For the week ending November 20, 2015

US markets led equities markets higher last week with the S&P 500 index up 3.27 per cent versus the S&P Global 1200, which was up 2.82 per cent — this despite terrorist attacks in Beirut, Paris and Mali.

US indicators announced during the week were mixed although jobless claims had improved some 8 per cent from a year ago. As the US economy is showing greater signs of recovery than the rest of the world, our equities portfolios are overweight US stocks compared to the global stock indices.

The US dollar appreciated against the euro and the yen during the week due to the stronger US economy and the expectation that the Federal Reserve will be the first central bank to raise interest rates.

The odds are currently 65 per cent that a quarter-point hike will be announced in December. We expect an eighth of a point hike in December as we don’t believe the economic indicators are showing a consistent enough trend to support a quarter-point hike. Additionally none of the major central banks are hitting their 2 per cent inflation targets yet.

Goldman Sachs came out with a report on Apple that we endorse: Apple is valued as a hardware company rather than a service company. A hardware company is only as good as its most recent sales of hardware; however Apple has created a service environment where music, movies, television, telecommunication and health monitors may be accessed and combined in an ever-increasing, all-encompassing cocoon.

This cocoon generates recurring revenues which could reach $153 per month per user from a level of $42 per month currently.

On this basis, the valuation of Apple is far too cheap and Goldman is calling for a target price of $163 per share in the next 12 months compared to a closing price last Friday of $119.30.

Another favoured stock of ours is Nike. It rose 8.85 per cent last week on the back of an announcement from its board that it would increase stock buy-backs from $8 billion to $12 billion or 10.7 per cent of the company’s market capitalisation.

In addition to the buy-backs, the stock will be split two for one on December 23 making the stock price more accessible to the average investor.

Although the dividend yield is low at 0.97 per cent, the board has agreed to raise it from 28 cents a share to 32 cents a share. This sort of distribution back to the shareholders is a positive indicator for stock markets generally.

Robert Pires is the chief executive officer of Bermuda Investment Advisory Services Ltd.