Apple Tops Earnings - Government Cuts

apple earningsMarkets slightly rebounded on Monday after the devastating two days of 200+ points of down trading to close out last week. I was surprised to see only a 23 point gain for the Dow today, as I thought the market might rebound a bit more given the two big consecutive down days. However, it is clear that investors are not excited about buying at current market levels.

Apple once again had a solid report of earnings (as they always do). Apple was one company that I mentioned last year, in which I felt that would be able to weather this recession very well and may actually come out of it stronger and they have done just that. The popularity of the Iphone continues to spread like a wildfire. I am always amazed when I attend large business conferences and see at least 80% of the people sporting the Iphone. Two years ago, AT&T probably only owned about 15% of their business. AT&T really does owe Apple a big one (I know they're paying for it). The huge increase in Iphone sales muffled the small decline in Ipod sales. It has already been announced of Apple's new release of a new media device. This acts as perfect timing for Apple, as it seems the Ipods are starting to lose their flare. As long as Jobs is still at the head of that company, I see nothing but good days for them.

President Obama announced his plan to seek a 3-year spending freeze beginning in 2011, as he has set new records for the national deficit. In addition to the spending freeze, he is also looking to tax increases to also help pay off the debt. With this plan, he is angering both parties and will most likely find little support for his plan. I agree that indeed government spending should be severely re-evaluated and re-allocated to areas that will directly assist the consumer. However, to also raise taxes at this point in the recession is, in my mind, a big mistake. Consumers need to become confident in the economy and their own reserves until they start spending again. An increase in taxes will only take a big bite in what little is available to spread throughout the economy. Also, consumer spending, usually directly effects the economy. Government spending is much less effective. President Obama should go back to the drawing board and find other ways of paying back the debt. There is a lot of real estate available to invest in!

At this point, I believe the market is building momentum downward. Thus far, 2010's economic performance has been quite dismal and has disappointed several economists hoping that we would begin to see much bigger seeds of recovery. Like I've always said, this will be a very long road home. Happy Trading.



    The price of apple stock has gone though the roof over the last ten years.

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