iPhone 5 Released Amidst Consumer Concerns

AAPL: Not all is well in Cupertino, CA. Apple Inc. recently released their infamous and highly anticipated iPhone 5. With all the great new features and increased processing speeds the new Apple Maps app is under great scrutiny. The major issues are that the app often displays shops and restaurants streets away from their true location, important sites including some train stations are missing, and the search function appears unable to understand simple requests—essentially the app is unreliable and inaccurate. Many workers close to the case think that Apple placed its rivalry with Google ahead of its focus on iPhone customers. Apple has reassured customers that the product is in its infancy and will continue to improve. The issue with this is theory of improving with consumer feedback goes against Apple’s confirmed identity of producing products that are extremely user friendly. Could this yield an identity crisis? Only time will tell.
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Zachary Zarnik 

Market Recap (Sep. 17)

The S&P 500 Index (.SPX) fell 0.35% from 1465.42 to 1460.15 over the course of last week amid concerns that turmoil in the euro zone will continue to negatively affect global economic growth. The CBOE Volatility Index (.VIX), which measures volatility in the stock market and is generally considered to be the most accurate indicator of investor fear, traded above 14. The FTSE Eurotop 300 Index traded as high as 1,121.35 and as low as 1105.66 before finishing relatively flat at 1119.32 for a loss of 0.08%. The down trading over the week came as Mario Draghi and the ECB's bond buying plan failed to lift German business confidence and sentiment dropped for a fifth straight month. Spanish Prime Minister Mariano Rajoy's administration will present its budget to parliament this Thursday and bank audit results on Friday. Additionally, Moody's will be issuing a new credit rating on Spanish debt in the coming days that could affect investor sentiment even further.

The currency markets experienced volatility this week as the euro lost more against the dollar than during any other period over the last two months. Although the Federal Reserve's plans to expand the money supply and the ECB's bond buying program has seen the euro recover to heights of ~$1.31 against the dollar over the past few days, EUR/USD was trading back in the $1.28-$1.29 range by Monday, September 24.

Commodities news was dominated by oil prices plummeting. In a three day stretch last week, crude oil prices fell by more than 7%. A large sell order placed by a market mover on Monday triggered stop-losses and prices subsequently continued to decline. Winter months typically cause oil prices to become bearish and hibernate, but depending on how certain diplomatic tensions between key oil producers in the Middle East work out over the coming months, we could see a supply squeeze and a rebound of oil prices.
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Nicholas Hurst

Apple Releases iPhone 5; Stocks Soar

Apple’s stock continues to soar days after the release of the iPhone 5 specifications, reaching an all time high of $696.98 on Friday, raising the formidable stock three percent in two trading days. The technology giant will begin selling the iphone in stores on September 21 in nine countries and 22 more on September 28. Apple plans to build on the iPhone hype as it gears to launch the newest iPad next early next month. The iPhone 5 sports a 4-inch retina display, 4G LTE, a metal rather than glass back, and is 20 percent lighter than its predecessor. The company started taking orders for the iPhone at midnight pacific time and sold out of all pre-orders in an hour. Bloomberg has forecasted the sales of nearly 48.2 million units by the end of December with other analysts hovering around 42-46 million and have calculated a target price of $775 for Apple. Though some grant the rise in Apple’s stock with the demand for the iPhone 5, analysts contribute part of the rise of Apple’s stock price to Bernanke’s Federal Reserve package.
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Editorial Staff

Strong Moves by Fed Spur Stock Surge

Stocks surged this week following the announcement Thursday that the Federal Reserve would undertake its third round of quantitative easing, QE3. The program will consist of the Fed purchasing approximately $40 Billion in mortgage-backed-securities per month until significant improvements are seen in the labor market. The open-endedness of the program came as especially good news to investors who were expecting action from the Fed, but were pleasantly surprised by the forcefulness of the announced program and its potential longevity. By purchasing mortgage-backed-securities, the Fed hopes to boost a still-slumping housing market to growth in the overall economy and eventually an increase in employment.

Similar good news came to investors across the pond in Europe when a German Constitutional Court ruled that Germany could participate in the previously announced program by the European Central Bank to buy up short-term debt from the turmoil-ridden economies of countries in the EU. This affirmation of strong monetary policy from the ECB (which sparked last week’s equity market gains) coupled with the strong action taken by the Fed here at home pushed the Dow Jones up 286.73 (+2.15%) for the week to close at 13,593.37, within 5% of its October-2007 record high. Similarly, the S&P moved up 27.85 to close at 1465.77 (+1.94%) and the NASDAQ docked up 47.53 (+1.52%) to close at 3183.95. Despite this week’s rally, significant economic concerns still linger. Fears of looming inflation and a still week job market continue to worry investors. Only time will tell whether the Fed’s bold moves this week will lead to a sustained rally in the US equity market.
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Editorial Staff

Carlyle Buys Controlling Stake in Brazilian Specialty Furniture Retailer

The Carlyle Group announced a deal to purchase a 60 percent stake in Brazil’s largest furniture retailer by sales (~$495 million in 2011), Tok&Stok, for a reported $347 million on Thursday. The agreement marks growing confidence in the 200 million consumer market as government tax cuts have seen recent marked growth in consumer spending. Only two weeks ago, the firm struck a deal to purchase a 25 percent stake in the Brazilian equipment rental company Grupo Orguel. Both announcements add to Carlyle’s Brazilian portfolio, which includes CVC (a tourism company), Qualicorp (a health plan broker), Scalina (a lingerie manufacturer) and Ri Happy (Brazil’s largest chain of toy stores).
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Editorial Staff

Whistle-Blower Awarded Handsomely; Sometimes Crime Pays

After spending two years in prison, Bradley Birkenfeld, a former banker at UBS, was rewarded $104 million for information he told the IRS. Birkenfeld explained how the bank helped thousands of Americans evade taxes, and therefore received an unprecedented federal payout. Wealthy Americans had been using UBS and other Swiss banks to cheat the IRS. The most important part of Birkenfeld’s confession is that he effectively shut down other bank’s illegal offshore accounts. Twelve offshore banks, 50 American taxpayers, and lawyers and advisers have all been charged with crimes. Birkenfeld stated that he delivered and documented this entire scandal, the largest in U.S. history, and is now the most famous whistle-blower in the history of the world because he did the right thing. Although he claims his motivation was to put an end to crime, one cannot help but think greed ultimately led Birkenfeld to get his former company in trouble. This case should effectively end illegal offshore accounts, as people will become increasingly distrustful of their bankers. -- Editorial Staff