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    • When earnings expectations are as low as they are for Apple (AAPL), results don't get "released" as much as they escape captivity. Even if Apple sandbagged its guidance in order to make the actual numbers look good, the company is almost certain to report shrinking year-over-year profits for the first time in more than a decade.

      According to Yahoo! Finance, Apple is expected to report earnings of $10.07 per share on $42.6 billion in revenues. In the same quarter last year Apple earned $12.30 a share. Negative earnings growth means Apple's much cited P/E of 9 isn't all that it would seem.

      Hank Smith, CIO and VP of Haverford, is long Apple and says investors can win big tonight with just a little help from CEO Tim Cook. Smith says Cook can send shares higher one of two ways.

      First, the company can come up with a more creative capital allocation strategy in the form of buybacks or a dividend hike. Smith reasons that Apple is better off buying shares with the stock at $400 than when it was $300 higher. Unfortunately Apple already started a $10 billion buyback program last October with the stock in the mid-$600 area. Suffice it to say, the program did little to support the shares.

      Smith would much prefer a boost in the payout to shareholders. "Dividends are very real and the most tangible statement a company can make about the confidence in their current condition and future prospects," he states.

      Read More »from Time for Apple to Answer Its Wake-Up Call
    • Amazon.com (AMZN) is set to report first-quarter earnings this Thursday after the market close. Consensus estimates peg the online retailer earning $0.09 a share on revenues of $16.18 billion.

      Last quarter the company missed on profit, revenue and guidance, but was given a pass based on signs of improving operating margins. Amazon enthusiasts are bolstered by the company’s investment in building out fulfillment centers and adding content licensing agreements. Most seem undeterred by its sky-high valuation -- a one-year forward P/E of 74, making this one of the most expensive stocks in the land.

      In the attached video, Gene Munster, sr. analyst at Piper Jaffray, explains his belief that the more fulfillment centers Amazon announces, the better the stock price will perform.

      “Bottom line, that is a sign that margins are going to be drifting higher. And for this stock to work, we believe there needs to be the hope of margin expansion, not actual margin expansion," he explains. "We think that they will give some glimmer of that when they report their quarter.”

      Munster calls the stock a long-term hold based on the fact that 7% of goods purchased in the U.S. are bought online; a number he says is going higher. He has an “overweight” rating on the stock with a $329 price target.

      Further, this analyst will be listening for initiatives off the conference call that are a little outside of the box.

      Read More »from Amazon: It’s a No-Brainer to Own, Says Munster
    • Fed Is Firing Blanks With QE: Whalen

      Hollywood is bringing back the man of steel, and one thing we can count on (other than a new body-sculpted suit), is that kryptonite will still be the only thing that zaps him of his power. While the comic geeks have Superman, investors have Helicopter Ben and the Federal Reserve that's pumping $85 billion a month into the economy. But could it be the Fed has its own version of kryptonite that’s sapping its strength? Christopher Whalen of Carrington Investment Services seems to think so.

      The benefits of the Fed’s quantitative easing (QE) program are being offset by regulation promulgated from Washington, Whalen says, and therefore nullifying its stimulative ability. “When you look at all the constraints on banks in terms of lending, it's just not being effective in terms of growing jobs, and the key thing is that even with say housing up 10% last year, there’s no credit growth,” Whalen notes. “In terms of a classical economic recovery, we’re not having that.”

      The Fed’s plan of reflating assets like home prices in order to stimulate the economy (and thus job growth) is admirable, but according to Whalen regulations like Basel III and Dodd-Frank are stifling lending. This is because reform legislation discourages banks from making all but the least risky mortgage loans.

      In fact, Whalen notes that estimates for new loan originations in the U.S. mortgage market are in a precipitous decline; falling from $1.7 trillion in 2012 to $1.4 trillion in 2013, and perhaps below $1 trillion next year. Major home mortgage originators like JPMorgan Chase (JPM) and Wells Fargo (WFC) will likely take a hit from this decreased volume.
      Read More »from Fed Is Firing Blanks With QE: Whalen
    • Starting Sunday the Federal Aviation Administration (FAA) was forced to cut spending by 10% as a result of forced sequestration cuts. According to Reuters the cuts have already resulted in delays of more than an hour in New York with more delays to come at other hub airports.

      This sounds exactly like any other Monday in the last 20 years of air travel. Regardless, FAA authorities swear these delays are different and the direct result of the sequester.

      From an investment perspective, the question is whether or not the scorching hot stocks of the major airlines can withstand a service slowdown, even it isn't their fault (this time). Yahoo! Finance senior columnist Mike Santoli says the sector could hit an air pocket if the delays cause business travelers to consider alternatives to flying.

      "The story with the airline stocks is pricing power," Santoli says in the attached video. The industry has reduced capacity on travel routes and has seen massive merger activity. That makes for more crowded flights and fewer alternatives for travelers who don't want to share an armrest. Historically these stocks are "not a great buy and hold business," understates Santoli, suggesting a pullback in the sector should be expected.

      Read More »from Sequestration Flight Delays Not Hitting Airline Stocks…Yet

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