This morning we are seeing mixed markets around the world as all are waiting for the US Fed to release the minutes of the meeting concluding today. The “taper” word will be the key and of course any dates for the action, which I doubt we will get, will set the tone for the markets direction.
Asia and Europe are both quite mixed today also awaiting the Fed decision. Asia was off about 1.5% overnight. Europe was mixed with the UK higher and France and Germany lower.
Euro region unemployment dropped for the first time in 2 years however the rate is still at a record 12.1%.
North America is flat going into the Fed meeting, however there is additional economic news this morning. US GDP for Q2 was released and came in well above estimates at 1.7% vs. 1.0% and just behind Q1 at 1.8%. Q1 was revised down however to 1.1%. Bottom line, this is a good number but far off the level the Fed is looking at for real growth in the economy. We also had Canadian GDP which came in month over month at 0.2% vs. 0.3% and annualized (May) at 1.6% which matches estimates. The ADP Private Payrolls was also released and beat estimates by 20000 coming in at 200000 vs. 180000.
Markets are slightly lower but seemingly directionless.
The key will be Friday’s Non-Farm Payrolls that will set the tone for the Fed to move.
The problem that we have currently is good news or bad news, the markets are interpreting it as one thing – extreme volatility. We continue to try and mitigate that volatility as much as possible.
Gold is off 3.00 to 1320, oil is up 50 cents to 103.55, the loonie is down 0.09 to 96.94. The US 30 year Treasury is off a point, on the positive economic news with the yield moving higher to 3.72%
In earnings news, which I might add has generally been good, but virtually ignored, mandate company Comcast beat on both the top and bottom lines. Rio Can and First Capital Realty both beat FFO estimates and saw good revenue and cash flow growth in the first half of the year.
Kenneth A. Dick, BA, CIM, CFP, FCSI
Branch Manager & Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth Management