Author Archives: Scalper1

Apple Going Small With Spring Product Announcements

Apple ( AAPL ) is thinking small with its upcoming products, including a new, small-screen iPhone and smaller-screen iPad Pro, according to media reports. The Cupertino, Calif.-based consumer electronics giant hasn’t announced a date for its spring product rollout, but several news outlets now say that Apple has chosen March 21 for that media event. Apple is widely expected to unveil a 4-inch smartphone called the iPhone SE and 9.7-inch iPad Pro tablet, Mashable reported Sunday . KGI Securities analyst Ming-Chi Kuo said that the iPhone SE will look like the iPhone 5S, released in September 2013, but will have internal components much like the iPhone 6S, released last September, MacRumors reported Friday . The iPhone SE will sport an A9 chip, NFC technology to enable Apple Pay and a 12-megapixel, rear-facing camera, Kuo said. The 4-inch handset likely will come in one version with storage capability of 16 gigabytes and another with 64 GB. But it won’t have a pressure-sensitive 3D touch screen like the latest iPhones, he said. Kuo says that the iPhone SE will sell for $400 to $500 and that Apple will slash the price of the iPhone 5S by 50%. The 16 GB model iPhone 5S will sell for $225, down from $450 today. By comparison, the 4.7-inch iPhone 6S starts at $649. Apple will target the handsets to emerging markets such as China and India. Apple is also expected to unveil a 9.7-inch iPad Pro tablet at the March event, 9to5Mac reported last week . The current iPad Pro has a 12.9-inch display. The smaller iPad Pro will have the same internal components as its big brother. It will support accessories like the Apple Pencil and Smart Keyboard. At the March event, Apple also is seen offering new Apple Watch wristbands and perhaps a software update, but no second-generation hardware.  

JD.com Is Next China Internet Giant Set To Report Q4 Earnings

JD.com ( JD ) is due to report its fourth-quarter earnings before the market open on Tuesday, with the focus expected to be on its expansion into new business areas. JD is China’s largest online direct-sales company, offering a wide range of electronics, home appliances and general merchandise products. Its expansion efforts include online-to-offline retailing and flash sales to help it compete in China’s burgeoning e-commerce arena against  Alibaba ( BABA ), Vipshop Holdings ( VIPS ) and others. Analysts polled by Thomson Reuters expect sales to rise 49% in local currency to 51.9 billion yuan, or about $7.9 billion at the current exchange rate. They see the company reporting a per-share loss of 0.12 yuan, or about two U.S. cents vs. a penny profit in the year-earlier period. U.S.-listed JD stock was up 1.5%, near 26, in early afternoon trading in the stock market today . JD is down 21% this year. JPMorgan initiated coverage on JD last week with an overweight rating and price target of 33 a share. JD’s earnings will follow those of Vipshop Holdings, released Thursday. Vipshop reported Q4 earnings that beat estimates, but shares dropped as first-quarter guidance fell short. Vipshop is an online discount retailer that sells branded apparel, accessories, home goods and other lifestyle products. It specializes in so-called flash sales, in which a set number of goods are sold over a limited time. One year ago, JD.com formed a strategic partnership with Tencent Holdings ( TCEHY ), a leading Internet company in China, aimed at providing superior e-commerce services to mobile and Internet users in China. Tencent, China’s leader in messaging and gaming, is set to report earnings before the market opens March 17. It’s traded over the counter in the U.S., with its primary stock listing in Hong Kong, where it is a component of the blue-chip Hang Seng index. Chinese gaming and Internet company NetEase ( NTES ) released  Q4 earnings late Wednesday that beat estimates. NetEase said that revenue from online games, its biggest segment, more than doubled, while mobile original games also drove growth. It did not provide Q1 guidance. Alibaba on Jan. 28 reported earnings for its fiscal Q3 , ended Dec. 31, that topped Wall Street expectations. NetEase stock was trading near 136 Monday, up a fraction. Alibaba stock was trading near 70, up 4.5%. According to media reports, Alibaba Chairman Jack Ma and Vice Chairman Joseph Tsai are planning to buy back shares  worth $500 million.

Who Wants To Be Short Volatility? I Don’t

Nearly 5 years ago, I noted how the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA: VXX ) was ” Designed To Fail. ” Since then, excluding some rather terrifying spikes, it has reliably melted away as I suspected that it would. If you put the position on back in 2010, you made something better than 98% on your money. If you re-weighted the position on spikes in volatility, you did a good deal better. Longer term, this publicly traded ETN is designed to continue melting away; however, in times of increased volatility this product can not only rally aggressively, but go into backwardation where the roll yield increases the value of the equity, rather than the negative roll yield that this trade is based off of. For instance, during much of 2008, volatility was in backwardation and being short volatility was a losing proposition unless you were aggressively trading it. I’m not trying to make a market call here, but as I survey the world, between the untried experiment with ZIRP, to the pending massive write-offs caused by shale oil , to the increasingly bellicose relations in the Middle East, to the continued economic collapse of Europe and possibly China, to the unorthodox US election, to the beginning of competitive currency devaluations, to a myriad of other issues, I have to wonder if I want to be short volatility under 20. The answer is-I don’t. For much of the past few months, the 1-2 month VIX has been in backwardation. I wouldn’t be surprised if this backwardation continues along with an overall increase in volatility. In that case, there will be another time to put this trade on. During a market crash, you want to have cash to buy bargains-not a headache caused by a short volatility position that is rapidly going against you. This has been a winner for a very long time and it’s now time to book VXX and wait for a better moment to short it again. I have had very few investment positions for a while now, but there’s a growing list of undervalued companies that I want to own after there has been a washout. For the first time in quite some time, I’m finding exciting things to invest in. Sitting in cash worried about the global economy, as I have been for the past few years, isn’t all that entertaining or lucrative. That’s how short vol feels when you’re on the wrong side…