August 29th, 2013 Business and Market Update

A bit of a rally yesterday as many went bargain hunting as the day progressed.  Of course the threat of war in the middle east is hovering over markets and as we go into the long weekend caution will be the word for all.

In Asia overnight, markets rallied on the North American rise by about a point.  Euro markets are showing gains at midday of about a quarter point.

In North America, the US futures are pointing higher this morning by about a quarter point on higher Q2 GDP of 2.5% vs. 2.2% estimated.  Also the Weekly Jobless Claims came 6000 less than last week at 331000 which was also better than estimates of 339000.  With the housing rally in the US stalled, the GDP and employment numbers are promising.

Gold is off this morning by  7.00 to 1410, oil is lower by 0.50 to 109.56 on no new news out of the middle east, the loonie is lower by 18 bps to 95.15 and the 10 year yields are up in both Canada and the US to 2.67% and 2.82% respectively.

The last of the three big banks reported this morning and all beat estimates on earnings and matched revenue expectations.  Both TD and RBC increased dividends while CIBC will buy back up to 8 million shares over the coming year.  All suggested that margin compression will continue through the balance of fiscal 2013 and 2014 and there has been some slowdown mortgage applications in the last quarter.  The profit beat from all came from the wealth management divisions with an average increase of more than 15%.  Wholesale, retail and capital markets saw an average decrease of 10%.  In all, reasonable reports for the banking oligopoly.

Lastly, Verizon is making a bid for 45% of Vodaphone the big Euro cell company which will provide a solid position in that market.  It also suggests that Verizon may have shelved its Canadian plans for the time being, which in turn should help the Telco’s here in Canada.

Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

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