This is a post from Mike Schuster at Minyanville.

This Apple (Nasdaq: AAPL) conference was truly like no other.

Never before has this large of a cat been let out of this voluminous of a bag. How could Steve Jobs — a man of shrouded devices and riotous unveilings — entice a crowd with a device that millions have pored through weeks in advance?

Keep in mind, these are Apple fans. It’s not that difficult.

Today in San Francisco’s Moscone Center, Jobs performed to a crowd that was uncharacteristically a few steps ahead of the Apple chief himself. But as always, he had a few tricks up his turtleneck sleeve.

And at least one he didn’t plan for.

The conference began as expected — with pleasantries about the iPad. Two million sold, translating to one every three seconds, and 8,500 native iPad apps currently in the App Store. News footage accompanied by a testimonial sent to Steve via email:

“I was sitting in a café with my iPad, and it got a girl interested in me. Now that’s what I call a magical device!”

“So there’s proof,” Jobs said to huge cheers. Presumably, no one in the crowd thought of the Porsche driver who will sway this material girl’s opinion a week from now.

And you may be wondering how long it took for a direct slam against Google (Nasdaq: GOOG). About eight minutes.

After demonstrating an app called The Elements, Jobs displayed a pull quote from one of its developers, Theo Gray at Wolfram Associates. “I earned more on sales of The Elements on the iPad in the first day than from the past 5 years of Google ads on periodictable.com.”

Next, Jobs addressed some concerns over the App Store approval process. He explained that some apps aren’t met with approval because of three main reasons: the app doesn’t function as advertised by the developer, use of private APIs, or the app crashes. Nonetheless, Jobs said that out of the 15,000 apps that are submitted to Apple each week, 95% are approved within seven days.

Still, it’s hard to cheer up app developers who have an affinity for Adobe Flash (Nasdaq: ADBE).

As time ticked by, Jobs continued to build suspense for the main event.

He brought out Netflix (Nasdaq: NFLX) Chief Reed Hastings to demo the Netflix app debuting this summer on the iPhone. Off the success of the version for the iPad, the Netflix app allows users to control their queue, stream video, and pick up where they left off on other Netflix-compatible devices.

Available on both Wi-Fi and 3G networks, this will certainly wreak havoc on AT&T’s (NYSE: T) new data limits.

Two game developers took the stage to showcase their new games. Zynga’s Mark Pincus showed off his FarmVille app — able to sync up with Facebook — and Activision’s (Nasdaq: ATVI) Senior Vice President Karthik Bala played a little air guitar while demoing the upcoming version of Guitar Hero for Apple mobile devices.

At that point, Jobs was ready to talk turkey about smartphone market share. Google enjoyed a nice press bump after a report showed that Android devices outsold iPhones in 2010′s first quarter, but according to Nielsen, the iPhone is still far ahead of Android devices in terms of US market share — wedged between Research in Motion’s (Nasdaq: RIMM) 35% and Windows’ (Nasdaq: MSFT) 19% share with a 28% share.

It was Jobs’ way of leading in to formally introducing the iPhone 4… to people who are already familiar with the device. He even joked, “Some of you have already seen this.”

The iPhone 4 is almost everything we already know about the device. While remotely liveblogging the event, Jason Chen at Gizmodo — not invited to the event for some reason — wrote, “On the front there is a front facing camera, a microSIM tray on the side, camera and LED flash, microphone (and screws!) on the bottom, headset jack, second mic for noise cancellation and a sleep/wake button.”

Summing it up, he wrote, “Exactly the same as we saw,” and reiterated a few minutes later, “By the way, in this semi-downtime, just wanted to mention that all the specs and design things of the iPhone 4 unit we saw matches up exactly to what’s being unveiled now.”

But a few details were new to the crowd.

The device is 24% thinner than the 3GS model; Jobs claimed it’s the “thinnest smartphone on the planet.” The seams along the edge — contradictory to many of Apple’s sleek design choices — act as integrated antennae. The new display contains four times as many pixels within the same amount of space, which influenced the futuristic title “Retina Display.” Jobs demonstrated the increase in sharpness by stating that, at 326 dots per inch, it exceeds the capacity of human vision at a field of 10 to 12 inches.

Not sure it deserves the overly fancy name “Retina Display,” but it will coincide nicely with the new iBooks app on its way to the iPhone.The battery is larger as already noted in the leaked prototype, which equates to 40% more talk time, six hours of 3G browsing, 10 hours of Wi-Fi browsing, 10 hours of video, 40 hours of music, and 300 hours of standby.

With detail after unsurprising detail, Jobs landed the crowd with an unexpected jab. Rather than just keep the old accelerometer in the older models, Apple has added a 3D gyroscope capable of measuring rotation and movement along six axes. Jobs showed off his handheld display of a Jenga tower tilting, rotating, and matching his movements.

Then another surprise. This time, much bigger.

The camera is boosted from three megapixel to five, and with the added flash — or “backside-illuminated sensor,” as Apple has dubbed it — Jobs beamed that it will also record 720p video at 30 frames per second. The flash becomes a camera light, hence its new name. And when Apple engineer Randy Ubillos unveiled the iMovie app for the iPhone and ran through its features on a few video clips, the crowd went nuts.

Easily the showstopper for the day. Except for another. In the middle of the presentation, the unthinkable happened. For Jobs, that is. For every other iPhone user, it’s come as expected.

The network connection failed.

Visibly aggravated, Jobs asked the crowd to get off Wi-Fi for a moment as he tried to load the New York Times website. Frustrated with the blank screen, Jobs asked to his side, “Scott, you have any ideas?” In response, someone in the crowd shouted, “Verizon!”

To Jobs’ benefit, the iPhone 4 doesn’t currently have a wireless blood pressure meter. But he got his revenge — not just to the Verizon (NYSE: VZ) guy, but the whole crowd. After demoing the iMovie app, Jobs put on his schoolmarm hat, turned off the Wi-Fi, and asked everyone to set their laptops on the ground or, otherwise, there won’t be anymore demos.

Whether he asked everyone to spit out their gum has yet to be confirmed.

The iPhone OS has been redubbed iOS 4 and Jobs ran through its aspects people already know. Tethering, multitasking, folders, etc. Mentioning Yahoo (Nasdaq: YHOO) and Bing’s integration as default searches didn’t bring much excitement to the crowd.

But not as much as the lengthy iAd demonstration.

Jobs wowed them at the end with a demonstration of the front-facing camera and the new iPhone video chat capabilities. Giving fellow Apple exec Jonathan “Jony” Ive a quick call, he showed off the long awaited face-to-face conversations in store for future iPhone 4 owners. And in support of AT&T’s hampered 3G network, the feature will be Wi-Fi only.

Surely, Apple isn’t too happy about that limitation.

Prices for the iPhone 4 will run the same as the 3GS: $199 for the 16GB model and $299 for the 32GB model. No 64GB internal capacity. But perhaps in light of AT&T’s unpopular decision to discontinue the unlimited data plan offer, it’s moved upgrade eligibility up six months to accommodate existing customers whose contracts end in 2010. Although it’s good news for customers itching to upgrade, some analysts said it’s merely a ploy to keep customers locked in another two years as Apple weighs its options on Verizon, Sprint (NYSE: S), or T-Mobile (NYSE: DT).

It’s too bad that two iPhone prototypes had to be leaked prior to this conference. Chances are, the new features for Apple’s upcoming smartphone would’ve made much more of a splash.

But there’s also one in white. Not many people saw that coming.

The iPhone 4 goes on sale June 24.

Read more at Minyanville >

Over the weekend a fierce and savage cold front descended on New York City making outdoor excursions fit for neither man nor beast. It was the kind of crippling cold that makes you feel like you’ve just stepped out of the shower no matter how many layers of clothing you pile on. So, I decided to hunker down in the apartment.

By 2 a.m. Saturday, temperatures had dropped so low a piece of metal snapped off a window I was trying to close as if it were made of cheap Mexican plastic. I needed that window closed because with the apartment door open, it was creating a kind of wind tunnel effect through the kitchen, making it impossible to boil anything with the precision I required; a classic catch-22. If I closed the door my boiling would take on a proper rigor, but the deliveries from the pub downstairs would wake everyone up. If I left the door open the deliveries would function smoothly but the boiling would become haphazard and problematic, also waking everyone up. The situation demanded a compromise. So I turned the music up.

That’s how my weekend started, with a hard compromise. Two days later I’m sitting here still combing through the Special Inspector General’s report on the Troubled Asset Relief Program and I see the same game plan at work; when confronted with mutually exclusive and impossible-to-achieve objectives, turn the music up. It’s a type of fuzzy, 2 a.m. logic. It’s Washington logic.

Despite clocking in at 244 pages, the report is fairly breezy reading, but when I first came across it early Saturday I almost never made it to the second page. Something about the report’s cover stopped me cold.

But what? The logo was fairly routine for the government; a scale of weights and a skeleton key underneath some kind of perverted Confederacy stars and bars pattern. I asked the deliveryman from the bar his take on it.

“You see anything wrong with this?” I demanded, waving the cover page around.

“Just some of the glasses keep coming back broken, but — ”

“No, no,” I yelled. “This image. You see anything that looks… weird, out of place?”

He took the page, glanced at it and handed it back with a shrug.

“Two dollar bill,” he said flatly. “Means it’s fake.”

Enraged, I chased him out of the apartment, threading the closing elevator door’s needle with a well-thrown shoe; a small price to pay. He was right but for the wrong reason, and now he’d never know why, because sometimes a random show of force is needed to keep the delivery process on track.

Yes, that was it, alright. The American two-dollar bill, not exactly fake, but goofy, suitable only for birthday cards and broken down horse players. Was this supposed to be somebody’s idea of a sick joke? A 244-page report on a massive $700 billion government relief program illustrated by the corner of a $2 bill?

Perhaps there’s something else going on. On his next trip, my deliveryman apologized profusely for insulting the authenticity of the American $2 bill. “I’m Irish, you know, and we’re deeply suspicious of all forms of currency,” he said.

Briefly, in 2006, near the height of the credit bubble, savvy strip club owners across America began stocking up on two-dollar bills. “Strip clubs hand out $2 bills when they give customers their change, and the bills end up in dancers’ garters and bartenders’ tip jars,” USA Today reported at the time. “The entertainers love it because it doubles their tip money,” Angelina Spencer, a former stripper and executive director of the Association of Club Executives, an adult nightclub trade
group, told the newspaper.

But I digress.

See, I did comb through the report, all 244-pages of it, and there are literally dozens of fascinating paragraphs and charts, all explaining in great detail how the program functions and why, exactly, it doesn’t work; it’s a Calculus of Fools. While the word calculus may also mean a kidney stone or some kind of nasty gall bladder concretion, the word fool is straightforward enough. It’s either a lack of judgment or an outright deception. Take your pick.

From the Executive Summary:

“Despite the fact that the explicit goal of the Capital Purchase Program was to increase financing to US businesses and consumers, lending continues to decrease, month after month, and the TARP program designed specifically to address small-business lending — announced in March 2009 — has still not been implemented by Treasury.”

Of course, one of the main dilemmas here is that no matter how comprehensive it is, the TARP program can do little to end the vicious cycle of credit bubble corrections where lenders, having facilitated the bubble by relaxing lending standards too much, are forced as the bubble unwinds to tighten standards, which has the perverse effect of lowering overall credit quality.

What’s happening is that even as the goal of the CPP is to increase lending, the pool of available borrowers is shrinking, and this shrinkage is occurring from several different trigger points, including natural credit aversion and increased lending standards.

But let’s go back to this Capital Purchase Program for a moment, because the purpose of the program and the mechanics of how it’s working are instructive on a couple of different levels.

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With the holidays upon us, it’s almost impossible not to be reminded of Lloyd Blankfein said he was just a banker doing “God’s work”: Do bankers really do God’s work? Are Goldman’s larger-than-life bonuses ethical? What do religious leaders have to think about Blankfein?

Join Minyanville’s Josh Lipton as he poses these questions and more to three men of the cloth.

Click here or below to watch this excellent video.

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This is a guest post by Kevin Depew at Minyanville.

Fat Cat Bankers, the Pimps of Wall Street . . . The New American Dream . . . Fear & Apathy on Club Rancho Drive . . . We Got the Money, It’s the Wealth That’s Missing . . . Mackin’ Ain’t Easy

“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street.”
– President Barack Obama, 60 Minutes, December 13, 2009

“I ain’t a playin’ the whore to no man,” the preacher Fritz Linkhorn famously declares on page one of Nelson Algren’s novel, A Walk on the Wild Side, even though the question itself hadn’t been posed by anyone. Last night on 60 Minutes President Barack Obama made a similar declaration, though he limited the pimps in the matter to Wall Street fat cats, even though, like Linkhorn, the question hadn’t been posed by anyone.

Nevermind the fact that the Securities & Investment industry collectively paid the president’s 2008 presidential campaign more than $14 million, nearly twice what was paid to Senator John McCain’s campaign, or that Goldman Sachs (GS) singlehandedly contributed nearly $1 million to his campaign, just a shade less than the amount paid to McCain by Goldman, Merrill Lynch (BAC), Citigroup (C), Morgan Stanley (MS) and JP Morgan (JPM) combined.

The message was clear: President Obama ain’t a playin’ the whore to no banker. Not on 60 Minutes anyway.

If the question wasn’t posed in its precise exactitude last night by 60 Minutes’ Steve Kroft, the fact that the president chose to address it at all, even in subtext, is evidence enough of the weird hyperbolic anger chamber in which we find ourselves simmering these days. Mutant investment bank/ holding companies like Goldman Sachs are now more hated by the general public than one-armed auto mechanics and used car salesmen.

Remember when banking used to be considered a profession? Ho ho, it’s a trick question. Banking has never been a “profession,” not any more than online poker can be considered a sport. It’s an activity. Money changes hands. Eventually, after the other players either lose all their money or tire of playing, a winner is declared. Sometimes the stakes are higher than at others. When they creep up to the point where fear grips even the hearts of the innocent & unaffiliated, then it’s time to mash a few fingers, lower the ante, and cap the maximum bets.

Which is what’s happening right now. After the heat dies down, we’ll find plenty of good reasons to up the ante, peel back the bet limits, and gorge ourselves again on risk.

“It’s been a year since the big financial firms blew a hole in the economy and took down the jobs, wages, pensions, and homes of millions of people. They would have gone down too, devoured by their own greed, were it not for the taxpayer bailout.”
– Bill Moyers, Bill Moyers Journal, December 11, 2009

Whether or not you agree with Bill Moyers is relevant only to country club memberships, cocktail parties, and dinner invitations, especially if you agree with him. In other words, if you disagree, so what? You’re probably a fat cat banker anyway and no one cares what you think, at least not in public, because you never know who may be watching.

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This is a guest post by Minyanville Editor-in-Chief Kevin Depew.

1. The Economic Crisis Takes a Virulent Turn

The word credit comes from the Latin “credere” which means “to believe, or to trust.” That’s really all you need to know about the modern financial system. When the “credere” is gone, the whole thing unravels, and it works both ways, from lender to borrower, and from borrower to lender.

Now we’ve arrived at the point where that belief, “credere” — stretched to its limits by policies of endless credit expansion over the past two decades — has been weakened to such an extent that it has developed what may be likened to an autoimmune disorder; a condition where the immune system mistakenly attacks itself, destroying even healthy  tissue in the process.

I was reminded of that comparison this morning when reading the text of Federal Reserve Chairman Ben Bernanke’s economic outlook speech delivered to the Economic Club of New York today. Bernanke didn’t make it through the first sentence without referring to the financial crisis as a virus.

“When I last spoke at the Economic Club of New York a little more than a year ago, the financial crisis had just taken a much more virulent turn,” Bernanke said. The comparison isn’t at all far-fetched, and understanding how a virus operates, and how doctors treat it, is helpful in grasping the nature of our own economic autoimmune disorder.

Under normal circumstances, say, without excessive credit expansion policies, the system’s immunity defenses would attack and destroy toxic substances — such as subprime mortgages — and leave the healthy tissue alone. Unfortunately, an autoimmune disorder often results in the destruction of the body itself (the financial system), or abnormal growth of an organ (government and regulation), and/or changes in an organ’s function (the banking system).

As government bureaucrats trapped within the framework of their fiat currency-based operating systems, central bankers have little choice but to focus on the symptoms our virus presents, a virus that was unleashed on the patient by their own doing, without recourse to either irony or shame. And so they attempt to cure the symptoms of the virus over and over again without recognizing that the cure is worse than the disease itself; it only suppresses the symptoms for a brief time before they return with greater severity.

Bernanke sounds more like a physician than a central banker when he says the following:

The flow of credit remains constrained, economic activity weak, and unemployment much too high. Future setbacks are possible. Nevertheless, I think it is fair to say that policymakers’ forceful actions last fall, and others that followed, were instrumental in bringing our financial system and our economy back from the brink.

After all, he’s talking about a circulatory system — one in which credit functions as the blood flow — where the flow remains restricted, the body weak, fever high. Unfortunately, while the severity of the symptoms has temporarily passed, the virus lingers, building up strength for the next attack. Judging by retail sales, that attack may begin sooner than Bernanke and other optimists think.

2. The Entrails of Retail Sales

Optimists were out in full force after retail sales were reported this morning, citing the fact that headline retail sales rose more than expected in October. Sure, the usual caveats — “mostly  due largely to a big rebound in auto sales” — were present, but the headlines were largely positive … and with the market itself quickly tacking on more than 1.5 %, it was hard not to think maybe they were correct.

The reality, however, is that when you look inside the report, it is clear that broader consumer spending remains under pressure. Excluding auto sales, retail demand rose 0.2%, half of the expected 0.4% rise. The main sticking point, however, is that the government revised the September performance down to show a 2.3% decline, from the 1.5% drop initially reported. Ooops.

The 0.2% increase in retail sales excluding autos was down from a 0.4% rise in September and was the weakest showing since a 0.5% drop in July. Sales also fell 0.8% at furniture stores and 0.6% at electronics and appliance stores, Associated Press reported.

Click here for Page 2 of this article.

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1. The Federal Reserve is Irrelevant… for Now

Well, that was fun wasn’t it? All that waiting and waiting yesterday afternoon, and for what? Just a brief statement churned out from a laser printer, an obligatory nod to “weak economic activity.” But there’s more here than meets the eye, and it’s not about what the Federal Reserve will do, it’s about what they can’t do; namely, stimulate credit expansion.

The key nugget from the Fed statement was this:

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

What that means is the Federal Reserve won’t be tightening interest rates anytime soon, which is fine — we already knew that. But stocks sold off on the news anyway, largely because of this piece of the statement:

To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt.  The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010.

The stock market took a dim view of this, perceiving it to be a back-door attempt at tightening. Which may be true, but as we shall see momentarily, is nonetheless irrelevant.

Meanwhile, the frenzied buying of credit continued unabated, with a little more than $3 billion in new corporate bond issues priced yesterday — on a Fed day no less — and junk-issue spreads actually narrowing in the face of that supply.

Who’s buying all of this new supply of debt? The real question is, who isn’t? Because the sources are almost exactly the same this time as last, credit hedge funds (with a significant amount of credit shorts still being taken in), banks employing the carry trade – the usual suspects, all with leverage.

Wait, as we edge closer to October 2009, isn’t this exactly how we arrived at October 2008? Yes. And so won’t this end just as badly? Yes again. In fact, the same mistakes aren’t even being thinly disguised as new mistakes, they’re simply being repeated as if scripted.

2. It Just Doesn’t Matter

And now back to the Fed’s irrelevance. We’ve run this chart before, the last time was back in 2007.

Here it is updated.

3. DeMark Indicator Update

Just a quick update on where we stand via DeMark indicators for the major indices. On a quarterly and monthly basis, of course, there’s little change. The S&P 500 and Dow Industrials are on bar seven this quarter of a potential buy setup. The Russell 2000 is on bar eight.

Click Here to Read the Remainder of Number 3, Number 4, and Number 5 …