was in the summer of 2007 when I first contemplated the contracts. The OPEC nations have went on a "subprime like" debt driven spending binge, and need the petrodollars to keep flowing to support the facade that they are trying to build.