A quiet overnight in Asia as markets there were weaker by about a quarter point. China PMI was a stronger yesterday which caused markets to rally initially and profit taking then took over as markets sold off into the close.
In Europe, we are seeing gains with markets up about a half a point mostly on Merkle’s re-election and stronger business confidence numbers out of Germany. Merkle however did not get a majority (5 seats short) and will have to form a coalition government to get legislation passed which is cause for some concern as the big economy continues to recover.
In the US we are seeing unchanged futures this morning as the focus is on the debt ceiling that must be ratified by the 30th of the month. The new limit that will take the country through to the end of next year will need to raise from the current $16.7tr level. Of course both sides of the aisle are at odds on how to limit the cumulative debt. I am confident a deal will be struck adding a trillion to the current number. The Case Shiller July Housing numbers were released this morning and were bang on estimates at 12.4% year over year. Stable is the word I would use to describe sector currently.
TSX 60 futures are a little lower this morning following the US lead. Of course the big news out of Canada is the bid of $9.00 per share from Fairfax Financial Holdings for Blackberry. Yes the smart phone maker actually has a bid that has been ratified by the board. Prem Watsa the CEO of Fairfax and a board member of BB up until the end of last month has a 10% ownership stake in BB. The bid is smart on many fronts the most important of which is it puts a floor on the shares. It starts a bidding war (not that I think it will a big fight) but many analysts have already stated that the parts are worth more. The other thing the bid does is take the company private, which does take an incredible amount of public heat off the stock and may buy the company some time to regroup. At the end of the day, no matter how it is sliced up, it is a shame this great Canadian story will end with whimper like a few recent others before it.
Gold is down 15.00 to 1312, oil is off 0.67 to 102.05 and the loonie is off slightly to 97.17. The US and Canadian 10 year bonds are stronger this morning with yields falling to 2.69% and 2.61% respectively.
|Kenneth A. Dick, BA, CIM, CFP, FCSI
Branch Manager & Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth Management