Serving Up Apple on Fine China; Great Rotation, Take Two; Red Light, Green Light — Global Markets Play the Game Ahead of Fed

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Serving Up Apple on Fine China (Reuters)

Apple, Inc.’s second-quarter revenue from Greater China (Mainland China, Taiwan and Hong Kong) shriveled by 43 percent when compared to the previous quarter, according to company figures. And that was more than enough to elevate the importance of Apple CEO Tim Cook’s scheduled meetings with China Mobile Chairman Xi Guohua this week. China Mobile is the world’s largest mobile phone carrier by subscriber, and that’s a powerful position in China, where 78.5 percent of the country’s Internet users access it through their phones. One of the primary topics for discussion between Cook and Xi will be elevating the quality of G3 phones offered by China Mobile, as its current mobile units are greatly inferior to those used by the country’s second- and third-largest mobile carriers. Any new deal between Apple and China Mobile that features upgraded G3 phones — as well as G4 phones later this year — could ultimately triple China Mobile’s reach and drive revenues as high as $30 billion by 2015. And that would put a smile on everyone’s face, especially investors.

Great Rotation, Take Two (CNBC)

Last year’s mere rumor of the Great Rotation of investing funds out of bonds and into equities was enough to send the market into volatility convulsions. So what will happen the second time around, as interest rates begin to rise and investors again hear rumblings of a Great Rotation? Well, according to Mike Crofton, president and CEO of Philadelphia Trust Company, it’ll mean the Fed will ultimately lose control of those rates. That’s because, in the beginning, investors will come to see their bond portfolios as losing propositions and then will start selling their bonds.  The ensuing Great Rotation out of bonds will drive rates up to the point where we’ll be looking at 10-Year Treasury Yields hitting 5-6 percent in the next 18-24 months.  The last time investors saw 6 percent yields was more than 10 years ago, in mid-2000.

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Red Light, Green Light — Global Markets Play the Game Ahead of Fed (Bloomberg)

In the children’s game “Red Light, Green Light,” a player wins by becoming the first player to reach the “signal caller” by correctly moving towards that person when he or she yells “Green Light” and freezing in place when “Red Light” is called. Well, today’s version of the “Red Light, Green Light” game involves Fed Chairman Ben Bernanke serving as the signal caller at 2:00 pm Eastern when he releases the minutes from this month’s Federal Reserve meeting. Most analysts believe it’ll be another “Green Light” call, meaning additional stimulus and another month of artificial gains for indexes like the Dow. However, one day soon, Ben has to yell “Red Light,” and the game will suddenly become very different. As an investor, be prepared for your next move, when we get Ben’s big Red Light?

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