• Slow and steady wins the investment race.

I think we can all learn from the patience of investing in Oaktree (OAK).

It made a yearly high yesterday. 

• Dr. Doom not so gloomy?

Roubini on Bloomberg sees a cliff fall leading to a compromise. 

• What's doing the rounds.

1. Several more negative sell side calls on weak supply chain checks (Apple (AAPL), Jabil (JBL) etc). See comments from DB Asia/Japan.
2. AAPL iPhone 5 launch in China uneventful with lines small: WSJ.
3. Hon-Hai -5% (Largan limit down & LPL hit yesterday) on AAPL iPhone 5 demand concerns.
4. Several more articles out overnight about NAND/DRAM pricing continuing to rip higher.
5. Apple's Decision To Make The New iMacs Super Thin Was A Mistake.

• Disappointing, but not too bad.

While today's action in the bond market (relative to my being short) is disappointing, the yield is still at 1.70% and remains slightly above the 1.67% support.

• Coals, especially Walter Energy (WLT), continue to rally.

And CSX (CSX) finally has a pulse.

• ISI has its doubts.

The well-thought-of ISI Group is now saying that the U.S. will go over the fiscal cliff, as there will be no deal by year end.

My baseline expectation is that a shoddy deal will be put together. 

We will see.

• No rush to buy now.

The basic thrust of my missives in my Diary since the election is that the economic, fiscal, political and geopolitical cliff fears are overblown.

What is not overblown is the earnings cliff.

And the action of Apple's (AAPL) shares over the last 2-1/2 months is symptomatic of my 2013 fear that consensus top down ($107) and bottom up ($113) profits for the S&P next year are simply pie in the sky. 

A sub-$100 2013 S&P forecast is where I live.

And 14x seems a reasonable valuation under the umbrella cyclical and secular challenges.

It is hard to see, with profits and margins near cyclical peaks, valuations expand in a subpar-profit backdrop.

This is true even if a half-assed fiscal cliff compromise is reached in the next week.

There is no rush to go out and buy at this point.

• It's about fundamental expectations.

As I mentioned on "Fast Money" recently it continues to be my contention that the reason Apple's (AAPL) shares have materially underperformed is based on changing fundamental expectations (lower).

From my perch it has little to do with the expectations of rising capital gain taxes. Maybe nothing to do with this.

• Macro overnight was positive.

The euro areas December composite oro manufacturing/ non-manufacturing activity was well above exptcations at 47.3 vs. consensus of 46.9 and Nov. 46.5.

Most of the improvement was in the service sector, though manufacturing lifted a bit.

Dember's strength follows an increase in November, signalling the stability I have been emphasizing in the EU.

Of course markets lead fundamentals. Witness the near-30%+ in the DAX year to date!

Over in China, its market is +4% (breakout?) based on a slightly better manufactuing index print. (A hat tip to Stephanie "The Missing" LInk for causing/forcing me to focus on Chinese market about a month ago! Thanks!)

• I expect Apple's (AAPL) shares to continue to weaken today as UBS has lowered its price target to $700 from $780.

The brokerage reduces its fiscal year 2013 estimate by 10% to $47 a share. While it leaves December iPad and iPhone numbers in place, it lowers March, June and September numbers by 5 million iPhones and 2 million iPads each.

• Here is today's economic calendar with consensus expectations for the data.

Economic Calendar

Source: Bloomberg

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