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Okay, I couldn’t resist writing a comment on the Apple earnings from last night.  After a significant sell-off in the stock over the last two weeks (over 13%) caused by concerns of an earnings miss due to slowing iPhone sales, Apple once again “blew away” the estimates.  Revenues in the quarter were $39.2 billion compared to estimates of $36.8 billion and earnings per share were $12.30 compared to estimates of $10.04.  The company generated cash of $14.0 billion for the quarter, bringing total cash to $110 billion or $118 per share. The analysts were correct in that iPhone sales did slow in the US during the quarter but they exploded in China leading to revenues of $7.9 billion there during the quarter.  These revenues are three times greater than China’s revenues in the year ago quarter and that is without “new iPad” sales in the quarter and without China’s largest wireless...

It has been a while since I have sent out a Hays Advisory commentary but given my recent two-week trip to Argentina and the title of yesterday’s issue, “It Takes Two to Tango in This Stock Market Dance”, I couldn’t resist sending it out.  This link will take you to the Don Hays Blog which summarizes his commentaries. For the recent subscribers to The Lato Letter, Don Hays is a market strategist from Nashville, Tennessee that I have followed for over 15 years. Like all strategists and market prognosticators, Hays has been right many times but also wrong many times, but I do find his approach logical and rational and consistent with my approach to the market. He currently remains positive for the medium to longer term but expects some turbulence in the markets over the next few weeks as we digest the strong start to the year. Speaking of my trip...

Equity markets have been a little sloppier this week as investors digest the significant upward move so far this year.  Some near-term turbulence would not be a surprise but I remain constructive for equity markets for the balance of the year. Laszlo Birinyi is a market strategist and money manager who has always made a lot of sense to me.  This link is to an interview he conducted with CNN Money a couple of weeks ago.  It is definitely worth a read. I will be leaving tonight on a two-week trip to Chile and Argentina and although I expect to have internet and email access while I am away, I can’t promise that I will send out a Lato Letter.  I will be back in the office on April 9th and will be working toward the first “quarterly” version of The Lato Letter. Talk to you soon. To receive The Lato Letter by email...

Markets have been very strong since the last Lato Letter on generally more favourable economic statistics out of the US, and a fairly clean bill of health for US financial institutions following the release of the Federal Reserve’s stress tests earlier this week.  In conjunction with rising stock prices, we have also seen rising bond yields (and falling bond prices) over the last week. [caption id="attachment_16453" align="alignnone" width="470"] Chart courtesy of Bespoke Investment Group/Raymond James & Associates[/caption] Generally, low interest rates are better for stocks than high interest rates but that is a very broad statement that often has exceptions, particularly over short to medium term periods.  The rise in long bond yields could be signaling a further strengthening in the US economy as yield spreads between short term rates (Treasury bills) and bond yields have begun to widen.  Rates remain at generational lows and so the initial increases in yields from...

You certainly cannot pick up a newspaper or magazine or watch any business channel without being inundated with stories about Apple and the news surrounding its product announcement yesterday.  Normally when an investing subject dominates the press, it is a sign that the prevailing trend, whether positive or negative, is about to reverse. At the sake of using an investment cliché that has buried many who have uttered it in the past, I will say “it is different this time”.  Apple has been a savior to clients’ portfolios over the last six years having increased almost nine-fold since its initial purchase for clients in mid-2006.  The position has been trimmed several times since then (including earlier this week) but it remains the single largest holding in clients’ portfolios.  I continue to feel that the list of reasons of why “it is different this time” is long and powerful. This list of reasons...

North American equity markets have been very strong since the beginning of the year with the S&P 500 up 8.6% and the S&P/TSX up 5.8% to the end of February.  With the Greek situation still not resolved and potentially causing further European troubles, Middle Eastern tensions rising again in Syria and Iran and the US political situation creating more questions than answers, you might be asking what has changed to propel the markets to their highest levels prior to the 2008 financial crisis? Part of the answer lies in a steadily improving North American economic recovery.   The charts below, which are courtesy of Hays Advisory Inc., depict three important areas of improvement in the US economy.   The first chart shows the recently improved outlook for the US manufacturing sector as measured by the ISM Purchasing Managers’ Index and the Fed Manufacturing Surveys. The next chart (just below) shows the continued...

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