Three Charts

Apple takes commanding lead over Exxon

The Globe and Mail

Apple

CHART 1: Apple’s commanding lead

Apple Inc. has held the title of the world’s biggest company by market value since January, and as Bespoke Investment Group LLC points out, the maker of smartphones and computers is widening its lead.

Apple grabbed the No. 1 spot from Exxon Mobil Corp. for the first time in August. The two crisscrossed for a few months, and then after Apple reported earnings in January, the company started leaving the oil producer in the dust.

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This year alone, Apple’s shares have soared 48 per cent, bringing its market capitalization to $559-billion (U.S.). Exxon’s 2.3 per cent gain year-to-date values the company at a puny $408.8-billion.



“Apple’s market cap has gone parabolic over the past few years, and it has really widened the gap on Exxon over the past few months,” Harrison, New York-based Bespoke said on its website last week.

Even so, Apple is still a pipsqueak compared with PetroChina Co.’s brief foray above $1-trillion in market cap on its first trading day in Shanghai in November, 2007.

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CHART 2: Rational exuberance?

What a difference half a generation makes.

In December, 1996, when the Nasdaq composite index was less than a third of the way to its peak, Federal Reserve chairman Alan Greenspan asked “how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions.”

The question was seen as a warning that the sky-high stock valuations of technology companies were at risk of collapse. But the Nasdaq would reach its pinnacle only in March, 2000, before losing almost three-quarters of its value over the next 18 months.



Seen from today, things don’t look so bad. The Nasdaq has risen almost 6 per cent per year on average since Mr. Greenspan’s comment, notes Douglas Porter, an economist in Toronto at BMO Nesbitt Burns. This year alone it’s up nearly 20 per cent.

“Of all the equity markets parading higher in 2012, few can hold a candle to the Nasdaq,” Mr. Porter said in a recent report. “Note that the index has more than doubled since Alan Greenspan first uttered the phrase ‘irrational exuberance’ in December, 1996.”

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CHART 3: Smart money bets against loonie

Currency futures traders overall are betting the Canadian dollar will rise, but there’s also a lot of smart money positioning for a fall.

Weekly data from the U.S. Commodity Futures Trading Commission show that total futures contracts on the dollar - which include those held by corporations looking to hedge against currency swings - are net long. Being long means they stand to profit if the currency strengthens.

But it’s a more bearish picture when looking at the speculators, notes a report by Bank of Nova Scotia. According to the CFTC’s weekly report of March 20, asset managers and leveraged funds were net short, meaning they’re putting their money on a depreciation.



“Generally, sentiment toward the Canadian dollar is positive,” Camilla Sutton, chief currency strategist at Scotiabank, said in an interview. “What’s interesting is that even though Canada is held net long at that absolute level, both asset managers and leveraged investors are still net short. And they are typically the more savvy of the groups.”

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