Samsung may win after all – Squeezing Apple from within

Matthias Thoma, infovestment

In the past few months Apple has given Samsung quite a beating an several countries. Apple won billion Dollar lawsuits and kept sticking sales injunctions to its closest competitor.

The one thign Apple had not thought through is the fact that Samsung is a major parts manufacturer for all those beautiful i-devices. Today Samsung turned the table, raising processor prices by 20%, thereby cutting down Apple’s profit margin.

Matt Thoma  //  //


Can Obama save the stock market today?

Matthias Thoma, infovestment

Dow stocks have been on a 500 point dive since the morning after the US election. Republicans claim it was the disappointment over Obama’s reelection. But it is more likely that this was a sell the news event and that economic worries, in particular the fiscal cliff, have sent stocks off their highs.

Many stock markets look like they have put in double tops or a rolling top. So markets should ge down from here. This means there is no Santa Claus rally in 2012. But don’t expect things to move lower in a straight line. This afternoon Obama will hold a press conference and most likely assure the public that law makers are already in talks to find common ground on the expiring tax cuts. Politicians on both side remember all to well what happens when they botched the first TARP vote and sent the market into a complete implosion. No one wants a repeat.

Very likely the soothing words will produce a bounce and might even be able to save the longer term trend lines from being broken today. But the general direction is set. I doubt we will see fresh highs in 2012.

Matt Thoma  //  //

Group-oh-no – The death of a social media business model

Matthias Thoma, infovestment

Groupon just like Zynga are moving towards extinction, at least in the shape we know it today. While Zynga is trying to find salvation in merging from feeding virtual smurfs to offering outright online gambling to its community, Groupon’s coupon rebate model may likely turn into a rebate bazaar.

Groupon as of late mostly offered phoney deals, and the community complained about it. Many shops did not honor coupons because Groupon simply sold more than agreed. In some countries there were even shop owners claiming not to have had a deal arrangement at all. Really the only industry still offering deals through Groupon seems to be food and lodging, although it often seems as if the rebate is not actually a rebate but rather a price reduction of a previously raised price. No wonder that sales shrink. And then there is the competition. While most competitors do not have the size of Groupon, they represent a force to be reckoned with in their respective local territories.

Groupon’s answer is to list all deals on their website and offer hundreds of them simultaneously, instead of sticking to the time limited daily or weekly offers. Now where have i Seen that before? Right, there is the coupon book in the mail, that many still receive… And frankly the deals in that book are still better.

Groupon will more likely be a 2 USD stock before it moves higher, unless the company does a reverse split…

Matt Thoma  //  //

Never mind the fiscal cliff – Today stocks took biggest cliff dive in a year

Matthias Thoma, infovestment

Buy the rumor sell the news, once again proves to be a true proverb. Yesterday markets seemed to love the fact that the election campaigns come to an end and there will be result. Now that we have a result, markets go back to looking at economical and political risks and plunge at their fastest pave in almost a year.

It must have been clear that Romney would not win this election. The only person not willing to concede was Romney himself. He thought with Ohio and Florida being too close to call due to the margin of error he could simply pull a George W. Bush and turn the projections around. Well, as it became clear that Obama would not need Florida and Ohio, and still reach at least 272 votes in the electorate, even Romney had to throw in the towel.

Markets did nto see it that way. Apparently yesterday many floor traders still believed that Mitt Romney can pull off a victory. Let’s just hope those eternal market bulls closed their positions last night.

Today’s sell off might be more than just a small correction. Several indices are in danger of cutting below longer term moving averages. As mentioned in prior blogs, markets do look toppy, and this might just be event setting things in motion because fear that the financial cliff cannot be averted with continued gridlock in Washington.

Matt Thoma  //  //

The Fairy Tale of non-existent inflation

Matthias Thoma, infovestment

Ever since the Lehman collapse central bankers around the globe have resorted to ever more outrageous money printing schemes to keep the banksters balance sheets afloat while claiming that all this new funny money does not cause any inflation whatsoever.

Big surprise – they lied!

I remember those times 4 years ago when a gallon of milk cost $3.50 . Today it is $4.70. But then again that might be just me and is obviously not very representative nor is it scientific. But how about a study published by the Deutsche Bundesbank? Will that do the trick to convince the public that price stability is a lie?

Let’s see: The Bundesbank looked at car prices from the 1970 and adjusted the price for nominal inflation to see what prices of well known cars would be today. Here is what they found: A VW Golf in the Basic Edition cost 8.000 DEM in 1974. When adjusted according to the CPI and converted to Euro then a VW Golf should cost 10.400 EUR, but here is the thing, it actually retails for 16.800 EUR a whopping 60% higher than official CPI inflation should have lifted it. Not convinced? How about a Porsche 911 then? It retailed for 21.900 DEM in 1964 and adjusted for CPI and converted into Euro it should today cost 42.000 EUR. Well, it doesn’t, instead a brand new 911 retails for 90.400 Euro, which is a difference of over 100% compared to inflation adjusted pricing.

Sure, you can argue that today’s cars have a lot more to offer, however that does nto explain price gaps of such magnitude. The real explanation is simple. While the protectors of the currency keep telling you inflation is between 0 to 2%, businesses and consumers experience much higher increases in cost of doing business or cost of living. And what to businesses do when their cost goes up? They either pass it on to consumers or they close shop.

Central bankers have cooked the statistics for decades. If the inflation is too high, simply change the composition of the basket of goods and services. Things that go up in price are removed while cheap items make up a larger portion of the index. Many electronics have become cheaper over the years, but we can’t eat TVs or MP3 players, nor do toasters or plastic plates fill up the tank.

It is astonishing that in the face of such mind-boggling facts people like Bernanke or Draghi are actually able to sit through a press conference with a straight face when they talk about price stability.

Matt Thoma  //  //

Apple – Selling iPads like hot cakes again

Matthias Thoma, infovestment

On Friday Apple closed at the lowest levels in months, almost 20% below its all time high. Tim Cook knew just the recipe to revive the stock. This morning Apple announces 3 million units sold for iPad 4 and iPad mini within three days.

Apple stocks is on the rise, but this far it only  brought the stock up 1.8% ff the lows. The question is whether good news is good enough when a stock has been priced to perfection for years now.

There is also some bad news. In several westernized countries Android smartphones have now captured more then 50% market share, de facto breaking Apple strong hold. Granted hardware sales are scattered across dozens of manufacturers, but Apple will face more competition in years to come.

Another fact to consider is also that Apple has used up all its bullets. With the iPad 4 out already, the only device not recently upgraded is the MacBook Air. Other than that there is essentially nothing Apple has to announce in its traditional spring event…

Matt Thoma  //  //

Stocks have topped out – Sell the news, any news

Matthias Thoma, infovestment

While there was no news bad enough to make the market flaunt in October, it seems we finally have topped out. As Sandy hit the Eastern Seaboard markets managed to hold on, even an improvement in new jobs gave the market a spike to the upside, but now the party is definitely over. Markets reversed sharply into the weekly close giving up all their gains and then some. Apple, eternal darling of the investment community is now 20% off its all time highs. Good news is being sold, bad news is being sold, and the US election is just around the corner…

Gold was particularly hard hit and closed again below 1700. We may actually break the yearly gains streak that has held for more than a decade.

All the good news, actually is also good news for the US Dollar, and as it goes up, everything else is coming down. If this reversal has legs, the USD INdex could make a run for 84 in the next few months….And it will likely do so against most currencies, stocks and commodities at the same time.

If there ever was a time to buy insurance, then now would be it. If you are owning the stocks market, go and get some puts.

Matt Thoma  //  //