April 8, 2013
Weekly Market Outlook
By Keith Schneider
Apple, the company that could do no wrong fueled by the combination of brilliance and chutzpah that only Steve Jobs could master, is learning that when it comes to corporate warfare, state capitalism rules. Apple’s CEO Tim Cook had to apologize after several state news agencies blasted the company on its warranty polices. The Chinese have played this game like a Kung Fu master; just ask Google who lost its leadership position after a run with the Party. Although Apple has considerable power to help grow the Chinese Mobile Telecom market quickly, it does not align with long term goals of the ruling Communist party. This is a red flag to multinationals seeking dominance in the Middle Kingdom. That message is loud and clear, too big is no good when it comes to their domestic markets. Those attacks were clearly intended to knock the company down a notch in the Chinese consumer’s eye. This is a step in clearing the path for domestically owned companies to become the dominate thereby knocking Apple out.
Behind the scenes, the Obama administration has been trying to tackle cyber espionage issues and restrict China’s big telecom manufactures from doing business in the US. This could likely be a return salvo. If you are an Apple shareholder or contemplating becoming one, the assumption that the insatiable appetite for its products may be true, but there are political factors to consider as well. The technical picture for Apple is something we will be looking in this week’s video as we are at a critical price level that will hold the key to the next direction for the next several months.
Meanwhile, more events on the Asian continent have left the market off balance, namely North Korea’s saber rattling which mostly likely is just that but the market hates this type of uncertainty.
On the home front, Friday’s lousy employment data knocked the market hard on Friday morning, only to recover most of the losses. One month does not make a trend and this data is volatile but unsettling nonetheless. The dramatic flight to US treasuries, the drop and nice recovery in Gold, along with the collapse of the Yen and increased volatility in stocks not to mention a rotation out of small caps, all with a firm dollar points to a changing Global Macro picture yet again.
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