Tuesday, November 12, 2013

Markets slip on worries over tapering by the Fed

Dow fell 32, decliners over advancers 2-1 & NAZ was up pocket change.  The MLP index was fractionally lower in the 447s & the REIT index fell 1+ to the 268s.  Junk bond funds were mixed & Treasuries pulled back.  Oil fell to a 5 month low on estimates that US inventories rose to the most since Jun.  Despite what the chart below shows, gold inched higher.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLZ13.NYM Crude Oil Dec 13 ...92.97
...-2.17 ...-2.28%

Live 24 hours gold chart [Kitco Inc.]

Android's market share rose to 81%, extending its lead over iOS, used on its iPhones from Apple (AAPL), according to the IDC survey.  Android's share a year ago was 74.9%.  Even though iPhone sales grew 25.6% from a year earlier, the growth was slower than the overall market & iPhone's share fell to 12.9% from 14.4% in the same period last year.  Windows Phone emerged as the #3 smartphone platform with a market share of 3.6 %, up from 2% a year earlier.  Windows Phone sales grew 156% (from a low base), with more than 90% made by Nokia, the Finnish group whose handset division is set to be acquired by Microsoft (MSFT, a Dow stock).  BlackBerry, meanwhile, saw its troubles deepen, as its market share fell to 1.7% from 4.1% a year ago.  BlackBerry sales plunged 42% from a year ago despite the introduction of the new BlackBerry 10 operating system.  The overall market for smartphones grew 39.9% year-over-year in Q3, to 261M units & the average sales price of a smartphone fell 12.5% to $317, IDC said.  "Android and Windows Phone continued to make significant strides in the third quarter. Despite their differences in market share, they both have one important factor behind their success: price," said IDC analyst Ramon Llamas.  Both platforms have a selection of devices available at prices low enough to be affordable to the mass market, and it is the mass market that is driving the entire market forward."  IDC noted that market share for AAPL was likely affected by weak sales ahead of the introduction of 2 new iPhone models in Sep, at the end of Q3.  But it sold 9M new devices in the first weekend, suggesting a strong Q4.  IDC said larger devices called phablets accounted for 21% of the smartphone market, up from 3% a year ago.  "Almost all successful Android vendors have added one or more five- to seven-inch phablets to their product portfolios," said IDC's Ryan Reith.

Android smartphones dominate, Windows gains: survey

Fighting back, AAPL said the new iPad mini with a high-resolution screen is now available for shipping, while indicating that supplies of the tablet are limited ahead of the critical holiday shopping season.  The device, at prices starting from $399, can be ordered online to be shipped or picked up at an Apple store.  While the larger iPad Air went on sale Nov 1, AAPL hadn’t said when the smaller tablet would be available beyond sometime in Nov.  The company usually stocks its products in stores so customers can buy them on the spot.  AAPL is restricting purchases of the new iPad mini to online orders because the availability of high-definition Retina screens is capping the number of the new tablets the company can make, according to market-research firm IHS.  “They had an issue with panel production to get them done on time,” said Rhoda Alexander, a senior manager at IHS who analyzes the tablet & display markets.  “They didn’t have the volumes to support a full launch.”  IPad  sales have slowed in recent qtrs as consumers held off purchases while waiting for new models, & the market becomes more crowded with rival devices from the competition.  The iPad is AAPL’s 2nd-biggest source of sales after the iPhone, accounting for $32B in revenue.  The company sold 14.1M units in Q3, down from 14.6M in the prior period.  The stock was up 1 after having a good run since Jul.

Apple Starts Shipping IPad Mini With High-Definition Display

Apple (AAPL)

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Wall Street is expecting higher profit for Cisco, a Dow stock, when the company reports its fiscal Q1 tomorrow.  The estimate is calling for EPS of 47¢, a rise from 44¢ a year ago.  Analysts are expecting EPS of $1.94 for the fiscal year & revenue is projected to be $12.35B in fiscal Q4, 4% above the year-earlier total of $11.88B.  For the year, revenue is projected at $50.8B.  The company has seen improved revenue in the last 2 qtrs.  In the most recent qtr, revenue rose 5% year-over-year to $12.4B & the qtr before that, it rose 5%.  Over the last 4 qtrs, the company has seen its income grow by an average of 21% year-over-year & the 44% increase in fiscal Q2 was the biggest rise.  79% of analysts rate CISC as a buy.  This compares favorably to the analyst ratings of 10 similar companies, which average 32% buys.  The stock gained 28¢.

Cisco Systems Earnings Expected to Rise

Cisco (CSCO)

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Stocks had another uneventful day, partially because it was ignoring events in DC.  Initial reports show that fewer than 100K have signed up for Obamacare health plans so far.  There was an early goal for 800K sign-ups for the first 2 months. This is a glum start on a program affecting just about all Americans which will on balance suck money out of the economy.  Sticker shock from higher insurance premiums will crimp retail sales.  But Dow is within a whisper of its record high set yesterday, ignoring it all.

Dow Jones Industrials

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