Market On Open - Friday 3 May
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The Infinite Loop
by Alex King
Yesterday, Tim Cook saved the world. Apple’s earnings call dealt briefly with some stuff that doesn’t matter (you know, revenue going backwards, margins falling, cash pile diminished, all that) and moved swiftly on to the good stuff, being the GINORMO STOCK BUYBACK BONANZA.
As I noted in yesterday’s Apple earnings write up (read it here if you missed it), stock buybacks are capitalism at its finest. An infinite loop of taking money from the little people and giving it to the big people. A perfect reverse-Robin Hood in fact. And with this - against the backdrop of a dovish Mr. Powell (read our recent Fed analysis here) - up goes Apple stock. Why? Because securities pricing isn’t driven by revenue, earnings, or any of that. At least not in any way that can be usefully predicted. Securities pricing is determined by the demand for and supply of that particular security. So when a Yuge Buyer comes along - the company itself in this case - the stock is going to go up, simples. And as an Apple shareholder myself, I am not complaining. Nor am I complaining as a holder of various US equity index ETFs, because where Apple goes, the S&P tends to follow. And where the S&P goes, the others tend to follow. So on behalf of right-minded people everywhere, we might all say a heartfelt thankyou to Mr Cook for his largesse with the poors’ money!
Before something else comes along and throws all that to the wolves (data print, political event, heavy rain in Wichita, etc) let's check in on equities, bonds, volatility, oil and sector specific-ETFs.
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