The Big Picture

10 Monday PM Reads
Apple’s Stock Price Post New Product Announcements
Did Obamacare Cause an Increase in Part-Time Employment?
10 Monday AM Reads
Look Out Below, Government Shutdown 2nd Week edition
Live Stream Big Picture Conference!
If Shutdown Isn’t Resolved, Stocks Could Fall 20-30%

Posted: 07 Oct 2013 02:00 PM PDT

My afternoon reading:

• The 106 Finance People You Have To Follow On Twitter (Business Insider)
• How to Look Under a Hedge Fund’s Hood (WSJ)
• 3 ways Twitter’s IPO won’t be like Facebook’s (Fortune)
• The Business End of Obamacare (The New Yorker)
• CNBC Has Lowest-Rated Quarter in 20 Years (MediaIte)
• A Lonely Housing Bear Predicts a Big Tumble (Bloomberg)
• Delayed payments in 1979 offer glimpse of default consequences (Washington Post) see also When elections used to have consequences (First Read)
• Exploding Fuel Tankers Driving U.S. Army to Solar Power (Bloomberg)
• Climate change sceptics more likely to be conspiracy theorists (The Raw Story)
• Jeff Bezos Had His Top Execs Read These Three Books (Farnam Street)

What are you reading?

Entrepreneurship differs wildly among countries

Source: Economist

Apple’s Stock Price Post New Product Announcements

Posted: 07 Oct 2013 11:30 AM PDT

Daring Fireball points out that following most new Apple product introductions, the stock price tends to fall:

Here are the Steve Jobs product announcement stock action:

• 23 October 2001, introduction of original iPod: AAPL fell about 5 percent.
• 7 January 2002, Macworld Expo keynote: AAPL fell 4 percent.
• 7 January 2003, Macworld Expo keynote: AAPL fell slightly.
• 6 January 2004, Macworld Expo keynote, introduction of iPod Mini: AAPL fell slightly.
• 11 January 2005, Macworld Expo keynote: AAPL fell over 6 percent.
• 10 January 2006, Macworld Expo keynote: AAPL rose over 6 percent.
• 9 January 2007, Macworld Expo keynote, introduction of the iPhone, now seen as the biggest and most important product introduction in Apple, and perhaps industry, history: AAPL rose over 8 percent.
• 15 January 2008, Macworld Expo keynote, introduction of MacBook Air: AAPL fell over 5 percent.
• 9 June 2008, WWDC keynote, introduction of iPhone 3G: AAPL fell 2 percent
• 27 January 2010, introduction of original iPad: AAPL was up slightly on the day, but then dropped and kept dropping for days.
• 7 June 2010, introduction of iPhone 4 (last phone introduced by Jobs): AAPL fell slightly, then dropped 3 percent the next day.

Note that the 10 percent drop in Apple's share price following the 5S/5C introduction would have been extreme in the Steve Jobs era. Today, its hard not a heads up comparison — the stock price has been more volatile, the shareholders even more short term oriented. (Not sure if the naysayers are any louder though).

As I wrote almost a decade ago in 2005, Wall Street still does not understand Apple: Analysts Still Underestimate Apple; Sell-siders simply don't 'get' Steve Jobs' company, based on Wall Street Remains Clueless as Ever as to Apple's Products.

Funny how some things never change . . .

Did Obamacare Cause an Increase in Part-Time Employment?

Posted: 07 Oct 2013 08:30 AM PDT

A reader emailed the following question about this weekend’s WaPo column (ObamaCare: Investing Advice for Senator Ted Cruz):

“How can you make investment decisions about future returns in light of Obamacare driving so many workers to part time status?”

Ahhh, a classic bit of misdirection — an assumption built into a question. The first step in answering that is to verify the reality of that assumption: Has Obamacare actually caused an increase in part-time employment?

As you can see in the black line below, the number of part time workers spiked because of the Great Recession. It peaked and began to slowly reverse before the ACA was even passed. No, there does not appear to be an increase caused by Obamacare.

click for ginormous chart

Source: Economic Policy Institute

Funny how these memes gain traction.

Since I have repeated myself so many times, perhaps I should try phrasing this somewhat differently: You better really, really enjoy your partisan politics & Fox News, because it is an incredibly expensive hobby if you are an investor.

Source:
Obamacare Isn't Causing an Increase in Part-Time Employment, In One Chart
Max B. Sawicky
Economic Policy Institute October 3, 2013
http://www.epi.org/blog/obamacare-isnt-causing-increase-part-time/

10 Monday AM Reads

Posted: 07 Oct 2013 06:45 AM PDT

My morning reading:

• Majority of House appears to support 'clean' continuing resolution bill (Washington Post) but see John Boehner doesn't really want to ‘negotiate' with Obama (The Plum Line)
• Amazon.com: Dangerous for Competitors—and for Shareholders (Barron’s)
• Buffett’s Crisis-Lending Haul Reaches $10 Billion (WSJ)
• Closure Creates an Investor Opening (Moneybeat) see also What a difference a rally makes. (The Reformed Broker)
• How four car companies are forging ahead on fuel efficiency (Christian Science Monitor)
• Why Hasn't the Budget Deficit Decline Hurt Corporate Profits More? (Pragmatic Capitalism) but see A U.S. Default Seen as Catastrophe Dwarfing Lehman's Fall (Bloomberg)
• Hal Varian: the economics of the newspaper business (International Journalism Festival)
• Was tulipmania irrational? (Economist)
• One Big Doubt Hanging Over Twitter’s IPO: Fake Accounts (WSJ)
• 11 Simple Rules For Getting Along With Others (Farnam Street)

What are you reading?

US Default Risk Goes Up as Rest of World Gets Less Risky

Source: Bespoke

Look Out Below, Government Shutdown 2nd Week edition

Posted: 07 Oct 2013 04:15 AM PDT

click for updated futures

US Futures are deep in the red, as we begin the ~~third~~ second week of the government shut down.

In theory, some 25% of the US economy may soon end up off line. We are not there yet, but that is the short term negative. The worst case scenario is a U.S. Default potentially a catastrophe dwarfing September October 2008.

It will be interesting to see how this plays out, as we do not really know what the dissidents want. (I suspect they are not all that familiar with game theory). As of now, Boehner is saying the House will not have a chance to vote on a clean Debt Limit Bill.

Regardless, investors hope this slow motion train wreck gets averted prior to any actual collision.

Live Stream Big Picture Conference!

Posted: 07 Oct 2013 04:00 AM PDT

This year, The Big Picture Conference will be available via Live Stream on Fora.tv. If you buy the Live Stream, you’re not confined to your computer all day, you’ll be able to view panels and presentations for 60 days after the event.

See the full schedule below but if you want to join us in person, there are tickets available here or at the door.

If Shutdown Isn’t Resolved, Stocks Could Fall 20-30%

Posted: 07 Oct 2013 03:00 AM PDT

We recorded this last Thursday at the Yahoo studios:

Click for video

Source: Yahoo

Yahoo:

"It turns out the market really doesn't care much if [the shutdown] is a day or a couple of weeks," says Barry Ritholtz, chief investment officer of Ritholtz Wealth Management. "Where it becomes a concern…is if weeks turn into months. If it goes past three or four weeks, that could take a big chunk off GDP, effect consumer confidence and really have an impact on earnings."