November 26th 2013 Business & Market Update

Overnight in Asia markets were slightly lower as oil markets recovered after the slide yesterday based on the Iran nuclear deal.

Europe at midday is flat despite some continued strong numbers coming from the service sector that is adding jobs at the fastest pace in more than 6 years.

US and Canadian futures are also flat this morning despite strong Housing Start and Permits numbers for October. The estimates of 933,000 were beat handily by the actual number coming in at 1,030,000. These numbers are late in coming based on the government shut-down that occurred earlier in October. The Case-Shiller Housing Index was also released this morning and it showed a year over year 13.29% increase which was in line with estimates.

In Canada, the Finance Minister suggested late yesterday that the budget would be balanced in 14 months which is sooner than was anticipated only 10 days ago. Good news none the less if you believe the shell game that is played in government finance. Also, the big news out of Canada today is the new deal that the NHL struck with Rogers Communications. The deal valued at $5.2bn will run over 12 years and give the media company total control of the NHL property in Canada. In essence CBC and TSN (Bell Media) are out. Rogers has suggested they have a deal with CBC to broadcast the Sat night game of the week and will maintain the French and other language options that the CBC offers. The deal takes about a quarter of the CBC’s total revenues which will hurt the crown corporation. TSN it would seem is out other than some regional games where they have some ownership rights (Leafs, Winnipeg etc.). For those of you that like Don Cherry and Ron Maclean it would seem for now they are still on Sat nights and will be doing some playoff games.

Gold is up about 3.00 to 1245, oil is up a couple of cents to 94.12 and the loonie is down 0.06 to 94.81. Debt markets are flat this morning with US and Canada 10 year bonds trading at 2.73% and 2.55% respectively.

Lastly, as I mentioned yesterday I would be providing some insight into the conference I attended last week and start the process this morning with an article by Mark Kiesel, Head of Global Bond Portfolio Management for Pimco. The theme was what not to buy and finding the sweet spot in the debt and equity markets based on the current environment that we are ensconced in. I found Mark quite positive, down to earth and pragmatic in his big picture view which translated nicely into his sector analysis. Take the time to give it a read it you have a moment.

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

Branch Manager & Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth

November 25th Business & Market Update

With this week being the start of the holiday season in the US, markets will be fairly quiet going into the Thanksgiving holiday on Thursday and while markets will be open Friday volumes will be much lower.  I will be on the road Thursday and Friday in and out of meetings both days, but accessible and will be checking in often.  The Morning Blog will be attachments only Thursday and back to normal Friday.

Overnight in Asia, markets were mixed with Japan up 1.5% and China down about a half a point.  Japan’s rise is on top of analysts suggesting that Abenomics starting to take effect as the deflationary period in the region is coming to an end.  China on the other hand after a 7% move higher in the last week alone was off on profit taking.

Europe is up a about a half a point on solid US markets, the Iran nuclear deal with the US suggesting the country will curb further nuclear development and comments from the ECB that the region will not slip back into a full recession as growth continues to be positive.

The US and Canadian futures markets are higher this morning by about a quarter point on much of the above news along with the fact the dollar is stronger this morning.

The stronger US currency is causing more concern for gold investors as the commodity is off 10.00 to 1234.00, oil on the Iran deal is down 1.20 to 93.563 and the loonie is trading lower by a quarter cent to 94.80.  The US and Canadian 10 year bonds are lower this morning with yields at 2.75% and 2.59% respectively.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 19th, 2013 Business & Market Update

A sloppy overnight and morning session in both Asia and Europe with markets in both regions off.  Asia is down about a quarter point on profit taking after a couple of strong days and Europe is off on weak earnings reports.  The OECD suggested that the ECB increase the pace of asset purchases to avoid a Japanese style deflationary economy going forward.

The US and Canadian futures are virtually flat this morning with a slight bias to the downside.

Gold is flat this morning at 1272, oil is off a quarter to 93.43 and the loonie is down slightly to 95.85.  Bond markets are a little soft this morning with yields in the US and Canada at 2.69% and 2.54% respectively.

Mandate company Home Depot released earnings this morning and beat on both earnings and revenues and provided stronger guidance going into the next year.

Lastly, I will be away tomorrow through Friday at the Pimco Due Diligence conference out west.  Pimco is the biggest fixed income money manager on the planet handling more than $2trillion.  Most of my mandates hold the Monthly Income Fund and I am looking for more ideas going into the New Year.  The conference will be highlighting fixed income themes going forward into the rising interest rate environment that may be coming in the next year and how to capitalize on it.  As you are all aware we have had a positive 30 year run in the bond markets and based on the size of the asset class and the weight in most allocation models the impending rise in rates will cause capital erosion and poor returns if simple buy and hold strategies are maintained.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 15th, 2013 Business & Market Update

A solid overnight session in Asia as markets there reacted to the Yellen comments, the reforms in China that will promote internal growth and the Yen falling bolstering the Japanese market.  China was up about 1.5% and Japan was stronger by almost 2%.

Europe is essentially flat on a broad basis as markets there continue to battle the slow pace of recovery.

US and Canadian markets after a strong rally into the close on Yellen’s comments are looking to open higher this morning by about a quarter point.  Mrs. Yellen the heir apparent to replace Ben Bernanke, effectively held the dovish line yesterday indicating that there was no reason to move on tapering just yet.  This quote tells the story, “It’s important not to remove support, especially when the recovery is fragile and tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero”.

Gold is flat this morning at 1286, oil is higher again today after a rally yesterday up 0.27 to 94.69 and the loonie is flat at 95.55.  US and Canadian 10 year bonds after a rally into the news yesterday are flat this morning yielding 2.70% and 2.57% respectively.

Lastly, the Oracle of Omaha, Warren Buffett has made a big move indicating that he has taken a big position in Exxon and sold a good portion of his stake in Conoco Oil.  On the negative side however, with the purchase of Heinz earlier this year, the company has decided to close the Leamington, ON plant which will cost the small town some 700 jobs.  For as good as consolidation is, the down side is some do suffer in the process.  Hopefully they can all find alternative employment.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 13th, 2013 Business & Market Update

This morning we are seeing some weakness in Asia as the Chinese continue to try and determine how free of a market they will allow in the future.  The general consensus is a more accessible market is welcome, however at what cost.  China was off overnight by about 1.75%, while Japan was fairly quiet with only a slight decline.

Europe is weaker on on good news out of the UK on employment improving at a faster pace that thought (yes good news is bad news?).  Also, the ECB is trying to determine why Germany continues to have strong current account surplus (they export far more than they import) which does not bolster internal growth in the big Euro economy.  The report is to be released in the early New Year.  Markets in Europe are off about a point.

US and Canadian futures are lower this morning on continuing discussion and speculation on when the Fed will begin to taper bond purchases (QE?).  So everyone is aware, the US cannot go on forever increasing the size of its balance sheet, therefore, at some point in the not so distant future the FOMC will announce a decreased level of purchases.  Why this is a shock to anyone is beyond me, but markets continue to trade on a volatile basis around the rumour.  As I have mentioned in many of my blogs, corrections are normal in bull markets and we will take advantage of lower pricing when and if that occurs.  I have also been repositioning the fixed income portfolios in all mandates to take advantage of a higher interest environment.  US and Canadian futures are trading lower by about a half a point.

Gold is up 5 bucks to 1275, oil is up 0.33 to 93.36 and the loonie is stronger by a couple of basis points to 95.39.  Bond markets are rallying this morning with the US and Canada 10 year bonds yielding 2.74% and 2.63% respectively.

Lastly this morning, the Canadian Finance Minister provided and economic update yesterday in Edmonton and suggested that a surplus of about $3.7bn was possible by 2015.  I have included the highlights from the speech below which were released by the Finance Department yesterday afternoon:


  • The federal deficit has been reduced by almost two-thirds, from $55.6 billion in 2009–10 to $18.9 billion in 2012–13. Direct program spending has fallen for the third consecutive year, from $122.8 billion in 2009–10 to $117.7 billion in 2012–13.
  • The projected budgetary balance has improved across the forecast horizon as a result of policy decisions and changes to the forecast since Budget 2013. The Government projects a deficit of $17.9 billion in 2013–14, down from the $18.9-billion deficit recorded in 2012–13. This projection takes into account the estimated federal liability of $2.8 billion for disaster assistance related to the recent flooding in Alberta and the $60 million in assistance announced for the town of Lac-Mégantic. The deficit is projected to decline to $5.5 billion in 2014–15. A surplus of $3.7 billion is projected for 2015–16, even after taking into account a $3.0-billion adjustment for risk.
  • The Government remains on track to return to a balanced budget in 2015. Eliminating the deficit will ensure that the federal debt-to-GDP (gross domestic product) ratio will fall to low, pre-recession levels by 2017–18 and that Canada’s total government net debt-to-GDP ratio remains the lowest in the Group of Seven (G-7).
  • The Government is also on track to achieve the target, announced this September at the G-20 Leaders’ Summit in St. Petersburg, Russia, of reducing the federal debt-to-GDP ratio to 25 per cent by 2021.
  • The Canadian economy has experienced the best performance among G-7 countries over the recovery in terms of both output and job creation.
  • However, the global economic environment remains highly uncertain and downside risks continue to weigh on the outlook. While economic growth in Canada has remained resilient, Canada is not immune to developments outside its borders. Global economic weakness has weighed on our exports, which has restrained Canada’s real GDP growth. More recently, the weak external environment has dampened the prices of our export commodities which, combined with low domestic inflation, has resulted in weaker nominal GDP growth than was expected in Budget 2013.
  • To support jobs and growth, in September 2013 the Government announced that it will freeze the Employment Insurance premium rate at the 2013 level of $1.88 per $100 of insurable earnings for 2014, and additionally that the rate will be set no higher than $1.88 for 2015 and 2016.
  • As announced in the Speech from the Throne, the Government is reintroducing a freeze on departmental operating spending, which will incent departments to use their existing resources more efficiently. The freeze will apply to the 2014–15 and 2015–16 fiscal years and will help ensure a return to balanced budgets in 2015.
  • The Government is undertaking a systematic review of its corporate assets as a normal part of good governance, with a view to improving their efficiency and effectiveness and ensuring value for taxpayers. When it is in the best interest of Canadians, assets will be sold. As a first step, onSeptember 16, the Government divested its interests in 30 million common shares in General Motors. The Government is also updating its spending projections in light of lower-than-expected departmental spending in 2012–13, which reflects the Government’s commitment to the responsible use of public funds—funds are only spent when necessary.

Note: This document incorporates economic, financial and fiscal data available up to and including November 8, 2013, unless otherwise indicated.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 11th, 2013 Market & Business Update

We start this week with some good news out of China as Industrial Production there was strong in October causing markets to rally there by about a quarter point.  Japan was higher by more than a point on the US employment news that came Friday causing the dollar to rally and the yen to fall.

In Europe, a positive by Angela Merkel’s conservatives and the Social Democrats that a deal has been struck on the contours of a European banking union under which a body attached to European finance ministers, not the European Commission, would decide when to close failing banks.  This is a breakthrough for the two political parties, unlike our friends to the south that will help to shore up the banking system in the region.  Markets there are stronger on the news by about a third of a point.

Moving to North America, US and Canadian futures are just slightly higher this morning as the markets continue to digest the employment news and the whether the elusive “taper” is back on the table sooner as opposed to later.

Gold is down a couple of bucks to 1282, oil is lower by 0.35 to 94.23 and the loonie is flat at 95.44.  Bond markets after a bump in yields Friday are quiet this morning with 10 year yields for the US and Canada bonds at 2.74% and 2.60% respectively.  The spread is widening between the two countries as the US may reduce liquidity before Canada does.

Lastly this morning, on this Remembrance Day, I ask all to take a moment and be thankful for all that have given their lives in past conflicts and continue to do so today to provide us with the freedom that we all enjoy. Lest we forget.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 8th, 2013 Business & Market Update

In Asia overnight, markets were weaker by about a point on a higher Chinese trade surplus in October.

Europe is off about three quarters of a point on the credit downgrade by S&P on France.  The downgrade of one notch is attributable to the slower pace of recovery for the second largest economy in the region.

In the US, the Non-Farm Payrolls for October were released this morning and were well above estimates at 204000 vs. 120000.  A massive beat to say the least.  Also, September was revised up 15000 to 163000.  The unemployment rate increased slightly to 7.3% from 7.2% on an increase in rate of those no longer looking for work.  Of course this news was initially met with futures selling off (you know by now that good news is bad for the markets?) With futures trading down about a quarter point.  This number brings the tapering discussion back into play and thus the debt markets are falling like a stone this morning with the 10 year US bond yielding 2.73% up from 2.64% yesterday.  Oh how memories are short, keep in mind the debt ceiling and budget talks will be back on the front burner early in the new year which will likely take us for another ride on the big political coaster.  I continue to tweak all mandates to take into account the changes and the pace of change and as investors we are looking beyond the next report and continue to invest in positions that will provide preservation of capital with a strong income component and sustainable longer term growth.

Canadian employment was also released this morning and beat by a couple of thousand jobs to 13200 for October.  There were no revisions to September and the rate ticked up a notch to 7.0%.  TSX futures were lower by a quarter point however the Canadian 10 year bond yield was up about half of its US counterpart at 2.58%.

The good jobs news has the USD rallying and thus trashing gold as the metal is off 17.00 to 1291.  Oil is up on the news to 94.45 and the loonie is down about a third of a cent to 95.31.

In mandate earnings news this morning Telus beat on earnings and met revenues.  The company also increased the dividend by 12.5%.  Arc Resources met on both bottom and top line, as did CI Financial, Firm Capital and InterPipe.  Brookfield Asset Management beat across the board.

Lastly, Twitter increased on its first day of trading yesterday by 80% and the entire float on the issue turned over at least once!  Not bad considering most earnings estimates would not suggest the company will be profitable until 2015 at the earliest.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management