Thursday, January 15, 2009

Steve Jobs Announces He Will Take Leave of Absence

The market is trading lower for the 7th consecutive day amid the double whammy of news that Banc of America needs more government aid, and Steve Jobs will take a medical leave of absence from Apple.

Last night, Steve Jobs said he is taking a medical leave of absence until June, to deal with his condition which has become "more complex" recently. Last week AAPL said that Jobs had been suffering from a hormonal imbalance, which accounted for his weight loss.

AAPL stock has come down quite a bit, and is very cheap at current levels. I am not selling any shares down hear, but will likely lighten up on a bounce. I am confident that the COO can continue to execute on AAPL's current pipeline in the near-term, but he certainly can't replace Jobs vision, laser-like focus, and leadership.

Both BofA and Citi stocks are getting whacked this morning, down more than -20%, as concerns again mount about their liquidity positions, potential losses, and need for more capital. In the case of BofA, the reports are that they need the funds to help with the Merrill acquisition.

Bucking the broad weakness in bank stocks is JPMorgan (JPM), which reported a slightly better than expected quarter, and its stock is slightly higher. The overall bank index is down -10%, and dragging most ever other bank stock lower.

In other corporate news, Motorola (MOT) is announcing further job cuts, with another 4000 expected this year. And the WSJ is reporting that Microsoft (MSFT) is looking at job cuts as well. These trends indicate the unemployment rate will likely continue to rise, but I reiterate that this is a lagging indicator.

The dollar is higher this morning after the ECB cuts its lending rate 50 basis points to 2.00%. The fact the the Euro is down on this action likely indicates investors still believe the ECB remains behind the curve, and should have cut rates more.

The strong dollar is weighing on oil, nat gas, and commodities. Oil is trading back down near $35, while gold is roughly flat. The 10-year yield is hovering near 2.19%. And the VIX is up sharply to 54. The VIX has spiked 35% higher since bottoming near 40 in early January. It is now bumping up against its 50-day average, which should offer some resistance.

Trading comment: This morning I am taking profits on half of an inverse ETF position (SRS) I put on the other day. The market has been down for 7 straight days, and I think a bounce is in order. It will be interesting to see if the market can reverse some of today's early losses, which would be a very good sign.

long AAPL, SRS


At 6:59 AM, Blogger Celal Birader said...

AAPL have an earnings release this Wednesday.


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