Today we are seeing some weakness in Europe and in the US futures markets primarily as due to profit taking. Overnight in Asia however markets were higher primarily on news that the Indian government had cut the benchmark lending rate to 7.75% from 8.00%. Indices were higher by about a point across the board on further increased liquidity to the region.
Europe is off about a quarter point even with news that Italy’s borrowing costs have fallen to new three year lows at the latest auction yesterday.
In the US futures are down about a quarter point currently.
The Case Shiller Housing Index was released for November and once again year over year the index has advanced, this time by 5.52% vs. estimates of 5.55%. While the number was slightly under estimates it virtually hit the mark and also rose for the 11th straight month. The housing recovery in the US continues to plod along and provide positive confidence numbers.
Earnings on mandate positions were released this morning on CP, Pfizer and Metro. CP came in adjusted at estimates or $1.28 per share. The company exceeded revenue forecasts and the all important Operating Ration fell to 74.8 from 78.5 (lower is better in the rails). The company also guided to a very strong second half of 2013 with record revenues and earnings. Pfizer, came in at $0.47 per share vs. $0.44 estimated. The company also beat on the top line. They did however caution on the balance of 2013 with lower guidance. Metro, the big Canadian food chain had not released earnings as of yet today but did increase its dividend this morning by 16%. The estimates on earnings are at $1.15 per share.
Both gold and oil are higher this morning rebounding against the profit taking on the Euro and North American markets.
Moody’s yesterday downgraded all of the big Canadian banks except the Royal (which was downgraded in June) citing concerns in the housing sector and the increasing consumer debt load that Canadians continue to pile on. Canadian consumer debt as a percentage of household income hit the record 165% level in Q3 of last year and while the Q4 numbers have not been released as of yet estimates would suggest it will still be hovering around levels that the US consumer was dealing with back in 2008 just prior to the crisis down there. I continue to reiterate to all if you can reduce debt do it, regardless of how low interest rates are as they will not stay at these levels for ever.
In Canada, Consumer Confidence was up 5.1% in December which despite the debt concerns shows that Canadians, much like our friends to the south, are continuing to see positive economic signs.
Kenneth A. Dick, BA, CIM, CFP, FCSI