Tuesday 27 September 2011


26 September, 2011

Crazy news about Apple and Buffett, but new rumors out of Europe drive the day.

But first, here's the scoreboard:
Dow: +272
S&P 500: +33
And now the top stories:
It's only been a month since Steve Jobs announced he was stepping down as CEO, and investors already miss him.  JP Morgan warned that a couple of Apple's vendors said that Q4 orders for iPads were slashed by 25%.  Apple shares were in the red all day, holding back the Nasdaq.

In other mindblowing news, Berkshire Hathaway announced that it would be buying back shares.  Apparently, Warren Buffett thinks the stock is cheap.  Or maybe it's his talk that's cheap. You see, he could've just as easily paid out a dividend. But dividends get taxed right away. With a share buyback, Buffett returns cash to shareholders without forcing them to realize a capital gain, a taxable event.  An ironic move from a guy who promotes raising taxes on the wealthy.  Anyways, shares soared by over 8% to more than $108k per share.  That's right. Per share.

Let's not forget about the August new homes sales report, which came in line with expectations at 295k.  July's number was revised up to.  Markets didn't seem to thrilled about the number, which remains way below the longer-term averages.

A trading day wouldn't be complete without fresh rumors about the Eurozone bailout?  CNBC reported the EFSF bailout fund was basically ready to go.  Here's our favorite new development: EFSF funds would be used as seed money for an EIB that would be used as an SPV, which could issue bonds and buy sovereign debt.  Financial engineering at its best.  And the markets loved it.

Meanwhile, gold continues to sell off.  Gold futures settled below $1600/ounce.  No one's quite sure why.  Some point to higher margin requirements.  Others point to panicked investors looking for something safer.  Or how about this for a thought: maybe the investors are gearing up for the risk on trade?

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