The volatility show continues however, yesterday we did see some buying (investors) coming into the game in the defensive sectors that have been grossly oversold over the past month causing markets to finish off the lows of the days and many of the “bond surrogate” stocks actually finish higher.
Overnight in China, the PBOC reiterated that they have and will continue to provide liquidity to banks that require funding to maintain reserves. That news caused a massive reversal in the capital markets causing the Shanghai index to finish down about three quarters of a point.
Europe on the other hand has rallied at midday up about 1.50% on the positive news out of China and from the ECB suggesting the exit from stimulative monetary policy in the region is a long way away.
In the US, Durable Goods Orders were released and were north of estimates both on a gross basis and stripping out transports. Also, the Case Shiller Home Index was stronger once again month over month and year over year ahead of estimates. Of course with these crazy markets does good news economically mean higher markets? It should, but of course it also means less liquidity (in the future) as the Fed reduces the stimulus. The bottom line, and the markets have it right this morning, is as the economy improves so should markets and futures are higher this morning by about three quarters of a point.
Canadian futures are also higher by about the same amount.
Bond markets are higher on bargain hunting and to make things even more confusing so are the commodities. Gold is up 4 bucks to 1280, oil is up 40 cents to 95.59 and the loonie is up slightly to 95.28.
Bottom line folks, don’t get caught up in the daily noise. Portfolios are in great shape as the recovery continues and other than allocation model balancing and some sector rotation the strategy continues.
|Kenneth A. Dick, BA, CIM, CFP, FCSI
Branch Manager & Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth Management