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Scott Barlow

Globe and Mail Update

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

The iPhone has driven Apple Inc.'s market cap to the stratosphere and today the company will announce its new version, and possibly more products. There are numerous stocks in Apple's supply chain that are likely to be affected including Lumentum Holdings, Finisar, and Imagination Technologies,

"Seven stocks to watch during the iPhone launch" – Report on Business
"Morgan Stanley Goes Ballistic On Apple (AAPL) Ahead Of iPhone Release, Raises Bull Case PT To $253" – Street Insider
"What to Expect at Apple's Biggest Event in Years" – Bloomberg

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Apple is among the underweighted stock in fund portfolios, according to UBS. This does not represent a lack of popularity as much as managers not wanting to let Apple dominate their funds to the extent it drives index performance in market cap weighted indices.

Exxon Mobil, Johnson & Johnson , Protor and Gamble, Toyota Motor and General Electric are also under-owned according to the analysis. The most over-owned stocks in professional portfolios are Aflac Inc., Alibaba Group Holding, Microsoft and Visa.

"@SBarlow_ROB UBS: Most overweight and underweight equities" – (research excerpt) Twitter

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Lithium prices continue to go vertical in anticipation of battery demand for electric vehicles. The rally is tradeable – the price is likely going much higher – but I don't think its suitable for longer term, 'buy and hold' investors. It reminds me of the tech bubble and to a lesser extent the recent rush to buy marijuana stocks – investor assets pour in too quickly and this creates asset bubbles that implode before actual demand and corporate revenue skyrockets. Technology did expand into all facets of our lives but investors got hurt badly in the process.

"ETF Buyers Snap Up Lithium as China Fuels Electric-Car Race" – Bloomberg
"@ReformedBroker Lithium stocks all going vertical today." – Twitter (chart)

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Also in electric vehicle news, Bloomberg's Gadfly site through some cold water on the optimism,

"With enough money, smart engineering and focused government support, abandoning the internal combustion engine will happen. But it might take a generation or two -- and a lot can change between now and then. Which is partly why BYD has dramatically underperformed Hong Kong's Hang Seng Index over the last 12 months, even with the latest gain."

"Celebrate Electric Vehicles, Soberly" – Gadfly
"Shell Retail Looks to the Future With Car Charging, Clean Fuels" – Bloomberg
"Carmakers face electric reality as combustion engine outlook dims" – Reuters

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Watching the news it's easy to believe the world's ending but the underpinnings for a global market rally are actually more solid than they've been in years,

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"'The China reflation 2.0 story remains alive and may become a more dominant factor as the storms pass and North Korean tensions (hopefully) ease,' notes Ben Emons, chief economist at Intellectus Partners LLC. It's already sent emerging-market currencies and commodity prices rallying over the past month, and commodity demand from China will likely spur producer-price gains in developed markets, Emons said. .. 'The renewed strength in commodities is reinforcing the case for healthy third-quarter results,' [JP Morgan] strategists led by Mislav Matejka wrote in a note. The bulk of bullish earning projections for the second-half of the year come from the energy and materials sector, they said."

"Three Reasons the Global Rally Can Keep Going" – Bloomberg

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Tweet of the Day: "@macleans "We didn't have a multi-billion dollar moonshine business to face when the LCBO was created." ow.ly/HXmY30f4Ioq " – Twitter

Diversion: "What if there isn't a "global financial cycle" after all?" – FT Alphaville

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