What can we take away from market reaction to Apple’s new product conference Wednesday?
The stock traded down as the presentation went on, despite Apple unveiling a new business model for its most successful product, which may return more cash to the mothership.
Apple is moving to selling more iPhones through a leasing program, which guarantees consumers have the latest model phone for $32 a month for a year.
This move can take the mobile service providers, AT&T, Verizon et al out of the equation and end subsidizing sales.
However, institutional investors appear to be skittish about US consumer discretionary spending going forward, which seems to be the only hurdle CEO Tim Cook faces.
So Brazil’s debt was downgraded to junk late Wednesday by S&P with a bias to further downgrades given the dire straits of the country’s currency and its reliance on China trade.
Brazil is suffering from stagflation — persistent high inflation combined with high unemployment and stagnant demand in a country’s economy — which is a condition that the US could suffer if bond vigilantes had their way with Treasuries.
The BRICs are being taken to the woodshed as their economies are not robust enough to buoy the 90% of the people not participating in the stock market run up during the bubbles.