Morning Call [5:50am ET] Mayday-mayday-mayday… As soon as I published the Week In Review, the Peoples Bank Of China ordered the nation’s lending banks to raise their capital reserves in a move clearly designed at thwarting inflation and real property price speculation. So, as I opined in the WIR that the US Dollar index ($USD) would likely be pushed down by a Euro made stronger because of this weekend’s bail-out of Greece, it was just the opposite.
http://uk.reuters.com/article/idUKTRE6421BP20100503
http://online.wsj.com/article/SB4000142405274870460810457521943037825761...
Like it or not, the policy of Dollarization can now be referred to as Yuanization.
http://en.wikipedia.org/wiki/Dollarization
With the implications of a stronger Dollar and a further flight from risk, the Singapore and India equity markets immediately softened and closed down -0.92% and -1.08% respectively. The Australia market dropped -0.55% after the government there said it would impose a new tax on the profits of mining companies, totaling some 40%. Shanghai and Tokyo markets are closed.
In Shanghai, the greatest World’s Fair in history has now opened. The televised scenes will be amazing.
At this point in the morning, the CAC and DAX indexes of France and Germany are down -0.94% and -0.58%, but the S&P future is up a tad, the US Dollar future is up strongly +0.41% to 82.325. Crude Oil and Gold and Silver are flat, but Copper, Palladium and Platinum are a bit weaker, so far.
Have a good day, but you can ignore the mayday. All Quiet on the Western Front.
CTA Trading Desk Post-Close Report
Eager buyers piled into stocks on Mutual Fund Monday, hoping the moderate declines of the prior week left some relative bargains on the table. Led by technology (QQQQ+1.43%), Retail (XRT+1.96%), and financials (XLF+1.99%), common stocks were stuck in an up-grind higher for the entire session, selling pressure only affecting select material and mining stocks. Among the weakest were Cliffs International (CLF-5.73%), Freeport McMoran (FCX-2.73%), Teck Cominco (TCK-2.07%), and BHP Billiton (BHP-1.85%).
Unfortunately, there was precious little new information gleaned on Monday; stocks remain range bound between S&P 1180 to 1220 as they have for over one month. While stocks have sidetracked, multiple distribution days have occurred with buyers seemingly worn out and low on cash. Each time a particular sector looks vulnerable, money flows out and is parked in “one-decision stocks” (no need to worry about selling, the only decision is when and where to purchase) like Apple (AAPL+2.01%). Managers can show their clients a fully invested position, hoping to sidestep any potential potholes rotating in and out of sectors.
With Europe closed for a holiday black box programs had little resistance executing momentum-based algorithms, meaning day-long trends in stocks magically disappear the following day for no apparent reason. Day traders may need to widen their horizons by using a weekly chart to eliminate some of the random noise of the daily charts, keeping them on the right side of the path of least resistance.
Have a great evening.
Comments
Re: Bill Cara’s Blog for May 3, 2010
Quips from the President at this weekend's White House Correspondents' Association Dinner:
[WSJ] The president added a few new targets this year, including Goldman Sachs Group Inc., under scrutiny for its practices in the runup to the financial crisis. "All of the jokes tonight are brought to you by our friends at Goldman Sachs," Obama said. "They make money whether you laugh or not."
As for Jay Leno, who followed Mr. Obama as the headliner, the president said he was glad he wasn't speaking after Mr. Leno. "We've seen what happens when someone takes the time slot after Leno's," Mr. Obama said.
Re: Bill Cara’s Blog for May 3, 2010
The President said: "All of the jokes tonight are brought to you by our friends at Goldman Sachs," Obama said. "They make money whether you laugh or not."
dunno about that joke, I'd rather be making the money.
BHP and FCX showing make or break time. Thought I could catch FCX bouncing off 200 ma support on the daily but China might have put a spanner in that plan.
UK Election
In reply to your question from yesterday Bill, I had not thought about the possibility of the UK deciding on being in the EU or keeping the pound. I did see the leader of the Conservative party state he will keep the pound if elected.Over here politicians and financial pundits are praising the fact that we still have the pound and can set our own interest rates etc.What they are really saying is that they can devalue the pound at will as they have been doing lately, which is nothing to gloat about in my opinion,people here with
any savings are losing out badly with savings rates so low.e.g my father who earned his lifes savings working down coals mines all his life.
Market closed in London today ,its a holiday.
eurozone: Chronicle of a disaster foretold
A breath of fresh air from history, and the most perfect view of the eurozone Chinese finger-trap I have run across.
Chronicle of a disaster foretold plays out on the streets of Athens
http://www.telegraph.co.uk/finance/comment/7664328...
" . . .
MacDougall . . . had been Churchill's chief statistician during the Second World War . . . . was closely involved with Keynes's attempts to recast the financial architecture of the post-war world at the celebrated Bretton Woods summit.
. . .
I vividly recall MacDougall elegantly mauling the "Stability and Growth Pact", the system of fines supposed to prevent eurozone members "free-riding" off the prudence of others. "It just makes no economic sense," he observed, knowing that when it came to the crunch, such fines would never be enforced, which made the threat of them meaningless. How right he was.
. . .
The more likely outcome, is that the bail-out is agreed. This will be met with much fanfare and talk of "European cohesion" but will also eventually lead to the collapse of monetary union. That's because the credibility of the eurozone as a disciplined monetary regime would be shattered. Greece will be presented as a "never-to-be-repeated one-off", but once that line is crossed there's no going back.
. . .
Sir Donald MagDougall is dead, but if he were here, he would be entitled to say "I told you so." In 1977, MacDougall led an official Brussels enquiry into the fiscal implications of monetary union. The only way the proposed single currency would survive, he concluded, was with union-wide taxation and a centralised budget – in other words, a political union like the US. It was a message that the Eurocrats knew was too tough for many European countries to swallow – so the MacDougall Report was buried. The stupidity of that decision is playing out on the streets of Athens.
. . . "
Re: Bill Cara’s Blog for May 3, 2010
Bill,
I loved the story of Louie G. Reminds me of when in high school I worked at a hardware store in a Swedish (my heritage) part of town. An old guy said, "I need to buy a terr-mouse,"
Not understanding his heavy accent I had him repeat it — several times.
Then, in complete frustration, he yelled out..."A BACUUM BOTTLE!"
Cara 100 Ratings Changes
Good morning.
FSLR - Added to Focus List @ Kaufman Bros. PT Raised from $153 to $172
MCD - Piper Jaffray Initiates Coverage with an Outperform. PT = $85
PBR - Downgraded to Neutral @ JP Morgan citing valuation.
WAG - Scotia Capital Initiates Coverage with an Outperform.
-------
Zacks on SNDK (Cara 100)
SanDisk Corp.
By: Michael Vodicka
May 03, 2010
SNDK
SanDisk Corp. (SNDK - Analyst Report) just hit a new multi-year high at $44.89 after reporting much better than expected Q1 results that included 65% sales growth from last year and an 80% earnings surprise. The current-year estimate is up $1.02 in just the last week to $3.43.
With mobile devices that require robust storage capacities as hot as ever, Sandisk has been well positioned to capitalize on the boom as a leader in flash drive technology for consumer products like digital cameras, laptops and cell phones. That favorable market position and a resurgent consumer on a rebounding economy helped SanDisk produce awesome Q1 results, reported on April 21.
First-Quarter Results
Revenue for the period was up 65% from last year to $1.1 billion, the company's first ever first-quarter profit of more than $1 billion. Earnings also came in strong at 88 cents, 80% ahead of the Zacks Consensus Estimate. The company now boasts an average earnings surprise of 185% over the last four quarters.
Sandisk's quarter was driven by strong demand from OEM's (original equipment makers), now comprising 63% of product revenue, and mobile products sales, which more than doubled from last year and now account for half the company's product from virtually zero five years ago.
Strong Balance Sheet
Sandisk also took measures to further strengthen its balance sheet during the quarter, adding $279 million to its cash and equivalents, which now stands at $3.3 billion against $934 million in long-term debt.
Current-Year Estimate Spikes
The strong quarter sent estimates shooting higher, with the current year adding $1.02 to $3.43. The next-year estimate is calling for an earnings contraction but that long-term view could change significantly with underlying conditions.
Valuation
With a forward P/E of 12X, shares of SNDK trade at a sharp discount to the market and its industry peers at 21X. Its P/B multiple of 2.31X is in line with the industry average of 2.2X
The Chart
Shares of SNDK have been on a tear for the last 14 months after bottoming out with the overall market in March of 2009.
FED appointees/policy analysis
http://www.rasmussenreports.com/public_content/pol...
Life is too easy today...
This week end, after reading and hearing all the accounts of the subprime's risky investment packages, lack of oversight, loose ratings, etc. I began to ponder the ease and speed with which major decisions are made these days and the lack of actual human contact technology has allowed.
In many ways our lives are affected by only a few individuals who are running things by remote control.
Thousands of US lives and millions of others were put into life and death situations by a few in D.C. who have never seen combat. People who grew up playing video games at an arcade or in their own homes can now deliver death blows from half way around the world using giant model airplanes (drones).
CEOs in corner offices destroy a family's future by moving operations to cheaper labor countries and pocket their winnings from stock options without ever touching a certificate or a dollar bill.
Those juggling world markets by the click of a mouse, "print" the trillions they need to manipulate whole economies.
I first noticed this dehumanizing process when the "Personnel Office" became "Human Resources" around the late 1970s or early 1980s. The top of the military Chain of Command speaks in terms of "assets" rather than troops or soldiers. I can't remember which book quoted a CEO — "We think of employees as appliances. We plug them in for as long as we need them and when were done with them we just unplug." (It may have been, "Who will tell the people," by William Greider.)
When you don't see the enemy you kill, never meet the one whose job you sell, aren't affected by the price of groceries, minimum wage, cost of living — it is just too easy.
Watching RTP
anyone have thoughts on the Aus. tax proposal ? ... although applied after ' expenses ' ( I think dividends are considered expenses at RTP ), this could take a rather large bite beginning in 2012... seems consolidation in the industry might help ? the prior $ 165 - $ 180 range seemed stable ( would equate to roughly $ 42 - $ 45 presently after last weeks split ).. Noticed the $$ Billion sale by Vale this weekend...
Cara 100 Update
CVX - estimates upped at Morgan Stanley through 2011. Company is seeing better international exploration growth. Overweight rating and new $97 price target.
CVX - target, estimates boosted at Barclays. CVX price target increased to $105 from $96 on solid 1Q10 results. 2010 and 2011 EPS estimates increased to $9.00 and $10.50, respectively. Overweight rating.
Re: Watching RTP
BHP shares up a few cents pre-market.
Go figure.
Regards,
BH
Re: Life is too easy today...
Grym,
I always find your posts engaging and thought-provoking. Today you say it's just too easy. I agree and you put me in mind of the GS hearings. While I join everyone in applauding Congress's sudden cojone transplant, I wonder where is the satisfaction for the millions who lost billions. Perhaps I've been too busy to read as much as I'd like, but I haven't seen any mention of compensation for the ordinary people who directly or indirectly drank GS's Koolaid. Someone please tell me I'm wrong.
Getting Flat
I'm selling most of my long positions. Sold WATG at a small loss, TRMA at a decent gain, holding on to REDF. I bought some July/September SPY in the money puts. I believe we will see a sell off in the markets very soon and I want to be positioned properly, which means short some and a good position in cash. The one thing that may mess things up is Friday's jobs report. With the GDP print on last Friday, I have begun to temper my enthusiasm for the markets.
MMR...
this could be The second chance... working its way to close the earlier blastoff from a few months ago...
RSI tool issues
I noticed some people were seeing some inconsistencies with the RSI tool lately. I looked into the matter, and the issue is that we've been using raw close price data lately. That's a problem because lately a bunch of ETFs (including DUG, GLL, SMN, ZSL) have done reverse-splits. When a stock goes from $11/share to $55/share in one day, it looks overbought and tends to trigger sell alerts / distribution zones. We were previously using adjusted close data, but Bill doesn't like how that accounts for dividends so we moved back to raw data.
If I find some free time, perhaps I'll start adjusting the data myself, but until then be warned that any stock with any kind of split in the recent past is likely to give pretty inaccurate numbers. As always, please don't just blindly follow any tool!
Re: Life is too easy today...
We have all been democritized, socialized, sanitized and synchronized. Human resources indeed. If that sit-com Cheers was still playing, they would all be comparing FICO scores while sipping their beers. We've been algorithmized!
Update- UXG and RBY
UXG came out with terrific drilling results on "El Gallo", The hole intersected 22.9 ounces of silver per ton just 29.5 feet below the surface in a new "Southwest" zone. For trading purposes, the RSI 7 and 14 are at extreme levels and I wouldn't chase it. I prefer to buy in the $3.45 level at the most. for those who have already established a position, you are doing fine. The stock is currently in a rising channel, $3.04-$3.63
For RBY, it is moving with the price of gold where it may top out at $1200-$1220 before correcting. It is in a downward channel between $3.45-$4.34. A neckline appears to be forming at $4.17 with moving averages getting near crossover levels. Buying would be suitable closer to the $4.00 level. Currently at $4.05 but see if it retreats a little before entry. If you are already positioned, no problem, hold it.
Coeur d'Alene Mines Corporation (CDE)
The NIA's new stock suggestion, presented for your perusal:
http://tinyurl.com/32egy7l
--------
Not my suggestion to buy or sell any security. The NIA is a group of precious metal advocates (among other things) to be sure, but I do find them to be honest and well intentioned.
Re: Watching RTP
seems Rudd was selling this as some sort of super-boom time profit sharing plan. Problem is, accountants see it as an additional slug on ordinary earnings. This as China is tightening up. This'll be interesting to see how it fails.
http://www.smh.com.au/business/rudds-stumble-on-de...
Re: Watching RTP
Thank you, Les... excellent information, as always.
Repost for RIG
Vad, can you offer some comments on how best to enter RIG on a longer hold horizon?
Took my lumps on the HP buyout of PALM. Should have listened when signal was "non" directional and just left after the first set of successful shorts.
We'll see if May is the turning point for the up trend (to down). Appreciate if when you see it give us the chart on what you see.
Thanks,
Seek
I recall the last time
Mos dipped back to the $ 48 area, and Dr. J ( on Fast ' Monkey ' ) started pounding the table... THIS is getting Really Interesting... China is having to import mucho tons of corn, due to an extremely rough winter... I took at small position at low $ 50's last week, as discussed.. Would Love to hear some of the Community thoughts on Ag. sector.. Just as some other sectors are advancing even though ( because ?? ) dollar elevation, the Northern Hem. ' do something ' season is upon us... The farmers that I talk with ( and relate here ) have said they are " comfortable " with the current prices, and " don't expect a decline " in use... Who knows... But, the ' risk/reward factor ' might be nearing an equililibrum... jmhao.
Re: Repost for RIG
Seeker,
RIG is in the middle of "news storm"... that usually provides for hectic movements influenced by the latest headline rather than technicals, so chart reading is kind of pointless here. All this mess should sort itself out before normal trading resumes.
As for trend reversal, I am on "high alert watch" for that. At this point my confirmation for reversal would be SPY losing 118.25 while never going over 121.30. I however do not expect anything even close to retesting March 2009 lows. Barring some unforeseen news development, market should be bought enthusiastically much sooner than that, by all who missed the train and will be all too happy to snatch any significant pullback.
Jingo
The single most important driving force for this morning's rally may just be 'bewildered bears.'
The more bewildered-yet-confident they are, the more likely they are to open shorts or add to existing shorts. Which simply propels the market higher.
reply to baz22/MOS
MOS sure does look washed out here, stochastics,etc but too many people I respect are extremely cautious the market here.... you could sell this month 50 puts on MOS for in the $1.70s on a small position which would get you in at last nov's prices.......DYOD of course.......
Re: I recall the last time
"Fast ' Monkey '"
Good one.
Re: Jingo
Hi 2nd,
I'm not short (as of yet) but am bewildered by this market. Europe on the ropes, deficits soaring, high unemployment, rising oil and food prices......this market seems to defy all logic.
Your explanation is as good as any.
Regards,
BH
Re: reply to baz22/MOS
Thanks, tobyt.... I guess the new ' long term ' is the old ' short term '.. always have my sell points... Greed kills !.... how is the ' Palm Harbor ' home coming ? Great call on TMRA last week....
Re: Jingo
BH- As far as not (yet) having boarded the short train, I couldn't be happier to hear it, as I couldn't be hearing it from a nicer guy ;)
TRMA call ( not Tmra ), tobyt
What is that Vad said last week... " we can't read, so we daytrade !! "... although maybe a certain car maker could use the symbols ...' T***** Motors R Awesome ' !!
Gold hit 900 EUR / oz. - can I have 1000?
It bounced at 800 EUR / oz. as recently as March 15, so I'm looking for 1000 EUR/oz. by midsummer.
Markets do move in a linear fashion, don't they? :-)
Copper has not been looking good, but commodities in general are holding up decently, and AUDJPY looks to be once again trying for a major breakout, so perhaps copper will catch a bid? Unless the Chinese copper hoarders are about to be taken to the cleaners along with the real estate speculators?
Bill's write-up
from many days ago, TNP, just may be catching the wave...
SPY July/June Puts
Adding a few more in the money puts here. Stop is around $121.30. I'm now about 5%-10% short, 85 to 90% cash, 5% long.
Had to let
onxx go, for now.. negative forces at work.
gold here
interesting if not familiar action in gold today,
a nice run up early and a sputter the remainder of the session to break new highs, while the miners tank.
though the lack of downside volume in the miners could be the proverbial canary in the mineshaft as we would want to see a break in the upward trend with a huge volume down day.
suffice to say the miners have yet to show any sort of true return to their prior glories, especially in the face of a potential dump in the markets.
what i do see if gold acting well overall despite a jump in the USD but remember we have seen such moves many times over and just as quick as pundits will take 1 week's action of a jump in gold along side the USD one or the other can give way and fall in spectacular fashion.
lets not put the cart before the horse and jump on a seachange just yet.
this run up in the USD for whatever myriad of reasons may still have legs so long as the market is soft.
that being said gold remains strong for now, im just not convinced as of yet.
a market crack will take gold down after its done pillaging the miners as always.
steady as she goes!!!
Just when the bears thought it was safe to venture out...
Wham! this market is making it very challenging. Glad i am simply watching for now, building cash.
UXG - My PM stock of the year
Up almost 5% today! I'm happy!!
Re: Repost for RIG
Just to illustrate the point I made earlier about RIG being highly news-sensitive.. look at both BP and RIG long red candle 15:09, and look what caused that:
3:08:40 PM
BP Spokesperson: No change in oil flow detected at the spill site; same since yesterday (49.89, -2.26, -4.33%) (related CAM HAL RIG CLH SPN JOE )
That negated (in perception at least) this headline, earlier:
2:14:14 PM
British Petroleum plc Strength attributed to speculation that BP will be able to curtail the multiples leaks from Horizon well project quicker than previously believed
- one company official is cited as saying today that one of the three leaks may be sealed with a cut off valve, while the two larger leaks could be capped with containment domes within the next two weeks.
Re: Life is too easy today...
"If that sit-com Cheers was still playing, they would all be comparing FICO scores while sipping their beers."
I'm beginning to suspect the "Coach" from Cheers is the brain behind financial reform with Woody as his research specialist.
:-)
REDF
Sold off the rest at $2.90. Entire trade was opened about a month ago and was decently profitable.
Now about 93% cash and 7% short through SPY July/June puts (which are already down!) and short SPY around $120.2. Not looking to make a killing on the short side but the risks to the downside in my opinion have raised enough for me to get out of my longs.
High volume churn
Hello Bill,
Once upon a time, if I remember right, you had indicated that market reversals are preceded by high volume churning action. If you have a minute to respond, I would be curious to find out if you would classify the very recent action as churn.
Thanks in advance.
Inside Day
For what its worth, today would be classified as an inside day I believe.
Re: UXG - My PM stock of the year
I am happy too despite ignorance on Bill's RSI tool.
Re: reply to baz22/MOS
From a 2/11/2010 article on Agrimoney.com. What do you think they'll do with the extra 800 mil ?....
...Vale has agreed to pay $1.03bn to buy Mosaic out of both Fosfertil, a phosphate group listed in Sao Paolo, and of holding company Fertifos...
...Vale added that it had also taken out an option to pay $50m for Mosaic's fertilizer production and bagging business Cubatao, in south eastern Brazil, taking to more than $1.7bn the bill for other phosphate assets on its shopping list...
...The sale opened the door for a special dividend from Mosaic later in the year, Sterne Agee added, estimating the group's after-tax proceeds from the disposals at $800m.
Into China CTC
Last month I posted I was moving money into a few more REITs they were FCH up 43%, MPG 33.67% and NCT 18.52% for the month. Understanding Bill is indicating China as a play I have been researching China real estate problems. I did not want REITs as banking has firmed up requirements on loans and prices are being questioned now. I did like that Century 21 went public in China. My thought are that which ever way the market goes a sell is a sell, Therefor the market movers should do well. GS indicated to Century 21 that with a weak market the target price of $10.00 might not be achievable it was reduced to $7.00 and the IPO was held in Jan 2010.
12,487,500 shares @ $7.00, low end of the $7.00 - 8.00 range. Managers: Goldman, Sachs & Co., Morgan Stanley
It has held up at $7 support well until 4/13 when it started to trend down it looked to find support at $5 on 4/25 and has been moving back up over the last four sessions. I purchased it at the bell this morning CTC for $5.7899 and today it closed up 25 cents or 4.37%. One of the charting pages said:
Bullish Unique Three River Bottom candlestick
formation on 27-Apr-10, STRENGTH= 177.2.
It just looked to me to be trending back up and I believe over time should hit the original mark when the markets turn around for housing and there are a lot of spaces built there now.
Happy hunting all.
Shanghai Composite
9:27:40 PM
(CH) According to early indications the Shanghai Composite is seen opening down by more than 1.5%, following the move by China to raise the reserve ratio requirement
- The early losses are being led by banks and property developers
Add:
9:32:25 PM
(CH) Shanghai Composite opens down 2.1% at 2,811 - lowest level since late Sept 2009
Greenspan the Deceiver
http://ronsen.blogspot.com/2010/05/greenspan-decei...
Re: Greenspan the Deceiver
Ron,
may I offer you one more by him:
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said”
Ain't it a beaut
Re: Shanghai Composite
Vad - Looks like it was bought at the open and will most likely close green. Seller fatigue or whatever it may be, I think it might be time to start dipping toes in China...probably through EEM?
Re: Shanghai Composite
Or FXI... I haven't really looked at those charts yet, not sure. Maybe better wait till after this:
(CH) Beijing daily average of home sale agreements fell to 221 on May 1st and - an 82% decline from April average - China Securities Journal
- Note: Softer activity attributed in part to China's Labor Day, running from May 1st to 3rd
... and see how it acts after may 3rd? Don't know how significant it is, never looked closely in that market.
Re: reply to baz22/MOS
Thank you, Sedona... The absolutely outrageous capital expenditure required to develop new mines has had this one in the crosshairs for awhile..... Would not be suprised to wake up one morning and see that BHP has jumped... Lot of $$ and ego's at stake with Vale & Billiton...
P.S. .... Loved that explosion
in MMR today... Wow !
Had to take a go
at the ' fear trade ' today... There are too many nutcases out and about.. 'rae' is a rollercoaster ride, if so inclined... although, actually, they have some interesting stuff going on ) ....
Re: Shanghai Composite
Yeah, it's probably good to wait and see. I'm taking the same approach with our markets before getting aggressively bearish. I've seen enough distribution days in the past couple of weeks to take caution and move to the sidelines. I'm not as short term of a trader as you so I don't have the mentality of moving in/out as quickly.
Re: Shanghai Composite
My, probably misinformed, take is that the Shanghai Is at BEST dead money. A 40% haircut would not supprise me but 25% is probably baked in the cake at some time from here to 9 months hence.
I'm a China lover and truely believe that the Yuan is a tripple over the next 20 years. I owned Fuji Photo in 1969 when it was 85 cents and the Yen was 360 to the dollar. Similar opportunities are available in China but for me, it's a timing thingy.
Fighting central banks is a time honoured way of getting clocked. It just seems that the Chinese banksters are not only jawboning against the evil speculators but they are almost each week throwing tire shredders on the road. I think they will be successful which means that they have at least shredded their mizzen mast, for now. Look at the last 7 months performance.
Whether the fore mast goes next is anyones guess but if you are still a command society, they will command. I actually like these tyrants. They have a clue...
Why Apple does not use FLASH
http://www.apple.com/hotnews/thoughts-on-flash/
Apple has a long relationship with Adobe. In fact, we met Adobe’s founders when they were in their proverbial garage. Apple was their first big customer, adopting their Postscript language for our new Laserwriter printer. Apple invested in Adobe and owned around 20% of the company for many years. The two companies worked closely together to pioneer desktop publishing and there were many good times. Since that golden era, the companies have grown apart. Apple went through its near death experience, and Adobe was drawn to the corporate market with their Acrobat products. Today the two companies still work together to serve their joint creative customers – Mac users buy around half of Adobe’s Creative Suite products – but beyond that there are few joint interests.
I wanted to jot down some of our thoughts on Adobe’s Flash products so that customers and critics may better understand why we do not allow Flash on iPhones, iPods and iPads. Adobe has characterized our decision as being primarily business driven – they say we want to protect our App Store – but in reality it is based on technology issues. Adobe claims that we are a closed system, and that Flash is open, but in fact the opposite is true. Let me explain.
First, there’s “Open”.
Adobe’s Flash products are 100% proprietary. They are only available from Adobe, and Adobe has sole authority as to their future enhancement, pricing, etc. While Adobe’s Flash products are widely available, this does not mean they are open, since they are controlled entirely by Adobe and available only from Adobe. By almost any definition, Flash is a closed system.
Apple has many proprietary products too. Though the operating system for the iPhone, iPod and iPad is proprietary, we strongly believe that all standards pertaining to the web should be open. Rather than use Flash, Apple has adopted HTML5, CSS and JavaScript – all open standards. Apple’s mobile devices all ship with high performance, low power implementations of these open standards. HTML5, the new web standard that has been adopted by Apple, Google and many others, lets web developers create advanced graphics, typography, animations and transitions without relying on third party browser plug-ins (like Flash). HTML5 is completely open and controlled by a standards committee, of which Apple is a member.
Apple even creates open standards for the web. For example, Apple began with a small open source project and created WebKit, a complete open-source HTML5 rendering engine that is the heart of the Safari web browser used in all our products. WebKit has been widely adopted. Google uses it for Android’s browser, Palm uses it, Nokia uses it, and RIM (Blackberry) has announced they will use it too. Almost every smartphone web browser other than Microsoft’s uses WebKit. By making its WebKit technology open, Apple has set the standard for mobile web browsers.
Second, there’s the “full web”.
Adobe has repeatedly said that Apple mobile devices cannot access “the full web” because 75% of video on the web is in Flash. What they don’t say is that almost all this video is also available in a more modern format, H.264, and viewable on iPhones, iPods and iPads. YouTube, with an estimated 40% of the web’s video, shines in an app bundled on all Apple mobile devices, with the iPad offering perhaps the best YouTube discovery and viewing experience ever. Add to this video from Vimeo, Netflix, Facebook, ABC, CBS, CNN, MSNBC, Fox News, ESPN, NPR, Time, The New York Times, The Wall Street Journal, Sports Illustrated, People, National Geographic, and many, many others. iPhone, iPod and iPad users aren’t missing much video.
Another Adobe claim is that Apple devices cannot play Flash games. This is true. Fortunately, there are over 50,000 games and entertainment titles on the App Store, and many of them are free. There are more games and entertainment titles available for iPhone, iPod and iPad than for any other platform in the world.
Third, there’s reliability, security and performance.
Symantec recently highlighted Flash for having one of the worst security records in 2009. We also know first hand that Flash is the number one reason Macs crash. We have been working with Adobe to fix these problems, but they have persisted for several years now. We don’t want to reduce the reliability and security of our iPhones, iPods and iPads by adding Flash.
In addition, Flash has not performed well on mobile devices. We have routinely asked Adobe to show us Flash performing well on a mobile device, any mobile device, for a few years now. We have never seen it. Adobe publicly said that Flash would ship on a smartphone in early 2009, then the second half of 2009, then the first half of 2010, and now they say the second half of 2010. We think it will eventually ship, but we’re glad we didn’t hold our breath. Who knows how it will perform?
Fourth, there’s battery life.
To achieve long battery life when playing video, mobile devices must decode the video in hardware; decoding it in software uses too much power. Many of the chips used in modern mobile devices contain a decoder called H.264 – an industry standard that is used in every Blu-ray DVD player and has been adopted by Apple, Google (YouTube), Vimeo, Netflix and many other companies.
Although Flash has recently added support for H.264, the video on almost all Flash websites currently requires an older generation decoder that is not implemented in mobile chips and must be run in software. The difference is striking: on an iPhone, for example, H.264 videos play for up to 10 hours, while videos decoded in software play for less than 5 hours before the battery is fully drained.
When websites re-encode their videos using H.264, they can offer them without using Flash at all. They play perfectly in browsers like Apple’s Safari and Google’s Chrome without any plugins whatsoever, and look great on iPhones, iPods and iPads.
Fifth, there’s Touch.
Flash was designed for PCs using mice, not for touch screens using fingers. For example, many Flash websites rely on “rollovers”, which pop up menus or other elements when the mouse arrow hovers over a specific spot. Apple’s revolutionary multi-touch interface doesn’t use a mouse, and there is no concept of a rollover. Most Flash websites will need to be rewritten to support touch-based devices. If developers need to rewrite their Flash websites, why not use modern technologies like HTML5, CSS and JavaScript?
Even if iPhones, iPods and iPads ran Flash, it would not solve the problem that most Flash websites need to be rewritten to support touch-based devices.
Sixth, the most important reason.
Besides the fact that Flash is closed and proprietary, has major technical drawbacks, and doesn’t support touch based devices, there is an even more important reason we do not allow Flash on iPhones, iPods and iPads. We have discussed the downsides of using Flash to play video and interactive content from websites, but Adobe also wants developers to adopt Flash to create apps that run on our mobile devices.
We know from painful experience that letting a third party layer of software come between the platform and the developer ultimately results in sub-standard apps and hinders the enhancement and progress of the platform. If developers grow dependent on third party development libraries and tools, they can only take advantage of platform enhancements if and when the third party chooses to adopt the new features. We cannot be at the mercy of a third party deciding if and when they will make our enhancements available to our developers.
This becomes even worse if the third party is supplying a cross platform development tool. The third party may not adopt enhancements from one platform unless they are available on all of their supported platforms. Hence developers only have access to the lowest common denominator set of features. Again, we cannot accept an outcome where developers are blocked from using our innovations and enhancements because they are not available on our competitor’s platforms.
Flash is a cross platform development tool. It is not Adobe’s goal to help developers write the best iPhone, iPod and iPad apps. It is their goal to help developers write cross platform apps. And Adobe has been painfully slow to adopt enhancements to Apple’s platforms. For example, although Mac OS X has been shipping for almost 10 years now, Adobe just adopted it fully (Cocoa) two weeks ago when they shipped CS5. Adobe was the last major third party developer to fully adopt Mac OS X.
Our motivation is simple – we want to provide the most advanced and innovative platform to our developers, and we want them to stand directly on the shoulders of this platform and create the best apps the world has ever seen. We want to continually enhance the platform so developers can create even more amazing, powerful, fun and useful applications. Everyone wins – we sell more devices because we have the best apps, developers reach a wider and wider audience and customer base, and users are continually delighted by the best and broadest selection of apps on any platform.
Conclusions.
Flash was created during the PC era – for PCs and mice. Flash is a successful business for Adobe, and we can understand why they want to push it beyond PCs. But the mobile era is about low power devices, touch interfaces and open web standards – all areas where Flash falls short.
The avalanche of media outlets offering their content for Apple’s mobile devices demonstrates that Flash is no longer necessary to watch video or consume any kind of web content. And the 200,000 apps on Apple’s App Store proves that Flash isn’t necessary for tens of thousands of developers to create graphically rich applications, including games.
New open standards created in the mobile era, such as HTML5, will win on mobile devices (and PCs too). Perhaps Adobe should focus more on creating great HTML5 tools for the future, and less on criticizing Apple for leaving the past behind.
Steve Jobs
April, 2010
spookey site with your stats: www.spokeo.com
I cruised a super white pages site called Spokeo and they listed 89 persons by my name in the USA. Pretty impressive. The thing is: they had MY PHOTO on all 89 of these birds and my old Atlanta address even had a VIDEO of my street address showing my house. No kidding. They list such things as names of residents at your home address and astrological signs, ages, socio-economics of the neighborhood, education and any stats yo happen to have listed on your Facebook page like religious or political beliefs. So if you wondered what all the fuss is about Facebook suddenly sharing your info this is one example.
This invasion of privacy is scary. YOU CAN delist your listing on http://www.spokeo.com by searching the URL's and sending a link to the page you want them to delist. You have to respond to the email confirming your request. However, so far I have been unable to get them to stop using my copyrighted photo on their site beside the names of my 88 counterparts by the same name.
Shades of Logan's Run: http://www.youtube.com/watch?v=q0Amt30_QVQ
Wan to hear something really scary? A woman in Chicago by my same name is a financial planner who declares gold is not a hedge and quotes Warren Buffett on gold: "Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
Re: Why Apple does not use FLASH
jeez seek, just give me the link next time. I had to turn the wheel of my mouse 3 times to scroll past your post. Go easy on my finger :)
Some clarity to the Goldman criminal fraud allegations
Jesse quotes a Taibbi article that clarifies what was fraudulent about one of GS's deals.
http://jessescrossroadscafe.blogspot.com/2010/05/s...
The full Rolling Stones article:
http://tinyurl.com/GSisgoingdown
As Jesse remarks, Buffet's recent defence of GS suggests every man has his price. The world shall know if Buffet is caught swimming naked as the tide goes out.
good work
thanks for the blog!!.it helps me to my essays
I guess this is a currency story
http://bit.ly/azcHVR