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Afternoon Note

Waiting for Ben
By WSS Research Team
5/21/2013 1:51 PM
By Carlos Guillen

After some instability earlier in the trading session, equity markets are on track once again to reach new record highs. Despite a second day of lacking economic drivers, investors have not been dissuaded from jumping into stocks, and today comments from a Fed official have tipped the scale in favor of equities.

Federal Reserve Bank of St. Louis President James Bullard said earlier today that the central bank should continue its bond buying because it's the best available option for policy makers to boost growth that is slower than expected. This has once again served to give investors further confidence that the Fed will very likely continue with its easy monetary policy trajectory. According to Bullard, quantitative easing maneuvers have been improving financial conditions and can be adjusted as needed, and as such should remain active.

Later in today's trading session, New York Fed President William Dudley will also offer his views and insights into the outlook for the Fed's asset-purchase program. And more importantly tomorrow, Fed Chairman Ben Bernanke will testify before Congress, and the minutes of the most recent meeting of the Fed's monetary-policy committee will be released.

While there were some companies that had rather encouraging earnings results including Home Depot, Best Buy, Auto Zone, and TJX Co., the main driver continues to be easy money from the Fed. As such, if Ben Bernanke tomorrow gives any indication of a winding down of asset purchases, we can expect markets to make a sharp reversal. Ladies and gent hang on to your seats!

Apple Gets Grilled
By David Urani

It's not so easy being Apple these days. Just eight months ago when the stock was $700 you could ask anyone and they'd probably tell you it was the greatest company in the world and that the latest iPhone was revolutionary. In fact, ask someone on the Street and they probably would have even assumed the company was somehow "green" even though they aren't.

It's funny how things change. Now the stock is $435 and all of a sudden the latest gadget from Samsung steals all the buzz while Apple gets criticized for not innovating (and what ever happened to that iTV anyway?). Heck, even washed up old Microsoft seems to be sneaking itself back into some of Apple's lost limelight with its big new Xbox reveal later today.

And it's only now that Congress feels the need to prod Apple over its "shady" taxes, or lack thereof. I honestly wonder if the Company would have been scrutinized over something like this back in September when AAPL was $700. In reality though Congress' grilling of Apple today goes beyond just Apple, which is the highest profile example of a company that goes to great lengths to minimize its taxes (all perfectly legally, I might add).

The fact is, any competitive company is going to pay as little in taxes as it can. Apple is not a tax cheat, but rather one of the greatest business success stories of all time, and if the leadership in this government wants to publicly shame the company for all to see, then shame on them. It's not Apple that should be being criticized today but Congress itself for offering up this overly complex, cryptic, burdensome tax code, and all the many loopholes that go with it.

Ultimately Congress needs to leave this meeting looking at themselves. And therein lies another problem. There's a high likelihood this is a discussion that it designed to bring up tax reform, and surely the White House's agenda is to confiscate more of Apple's wealth for itself, and any other international US business for that matter. And along the way the government has found a way to tarnish American success once again.
 

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