May 29th, 2013 Market Update


The S&P/TSX Composite traded higher on Tuesday, as investors took
cheer after top officials in the European Central Bank and the Bank of
Japan pledged their support for continued monetary easing.

Bank of Nova Scotia (BNS), Canada’s third-biggest lender by assets, said
second-quarter profit rose 9.6% to $1.6 billion, on contributions from its
takeover of ING Groep’s (ING) Canadian business. Results missed
analysts’ estimates, however.

Gran Tierra Energy (GTE) said a horizontal exploration well in Peru
tested 3,095 barrels of oil a day. It also said it will begin an engineering
study to implement a long-term test to help bring new oil to market.

MTY Food Group (MTY) said it has agreed to buy most of the assets of
the Extreme Pita, PurBlendz and Mucho Burrito restaurant concepts for
$45 million. It said the purchase is the biggest in its history.

Baytex Energy (BTE) went lower after the CBC reported that as many as
six families have left an area in the Peace River due to emissions from a
Baytex heavy oil production site.

Novus Energy (NVS) released first-quarter operating and financial results
that were generally in line with forecasts given production volumes were
previously released in late April. The key takeaway from the release was
the encouraging results from its second quarter section pilot at Flaxcombe
testing the two distinct Viking cycles.


The S&P 500 rebounded from last week’s loss on Tuesday, after data
showed home prices rose in March by the most in seven years and a report
showed consumer confidence improved.

Tiffany’s (TIF) said its first-quarter net income rose 3% as sales improved
across all regions. Sales were helped by promotional events tied to
Tiffany’s 175th anniversary as well as a tie-in for “The Great Gatsby”
movie, for which the company designed the jewellery.

Solar module manufacturer Canadian Solar (CSIQ) reported a smallerthan-expected first-quarter loss on a steep fall in manufacturing costs, and
forecast higher solar panel shipments for the current quarter as it steps up
its presence in the high-margin Japanese market.

Offshore oil driller Seadrill (SDRL) beat forecasts with record core
earnings in the first quarter and it said high day rates and expected orders
would make the second quarter strong too.

Disclaimer:  This publication is a general market commentary and does not constitute a research report. Any reference to a research report or a recommendation is not intended to represent the whole report and is not itself a research report or recommendation. This  commentary is for informational purposes only and does not contain investment advice. This publication may be wholly or partially based on industry rumour, gossip and innuendo and as such is not to be relied upon as investment advice. Not intended for distribution within the United States. Canaccord Genuity Wealth Management is a division of Canaccord Corp. Member – Canadian Investor Protection Fund.

May 23rd, 2013 Market Update

Well, it would seem with Mr. Bernanke confusing the markets yesterday and the Chinese PMI (Purchasing Managers Index) dropping below 50.0 for May to date which signals contraction, has the markets in decline across the globe today.  The biggest hit is in Japan down 7.32% (the market is still up over 43% year to date).  China and Europe are off about 2.5% and futures in the US are down about three quarters of a point.

Of course, as per usual, the reaction is extreme and in my view represents a buying opportunity for investors.  Traders will get slaughtered on both sides of the market with these extreme fluctuations and I continue to look for value and add to positions on weakness.  Hedging the fixed income component of portfolios looking out to the world, corporate, high yield and mortgage debt will help to offset the downside and volatility in Canadian government debt.

As I mentioned yesterday, Mr. Bernanke would comment on how and when the bond buying program would taper off and his commentary and answers to the questions asked seemed to confuse traders as to which way to go.  Bond prices decreased to the point where there was some parody in yield on both the long bond and dividend yield on the S&P 500 which caused equities to sell off on the yield trade.  Move to safer assets (which many would question these days) from equities.  This morning bond prices have reversed trading higher at the long end by about a quarter point, which would suggest that both equities and bonds are not trading in concert.

Of course the good news out of Europe on the PMI number increasing there and the US initial Jobless Claims falling 23000 from last week to 340000 did not seem to have any effect on the markets this morning.  Traders are looking for excuses to get out and the news yesterday and today was the trigger.

Gold is moving higher on the news this morning up about 20 bucks to 1388.00.  Oil is off on the news down 1.25 to 93.00 and the loonie is stronger up 17bps to 96.63.

As mentioned yesterday the big collusive oligopoly is releasing earnings over the next few days and TD Bank came this morning with a miss of a cent a share.  Revenue was in line.  Loan loss provisions were lower which helped increase earnings due to the housing market continuing to slow.  US operations represented about a third of the retail banking income.  Wholesale banking income (trading, investment banking and corporate lending) rose the highest up 12% for the quarter.  In summary, a slight miss with no real organic growth.  The stock will trade down on the news this morning and the general down trend in the markets today.

Last but not least, the US House of Representatives voted once again to pass the Keystone XL Pipeline’s northern leg from Alberta to Nebraska.  The vote which passed easily still needs Senate approval which may be a more difficult task as the Senate is controlled by the Democrats.  Obama’s office has stated that they have recommended that the President veto the bill should it pass both branches of government, however if the Senate gets enough positive votes the veto could be bypassed.  For the record this is the 5th time the bill has passed in the house over the last 5 years.  The Nebraska to gulf shores leg is almost complete which shows how far behind the northern leg is currently.  Energy independence, job creation and a strong environmental report, stamped by the White House, it would seem are not enough for the left side of the aisle to get this thing built.  In the interim Trans Canada along with the other pipeline companies in Canada continue to look for other markets to export to and will find markets for the product.  While we all would like a fossil fuel free world, the reality is that it is not going to happen in the near term.  Becoming energy independent in North America would save billions in defense spending in the Middle East redirecting those assets home to programs that are necessary to all namely, infrastructure, education and health care to name a few.  Politics and reality once again prove to be like oil and water.  The saga continues..

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

May 21st, 2013 Market Update

Overnight there was some weakness in the Asian markets as corporate Japan is suggesting the fall in the currency is enough and stability or a slight increase is warranted.  Costs to exporters continue to rise as the currency falls and it would seem that the sweet spot has been by passed according to reports out the country.  Markets in the region are mixed off just slightly from yesterdays close.

Europe is off about a half a point this morning as markets are quiet going into the Bernanke congressional testimony later today.

The US markets are however pointing to a slightly higher open up about a quarter point.

Commodities continue to be under pressure as gold is off another 16.00 to 1368, oil is down a quarter point to 96.67 and the Loonie is down about a half a cent to 97.22.

Lastly, as I am sure most are aware by now there was a severe tornado in Oklahoma yesterday that has devastated a small town and killed many, including several children.  Take a moment and think of those affected today sending positive thoughts.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

May 13th, 2013 Market Update

This morning in Asia, Chinese Factory Output numbers were released and they were weaker than expected, which took the Chinese markets lower overnight by about a half a point.  Japan, however rose another 1.5% taking the market there to another near term high.

In Europe, the Chinese news filtered through the markets there and has the Euro Stoxx Index down about a quarter point at midday.

In the US April Retail Sales numbers came in at 0.1% vs. estimates of minus 0.3%, which was a nice upside surprise.  Retail Sales at 30% of consumer spending is an important contributor to growth in the economy and the upside surprise has caused futures to trim earlier losses to a virtual flat open.

US dollar strength is causing gold, oil and the loonie to fall this morning.  Gold is off a quarter point to 1432, oil is off half a point to 95.66 and the loonie is trading up 5 basis points to 99.06.

Looking at Canada, it would seem that the Obama administration is unlikely to make a decision on the Canada-to-Nebraska Keystone XL pipeline until late this year as it painstakingly weighs the project’s impact on the environment and on energy security, a U.S. official and analysts said on Friday.  The delay continues to weigh on heavy oil producers in the west as the longer the pipeline is delayed the longer the pricing mechanism for heavy crude stays at a discount to West Texas and Brent crude.

Last but not least, tonight the Leafs are actually in a game seven match-up, the first in a long time and do have a chance to win!  For as bazaar as it may seem if they do win, watch the sky for the blue moon later in the evening!

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

May 8th, 2013 Market Update

Asia rallied overnight as the Dow and S&P continued the upward trend yesterday.  Japan continues to move higher due to the aggressive monetary policy to increase inflation.  Chinese exports increased dramatically in April which moved that market higher overnight also.  However there was some currency speculation which may have distorted the data somewhat.

In Europe, German March industrial output increased by 1.2% vs. estimates of a 0.1% decrease which has indices trading up about a quarter to a half a point.

In the US no economic news this morning and other than a few earnings reports the markets are relatively flat.  Futures are currently off slightly.

In Canada, mandate company Enbridge reported this morning and the pipeline company reported a 31 percent rise in first-quarter adjusted profit driven by higher volumes.  Earnings at $0.62 came in well ahead of consensus estimates at $0.51.

After trading down dramatically yesterday, Gold is moving higher this morning up 17.00 to 1466.  Oil is also higher by about 15 cents to 95.77 and the Loonie is flat at 99.55.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

May 1st, 2013 Market Update

Good morning all and welcome to May.  Yes, tax season is finally over and summer is on the way.

Today many markets are closed for May Day celebrations, which in Europe have turned into May Day protests on austerity.

The China Purchasing Managers Index dropped from 50.9 in March to 50.6 in April which still indicates growth however at a slightly lesser pace.

Tomorrow, Mario Draghi will provide us with some insight into how the Euro zone is fairing and provide forecasts for the balance of the year.  It is widely rumoured that the ECB will reduce rates and or look to some other stimulative measures to help the Euro zone recover.

Today UK Factory Orders saw a nice rise in April to 49.8 vs. 48.6 in March which shows the economy is almost in the growth channel (greater than 50.0 is the benchmark) and this surprising upswing for the month has the UK markets rallying as the balance of the region is closed today.

In the US the ADP Private Payroll numbers for April were released this morning with the number coming at 119000 new jobs created vs. estimates of 150000.  The negative number has caused futures to sell off in the US from a slightly positive bias earlier this morning.  This number in most cases sets up the Monthly Non-Farm Payrolls which are due out on Friday morning with estimates of 145000.

Gold is off $7.00 this morning at 1465, oil is off more than a $1.50 at 91.95 and the Loonie is flat at 99.31.

Lastly this morning, we are now in the “Sell in May and go away” month however our quant analyst Martin Roberge would suggest that this may not be the case this year.  He states,

  • ·         The “Sell in May and Go Away” season has now arrived. But an important dilemma for investors this year is the historical script showing that S&P 500 returns above 10% through April usually hold until the end of the year.
  • ·         Thus, even though markets are likely to maintain their uptrend, volatility should increase from here; hence, the need for investors not to chase recent winners but look for laggards.  We decided to resist cutting our equity exposure because beneath the surface, stocks are pricing in recessionary conditions as suggested by the strong outperformance of defensive stocks this year and the much depressed valuation of resource stocks.
  • ·         We don’t want to sound complacent but as we see next, the investment climate and global economic backdrop are more constructive this year than they were at this time in 2011 and 2012. Moreover, should the ECB cut rates and deliver more, it will add to the probabilities of a second-half recovery, which should normally help cyclical stocks to get out of their funk.
  • ·         This is not spring 2011 and 2012. Key differences are: 1) monetary reflation has gone global and central banks have removed tail risks, 2) leading economic indicators (LEIs) are rising worldwide, 3) growth in Chinese exports and imports is recovering, and 4) the US/global trailing EPS-growth cycle has shifted from deceleration to reacceleration

Some positive but continuing cautious analysis which I am in agreement with.  We shall continue to be defensive and adhere to structural allocation models across all mandates going into the summer.

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


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