October 31st 2013 Business & Market Updates

Yup its Halloween, which of course also means its month end and it looks like the pundits got both September and October wrong as markets world wide for the most part rallied.

Looking at the overnight numbers, Asia was off about a point following the close in the US yesterday.

Europe on the other hand is rallying up about half a point at midday as investors continue to look for value in the region.

US futures are off slightly this morning despite the fact the Initial Weekly Jobless Claims were virtually at estimates coming in at 340000 vs. 338000.  Also, as mentioned yesterday the FOMC did release the minutes of their two day meeting (attached) and stated that there would be no change to asset purchases or interest rates until both inflation and employment further improved.  The comments indicated that economic improvement is continuing but still at a sluggish pace.  Muddle through comes to mind again.  This is the new normal for the foreseeable future in my view.  As always, I have highlighted in RED the points in the release that I think were interesting.  Bottom line accommodative monetary policy continues.

I have also added the most recent view from Canaccord US Strategist, Tony Dwyer who is suggesting that while the markets are somewhat overbought with the run up in the last couple of months and a correction would not be a surprise, the trend continues to be higher and he continues to affirm his 1955 target on the S&P with a modest 15 multiple.  He is suggesting a modest 4 to 7% correction only and that those that are investors to stay where they are as the rally on the other side of the correction, if indeed it does occur, will be strong.

Canada released GDP numbers for August this morning beating estimates year over year at 2.0% vs. 1.7%.  Canadian futures are off about a half a point however on weak gold prices this morning.

Gold is down 23 bucks to 1325, oil is off 0.33 to 96.44 mostly on supply increases and the loonie has rebounded a third of a cent this morning to 95.77.  The bond market is flat with US and Canadian 10 year yields at 2.50% and 2.39% respectively.

Mandate earnings released after the close last night and this morning for the most part were meets or beats.  AltaGas beat on earnings and beat revenues by a large margin, American Railcar missed by a penny but also saw huge revenue increases, Visa met estimates with revenues were slightly below mostly due to declining demand by consumers in Q3, Williams beat by a large amount on both earnings and revenues and lastly, Valeant Pharma beat on both earnings and revenues.  In all a pretty solid group.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

 

 

October 30th, 2013 Business & Market Update

Green across the board this morning as Asia and Europe are coming for the ride the north American markets continue to be on.  Asia was up about a point and a half and Europe is up about a third of a point.

Europe is getting some further lift as Spain is finally emerging from recession, albeit by a small amount but the numbers are positive.  Also, Euro zone economic sentiment increased again in October which is also helping markets stay positive.

In North America, we got the CPI and ADP Private Payrolls this morning.  CPI met estimates coming in for the month of September at 1.2% and year over year at 1.2%.  While estimates were met, the number is still well below where the Fed would like it.  The ADP number was 130000 for October which was below estimates at 150000.  September was revised down to 145000 from 166000.  This is the lowest level in the since April 2013.  The monthly average over the last year is 169538 suggesting growth is continuing but still at a muted pace which continues to favour very accommodative monetary policy.  The Fed releases the minutes of their two day meeting at 2pm today which should provide us with some further information in regard future policy.

The US futures re higher by about a quarter point and with Canadian futures up by a slightly lesser amount.

Gold is up 9 bucks this morning to 1354, oil is down a buck to 97.24 and the loonie is up 0.16 to 95.70.  The US and Canadian 10 year bonds are rallying this morning with yields down to 2.50% and 2.39% respectively.

In mandate earnings news, Gilead Sciences missed by a penny on the bottom line but beat on revenues and raised guidance for the coming year.  Sun Communities missed by a penny on the bottom line but beat on revenues by a big margin.  Also Funds From Operations (FFO) was much higher than estimated and guidance was maintained.  Comcast beat on earnings and met revenues.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 29th 3013 Business & Market Update

Asia, sold off another half a point overnight as the US dollar continued to sag with most suggesting the US Fed will stay the course on debt purchases.

Europe on the other hand is up more than three quarters of a point on strong earnings news from many large caps in the region.

US and Canadian futures are flat this morning waiting for the Fed release on Wednesday.

Gold is lower by about 7.00 to 1346, oil is down 0.53 at 98.15 and the loonie is flat at 95.75.  Ten year US and Canadian bonds are also quiet this morning at 2.52% and 2.42% respectively.

The Case Shiller Housing Index was stronger than expected for September as prices advanced by 0.93% vs. 0.65% indicating the housing advance while cooling somewhat is still headed in the right direction.

Two big Pharma companies are reporting today with Pfizer out this morning with a beat on earnings and revenues meeting estimates.  After the close tonight Gilead Sciences will report.

Lastly, Apple reported last night and beat estimates by about half a point with revenues coming in slightly above estimates.  A couple of interesting points of interest:  This quarter marks another where gross margins have fallen dipping under the 40% for the first time.  Also, more than 60% of revenues in the quarter were from international sales.  The stock fell on the news after hours but is trading higher this morning in the pre-market.  It is obvious that as the company continues with its world wide sales initiatives, the margins for the products in the lesser developed world are lower and it would seem the trend is continuing.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 25th 2013 Market Update

Asian markets tumbled about 2.5% overnight on the potential for the PBOC to tighten credit and the strength of the Yen against the USD.

In Europe, markets are off slightly at midday as the Asian news and business morale in Germany declining in September.  The loss is about a fifth of a point as the UK economy increased at the fastest pace since 2010 in the last quarter.

US futures are flat this morning regardless of the fact Durable goods (ex transports) for Sept were lower than expected.  Canadian futures are also pointing to a relatively flat opening.

Gold is off this morning about 9.00 to 1340, oil is rebounding up half a point to 97.55 and the loonie is off another 0.25 cents to 95.73.  The US and Canadian 10 year bonds are flat this morning yielding 2.51% and 2.42% respectively.

In mandate earnings news, Eastman Chemical and Microsoft both beat on the top and bottom lines.  In the case of Microsoft it was also announced that the current CEO will be stepping down next year.  Consumer products companies Sherwin Williams and P&G both missed estimates slightly but met or beat on revenues.

Lastly this morning, Twitter announced the terms of the coming IPO and have lowballed both pricing and size.  Lessons learned from the Facebook debacle a couple of years ago.  This deal will be highly subscribed regardless of the fact the company has not been profitable since it began.  We shall watch with some interest but will not be participating in the deal.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 24th, 2013 Business and Market Updates

We are seeing a rebound today after yesterdays declines across the globe.  China was off about three quarters of a point on the US declines and the dollar weakness, however after the market close positive manufacturing numbers were released which should translate to higher markets there tomorrow.  Japan was higher by about a third of a point.

Europe is stronger on the China news up about a half a point at midday however the Purchasing Managers Data there was weaker than expected.

US and Canadian futures are trading higher by about a third of a point regardless of the fact the Weekly Jobless Claims did not fall as far as expected.  Key word here – fall, which they did to 350000 down 12000 from the previous week.  Estimates were at 340000.

 

Gold is higher by about 7.00 to 1340. Oil continues the slide on supply strength to 96.20 down 0.66 and the loonie lower by about a quarter cent to 96.08.  The US and Canadian 10 year bonds are marginally higher with yields falling to 2.48% and 2.41% respectively.

In mandate earnings, another beat this morning with Deluxe Corp beating on the bottom and top line with guidance of revenue growth in the 4% to 5% range and earnings about 5%.  Altria also beat on both earnings and revenue and guided to a stronger 2014.  CMS Energy, met earnings and revenue estimates.

So far, of the 178 S&P 500 companies to report 138 have beat, 8 have met and 32 have missed.  This is a strong stat, however, the forward guidance has not been strong in many cases on either earnings growth or revenue growth.

On the positive side, Fed-Ex continues to report strong sales going into the holiday season with the stock as a solid barometer to economic conditions.  Caterpillar on the other hand continues to flounder which is a proxy for the global mining industry which continues to show weakness.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 23rd 2013 Business Update

It would seem that real estate news out of China yesterday spooked investors in Asia and Europe in regard to a possible tightening of monetary policy in the region.  Markets in Asia were off about 1.5% overnight.  In Europe markets are lower by about a point at midday on the Asian news and the fact the ECB will holding financial institutions to a higher level of disclosure when it comes to capital requirements.  This is a good thing in my view longer term as it will breed more confidence in the Euro banks, however the short-term view is less profitability for these institutions.

US Futures are off about a third of a point and Canadian futures are down about a quarter point.

Gold is retreating this morning down 8.00 to 1333 as is oil down more than 1% to 96.80.  The loonie is off 0.34 cents this morning to 96.85.  Bonds are up slightly with US and CDN 10 year yields at 2.50% and 2.46% respectively.

In mandate earning news, CNR reported after the close last night and beat estimates by about 10% on earnings and about 5% on revenues.  The all important operating ratio feel below 60% to 59.8% which shows continual improvement (the lower the number the better).  Carloads and tonnage were both up more than 3% and the company will buy back more than 15 million shares over the next year.  The stock will open higher about 2% this morning according to the pre-market.

The Bank of Canada will release its policy statement this morning at 11am EDT and the assumption is nothing much will come of it.  If there is anything interesting worth getting out I will send another mail later today.

Lastly, yesterday was Apple day as the company announced the new iPad Air for the holiday season.  The lower priced and not as heavy tablet boast loner battery power and higher resolution.  Not really a big Apple announcement by any means.  It would seem that the company needs some “wow” factor to continue the run it has been on the last while.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 22nd, 2013 Business / Market Update

Overnight in Asia, markets were fairly quiet, despite a big increase last month in Chinese home prices.  The biggest in three years which has some wondering how inflationary this may be and will the PBOC respond.

In Europe, markets are higher by about a half of a point on the jobs news out of the US.  The monthly Non-Farm Payrolls for September were finally released this morning and the number was far below estimates coming in at 148000 vs. 180000 estimated.  The unemployment rate fell to 7.2% from 7.3% on the participation rate falling.  However, the news was not all bad as August was revised higher by 24000 to 193000.  Bottom line growth is occurring however until Washington gets its act together many companies will not actively hire.  Some form of tax reform must take place to assure companies that hiring and expending capital into bricks and mortar will be rewarded down the road.    US futures are higher by a quarter point this morning on the news.

Gold is up 14.00 to 1328 on a weaker US dollar, oil is off another 0.27 to 98.95 and the loonie is flat at 97.04.  The US and Canadian 10 year bonds continue to strengthen this morning as yields are 2.54% and 2.50% respectively.

In mandate earnings news, Lockheed-Martin beat on both earnings and revenues and indicated higher guidance for the balance of the fiscal year.  Whirlpool also beat on both earnings and revenues but cautioned on the balance of the year.  Both stocks are set to open higher this morning.  After the market close CN Rail will report,  I will provide the details tomorrow.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca