Can Apple Break Wall Street?


#1

Has the Tech Deflation Arrived? Is it the end of an era? The markets haven’t seen higher numbers since the crash in 2008! The Standard & Poor’s 500 index closed above 1,500 on Friday for the first time since 2007. The index rose for the eighth straight day, its best streak since 2004. That sentiment helped the Dow Jones industrial average rise 70.65 points, or 0.5%, to 13,895.98 on Friday. That put it within 269 points of its October 2007 peak. Apple shares have fallen 37% since September.

So why is Apple doing poorly and what could that mean for the markets? Will Apple spark a giant sell-off in a time that is supposed to be good for markets? Many analysts are worried because Apple didn’t meet their very very high expectations, which caused Apple’s loss and poor outlook. This caused more panic on the street as people are not as excited about what Apple has been offering lately and top investors are saying that Apple needs a catalyst to get people interested again. What will it be?

Remember Apple has more cash on hand than the US Government. A $137 Billion surplus in fact. Will Apple try to buy a major company to get back on its feet like Netflix or VISA? Or more likely Apple actually knows that it’s market cap is artificially high and has already braced and covered its loses from this artificial fear? Or worse, could the Apple sell off be so deep inside the Technology World that it will be a mini tech bubble burst? I say, it would be more like the Tech Deflation, as companies Dell, HP, Lenovo, Blackberry, Facebook, and now Apple are all struggling to please investors.

Will we see a major tech sell off in the next few weeks Or is it all fear mongering?


#2

I don’t believe there will be a big Apple sell off. They still have plenty of time to wow us with new stuff before doubt really sets in.


#3

The market is way over inflated thanks to government intervention. An article from 2010 Business Insider. They like to separate the Fed from the government, I do not.

What’s most important here is the role of the Fed and not the banks. I sincerely believe the banks are doing what their analysts believe is prudent. Remember, in a zero interest rate world, the Fed is herding investors out of cash. It truly is the most expensive asset in the United States. This is one of the primary reasons why you can’t fight the Fed. Bill Gross has personally elaborated on PIMCO’s interactions with the Fed and their use of the Fed’s handout. In an interview with TIME in January he said:

“Just speaking about Pimco’s general portfolio strategy, we’ve sold our agency mortgage securities, Fannie and Freddie, in the billions to the willing check of the Fed. They’re buying a trillion dollars of them, or have over the past nine to 12 months, and so we sold them a lot of ours. Now, what did we do with the money? We bought Treasuries, we bought corporate bonds, and so the bond markets in general have benefited, as have stocks, because this available money effectively flows through the capital markets.”

It’s that simple. Toxic assets get exchanged for cash and cash gets exchanged for whatever the banks feel like buying on a particular day. In this case, it’s approximately $1.5T worth of firepower. The results have been “shock and awe” on steroids. $1.5T certainly does wonders for an equity market, bond market or municipal bond market (all of which have rallied substantially in the last year). So, the trick isn’t quite as nefarious as some would have you think. **The banks are essentially taking advantage of the Fed’s foolish monetary policy. It’s all part of that wonderful bailout we generated for the banks and what is essentially a fatally flawed monetary approach by a Central Bank that continues to print (or more accurately, “button press”) us into a boom & bust cycle.
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Read more: Does The Government Actually Manipulate The Stock Market? - Business Insider