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Summary

  • Apple has turned itself into a stable "widows & orphans" stock with stock split and dividend hike.
  • Investor flight to safety favors stocks with strong cash flow and safe business model.
  • Apple's surge does not reflect optimism for tech, but more capital flowing to safe businesses.

If Tim Cook ever tires of his job as Apple CEO, he could maybe start a macro hedge fund. The market timing of Apple Inc. (NASDAQ:AAPL) is exquisite, re, turning itself into a widows-and-orphans play (via 7 for 1 stock split and fat dividend hike) just as investors show panicky demand for safety, quality, and cash flow, with "boring the new sexy" in a very big way.

The market hates everything high-beta, social media and cloud right now, as evidenced in the horrible carnage of Salesforce.com (NYSE:CRM) yesterday (and plenty of other things). We laid out reasons why (based on positioning) in "Tiger Soup" - long story short, lots of smart hedgies (particularly Tiger Cubs) are now looking not-so-smart (and may in fact be getting killed).

The AAPL surge is not reason to be optimistic on the tech side - in fact we'd say the opposite, it is more evidence of a late-cycle rotation into "anything that isn't melting down." AAPL also remains a double-digit percentage of Nasdaq QQQ Trust (NASDAQ:QQQ), thus helping explain the wicked tail in QQQ yesterday.

For risk assets in general, if anything there is probably more fake-out shake-out high-vol drama ahead. As Samuel L. Jackson so eloquently put it in Jurassic Park: "Hold on to your butts!"

(click to enlarge)

Source: Tim Cook, Macro Genius