Overnight, the Nikkei Index (Japan) rose 3% after a few days off and continued news of easier monetary policy which will aid the export firms in the country. The balance of Asia was mixed regardless of China’s Services Sector PMI numbers moving to new highs for March.
In Europe, after a strong up day yesterday, profit taking is occurring today going into Mario Draghi’s monthly press conference tomorrow. On average markets in Europe are off about a half a point on low volume trade.
In North America, the ADP Employment Survey was released this morning which should provide some insight into the Government numbers which will be released on Friday morning. The number came in below estimates at 158000 vs. 200000, however February was revised up by more than 39000 jobs to 237000, which is suggests a relatively neutral bias. Looking into the numbers further, 74000 of the new jobs created were by companies with less than 50 employees, which in my view is a very positive trend as small business, the driver of the north American economies’, continues to see solid growth.
In earnings news Monsanto, a mandate position posted strong Q2 earnings beating estimates by 10%. Top line numbers were also ahead of estimates and were up 15% year over year. The company also increased guidance for 2013 by 10%. The big driver was the corn business in both North America and South America.
Futures in the US are flat this morning on the employment numbers.
Gold is continuing its downward spiral this morning off another $5 to $1570 after a big down day yesterday of more than $25 per ounce. Oil is also trading lower off 70 cents to 96.50 and the Loonie is up slightly this morning at 98.68.
In Canada, Valeant Pharma, a mandate company is increasing its bid for Obagi Medical Products to $24.00 per share from $19.75. The increased offer will bring some pressure to the stock today.
Lastly this morning, the ED Clark era at TD is coming to an end next November with an announcement this morning that Bharat Masrani, the current head of US operations will be taking over. Clark will be know for his entry in a big way into the US and Masrani is the man that has run the show for him down there. Masrani was instrumental in adjusting the risk profile of the bank in the mid 90’s and got the institution through the tech wreck and the 2008 crisis. With all that said however, since Clark took over as CEO in 2002, the stock has returned approximately 139% to shareholders (8.24% compounded), which is a pretty impressive number. However, the Royal Bank over the same period is up approximately 325% (14.06% compounded) and the Bank Index is up approximately 240% (11.77% compounded). Mr. Clark has been paid more than $100mm all in since he took over the role and will have a very nice retirement package to sit back and enjoy. While I understand the shareholder value he has created, it is sub-par to the rest of group and his compensation is just simply grotesque.
Kenneth A. Dick, BA, CIM, CFP, FCSI
Portfolio Manager & Branch Manager