Investorstoday

Friday, October 21, 2011

Weekly Wrapup for the week ending October 21, 2011



The market tried to push higher but earnings reports this week did not help.  The banks used phony accounting to book gains while Apple released disappointing earnings.  The S&P printed a small gain for the week while the NDX pulled back

Apple’s (AAPL) difficult quarter came as iPhone buyers delayed iPhone purchases until the iPhone 4S was released.  On a side note, iSupply took an iPhone 4S apart and found that Qualcomm replaced Intel and Hynix replaced Samsung for certain chips.  Interesting to say the least. 


I am quite interested in Qualcomm’s earnings on November 2nd.  They may forecast weaker than expected Q4 numbers because of weak iPhone sales but they have HUGE chip wins from the iPhone 4S and Microsoft along with a slew of Snapdragon powered devices coming on market. 


Meanwhile, Nero plays his fiddle in Europe.

Russia announced hydrocarbon reserves in the Arctic


A quick note on the article I reposted yesterday from 2009.  The key point is the CS graph defining the length of time we go through this mess of bad mortgages.  We are clearly into the second wave of mortgage resets and as the banks continue to be hit with bad mortgages their already weakened capital base causes consternation.  This leads to accounting gimmicks to boost earnings signaling significant weakness in the sector.  At this moment I would not be touch the banking sector with a ten foot pole. 

Given the problems in Europe and the US and the recent defaults at Proton Bank and Dexia we are likely to see more failures over the coming year. 

I cannot see a single viable reason to be invested in the banking sector outside of Canada and Asia ex-Japan/ China.  The sector looks like a giant value trap to me until the Greek and US mortgage problems are settled.

Although this proposal might be a start. 

Mirabile Dictu! Eurozone to Impose Penalties on Banks That Get Bailouts

As a side note, in the aftermath of the 2008 financial crisis Canadian banks tried to get relief from the government for problems in the ABS sector.  The government pushed back and in the end, the banks tucked their tails between their legs and ran away.  3 years later the Canadian banking sector is the strongest in the world with Bank of Montreal (BMO) and TD Bank (TD) actively expanding in the US while the Bank of Nova Scotia (BNS) expands in South America and Asia.

On the technical side, I think we are looking at a rollover and pullback next week.  The market is having a hard time pushing higher and the newsflow from earnings and Europe is not stellar.  We may get one final push towards the 1250-1260 level but then fall prey to some strong investment selling.



Look for my gold and silver articles next week which were delayed by Agnico-Eagle’s disclosure about the Goldex mine.

In addition, I will cover the Apple and Google’s earnings releases and possibly take a look down the road to what will likely happen at the ECB when Mario Draghi takes over.

Have a great weekend everyone.



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