A lot of speculation is going on about Steve Jobs' health.
The king of Apple is such a serious vegetarian that he wouldn't let Pixar put toys in Happy Meals and he was indeed treated for a rare form of pancreatic cancer in October of 2003 which, at the time, Apple did not disclose. This has made his health a favorite target of hyenas, who use any chance they get to knock down the stock with speculation that Jobs is about to die.
Wired said: ""Looking very thin, almost gaunt, Jobs used the 90-minute presentation to introduce a new desktop Mac and preview the next version of Apple’s operating system, code-named Leopard… I wondered if Jobs, who was treated for cancer last year, was sick. Was he sharing presentation duties to save energy? When I saw Jobs introducing the iPod Hi-Fi at Apple’s headquarters in late February, about five months ago, it looked to me like he was tiring quickly and was glad to get it over." – Sound familiar? That was August 8th, 2006, when Apple's stock was at $63
Forbes said: "Last month, at Apple’s Worldwide Developers Conference, Jobs looked gaunt and gave an an atypical (for him) low-energy speech. Here is the review. Note Jobs’ photo at the 2005 Apple WWDC versus that of the 2006 Apple WWDC meeting. The weight loss is alarming." – That one was Sept. 7th 2006, when Apple's stock was at $71
Fortune started the cancer speculation going this year, long before the WWDC conference, back on March 5th, when they did a hack piece on Jobs for their cover. Henry Blodget was on top of that story on the same day and he's never steered us wrong has he? Apple's was down at $124 on March 5th. The picture on the right is very scary – but it's from August of 2006. I'm not saying we shouldn't be concerned about Jobs' health but let's recognize these hyena attacks for what they are – a blatant attempt to use the issue to take down the stock ahead of what is likely to be a significantly good quarter.
In other CEO news: Thomas Edison, Alexander Graham Bell and Tom Watson are all still dead but the companies they founded seem to be surviving. Rumor has it that Sam Walton is not coming back to work anytime soon and neither Goldman or Sachs are still with us. Conrad Hilton is no more but we still have Paris to carry on the family name and John D Rockefeller stepped down from standard oil over 100 years ago but the monopoly lives on in XOM and their 4 brothers. I'm not saying Jobs is not hugely important to Apple, but let's keep things in perspective shall we?
Also trying to keep things in perspective this weekend is OPEC, who say things have gotten out of hand that they are calling a special meeting with their customers to see about reigning in speculation in the energy markets. "The June 22 meeting in Jeddah will discuss the price rise, which are unjustified by fundamentals, and suggest appropriate solutions,'' Saudi Oil Minister Ali al-Naimi said in a statement today. The kingdom will start pumping oil from its new 500,000 barrel-a-day Khursaniyah field within the next month, a board member of Saudi Aramco said.
Oil in New York rose more than sevenfold since trading at $17.45 a barrel in November 2001, and reached 28 record highs this year. A similar pattern was seen in equities eight years ago, when Internet-related stocks sent the Nasdaq Composite Index up 640 percent to its highest level ever, according to data compiled by Bloomberg and Bespoke Investment Group LLC. “I think that at about $80 the market crossed into the irrational exuberance level,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It's hard to find a rational explanation for the gain of the last six months.''
Deborah Fineman, president of Mitchell Supreme Fuel Co. in Orange, New Jersey, summed up the scene: “Energy markets have been dictated for too long by hedge funds and speculators, who artificially manipulate the numbers for their own benefit. The current market isn’t based on the sound principles of supply and demand but it is being rigged by companies and speculators who are jacking up prices for their own greed.”
According to the WSJ: "Some lawmakers are mulling ways to change the industry's incentives. Wall Street increasingly values oil companies — especially the smaller ones that dominate onshore U.S. production — based on their reserves, not just their production. That gives companies an incentive to snap up land even if they won't be able to drill it for years. On Thursday, House Democrats introduced legislation that seeks to compel energy companies to either produce or give up the federal onshore and offshore leases they are holding, by barring them from obtaining any more leases unless they can demonstrate that they are producing oil and gas, or are "diligently developing" the leases they hold.
We are as mad as hell, and we are NOT going to take this anymore!
Asia is not taking any more losses and came roaring back this morning with a 380-point gain in the Nikkei (2.7%) and a 437-point gain in the Hang Seng (1.9%). Even the Shanghai Composite stopped dropping with a 5 point gain. I'm liking the 1/3 off sale on CHL now and I'm going to grab some Sept $65 calls at $7.50, hopefully selling the July $75s for $2.50 or better on a run up. PTR is also tempting down here if oil keeps going down. Japan and China are close to agreement on co-development of gas fields in the East China which could be a huge addition to production.
The G8 met in Osaka this weekend and issued a joint statement saying: "Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth world-wide, have serious implications for the most vulnerable, and may increase global inflationary pressure. These conditions make our policy choices more complicated," they said. They vowed to take "appropriate actions" to secure stability and growth.
Europe is trading flat ahead of our open but inflation news gets worse and worse with a 3.7% rise in May, up over 10% from the 3.3% measured last month. This is the highest measure since the EU records have been compiled starting in 1996. Food prices were up 6.4%, transport costs were up 5.9% and housing costs (rents) were up 5.7%. The whole EU is in turmoil after Ireland rejected the Lisbon treaty on Thursday, it remains to be seen how this affects the eight additional nations that have not voted but the vote did need to be unanimous to carry.
US futures were good but fell off on a poor Empire State Sruvey coming in at -8.7 vs the -2.5 that was expected. This is, as they say in advanced economic classes, not good as it indicates new and unfilled orders and shipments are failing to recover and we are miles below last year's +10 mark. Pricing showed inflationary tendencies and, worst of all, capital spending plans are turning down – not at all what we wanted to hear…
LEH was as bad as expected with a $2.8Bn loss but not worse than expected so our earnings gamble paid off, now we'll see how well they do on the day but they will be swimming against the tide as the markets do not look good at all following that manufacturing data. We have GS and MS earnings this week and, as the WSJ pointed out, they "look like the last two kids on the tour of Willie Wonka's chocolate factory." Perhaps they can get some Oompa-Loompas to read the earnings reports…
"Their numbers are dwindling like the children in the Roald Dahl story and later movies. The kids succumb to the temptations of candy and pay a price. For the investment banks, it was credit. Bear Stearns plays the role of bratty Veruca Salt, who disappears down a garbage chute. Lehman Brothers Holdings, like television-obsessed Mike Teavee, has shrunk to a fraction of its former self in market value and street credibility."
Oil is back to $139 pre-markets on no particular news other than Saudi Arabia raising output. Oil was drifting along at $135 in a full day's trading ahead of the NYMEX open but those guys yachted straight in from the Hamptons and hit the buy button right from the open. There is little hope for the markets if this continues and the dollar isn't helping as it's pulling back in early currency trading as well so we'll be back to hoping to hold 12,200 this morning and 1,350 on the S&P. If we lose them, it's going to be ugly again.
