November 5th, 2013 Business & Market Update

Overnight in Asia, Chinese markets were stronger by about a third of a point on news out of the government that growth of 7.2% is required to provide strong employment over the next year.  Japan was also higher as bargain hunters stepped in after a few days of losses.

In Europe the forecasts are coming for 2014 and 2015 and as mentioned yesterday, the road is bumpy but it would seem the big economy is going in the right direction.  2013 will end slightly positive with GDP at about 0.4%.  The forecast for 2014 is 1.1% and 2015 1.7%.  Also, the UK Service Sector advanced at the fastest pace in more than 16 years.  None of this news however is what the markets were looking for as an interest rate cut and or more asset purchases by the ECB is what traders want.  To that end markets in the region are down about a point at midday.

US and Canadian futures are trading down about a quarter point this morning as many are still setting up for the onslaught of economic news coming toward the end of the week.

Gold is up slightly this morning to 1314, oil is off 0.29 to 94.33 and the loonie is down about a quarter cent to 95.68.  Bonds are off slightly with the US and Canadian 10 years’ yielding 2.62% and 2.50% respectively.

Mandate earnings out this morning are showing beats across the board with CVS Caremark, Brookfield Renewable Energy and TransCanada all coming in ahead of estimates.  All three securities are trending higher in the pre-market.

Lastly, a few other things that caught my eye this morning:

  • ·         Twitter has increased the price of the IPO to the mid $20’s from the mid teens.
  • ·         Blackberry settled in down about 17% yesterday and looks to open where it closed this morning as the deal makers are trying to spin the latest developments, I continue to suggest avoidance.
  • ·         EnCana, once the darling of the natural gas industry in Canada this morning came out with a big earnings miss and a re-structuring program that will see the company downsize by about 20%.  The company is also cutting its dividend by two thirds and spinning off Clearwater Minerals in an IPO.
Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 4th, 2103 Business & Market Update

A light overnight session as China was closed for a holiday.  Japan was off about a point on continued US dollar strength.

Europe is up about a half a point at midday on continued positive factory data, however deflation is still a problem and it will be interesting to see what Mr. Draghi has to say this week in his monthly presser in regard to a more accommodative stance.

Futures in the US and Canada are pointing higher this morning by about a third of a point as traders position themselves going into the employment numbers that are due out Friday.

Gold is up a couple of bucks 1317, oil is down 0.34 to 94.28 and the loonie is stronger by 0.12 to 96.09.  The 10 year bonds in the US and Canada are both trading higher this morning with yields at 2.60% and 2.48% respectively.

Lastly this morning, it would seem that the Fairfax team couldn’t get the financing together for the Blackberry purchase that was to close today, so they have done the following:  Fired the CEO, brought in John Chen (former Sybase exec to run it), Watsa is now on the board, float a $1bn convertible bond which Watsa and Fairfax and some other investors will invest in and keep the company a public entity.  It would seem the street is not to happy with it as the stock is trading down in the pre-market about 18%.  Interestingly, the stock price is now getting to a level where the company is trading for the cash in bank.  It will be interesting to see where it goes today and to further disseminate the news.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

October 15th, 2013 Business and Market Update

Looks like there has been some movement over the weekend in Washington as hints of a deal are starting to emerge on the news wires this morning.  No details just yet but flat US futures are suggesting that something is brewing.  Stay tuned.

In Asia overnight, markets were higher by about a quarter point following the US rise on Friday and Monday and reacting to the positive news out of Germany on investor sentiment rising yet again.  Euro stocks are up about a half a point on the news.

Earnings season gets under way in earnest today as Coke and JNJ beat on both bottom and top line numbers.  Citigroup however missed estimates by a couple of cents with the hit coming from charges and fixed income trading.  That news caused the futures to pull back from higher levels earlier.

With a deal somewhat imminent in Washington, Gold has pulled back again this morning down more that 16.00 to 1260.  Oil is trading down a buck to 101.46 and the loonie is off 20bps to 96.46.  The US and Canadian 10 year bonds are mixed this morning with yields coming in at 2.71% and 2.62% respectively.

Lastly, Blackberry has put ads in papers worldwide to try and explain the current situation that they are in and how they are going to move forward.  To me it seems to be a desperate attempt to hold onto what they have.  We shall see how effective the ads turn out to be.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

July 9th, 2013 Business & Market Update

Asia rallied once again with markets up about 2% on the positive US markets yesterday.

Euro markets are also stronger by about a point at midday on the strength of the US markets yesterday.

North American futures are moving higher this morning on continued dissemination of the real effects of the FOMC tapering threat and the fact it is not going to occur immediately and will be a process vs. an event.  Futures in both the US and Canada are up about a half a point this morning.

Alcoa, the first Dow 30 company to release earnings each quarter came in slightly ahead of estimates after the close yesterday which also helped in moving futures higher this morning.

Gold has rebounded another 12 dollars this morning to 1247, oil is lower by a half a dollar to 102.48 regardless of continued fighting in Egypt and the loonie is up a half a cent to 95.09 on a weaker US dollar.

In other news this morning Blackberry is holding their annual meeting in Waterloo and will need to reassure shareholders that they are on the right track despite a poor earnings report a week ago.

Our intrepid US Strategist, Tony Dwyer has come out with a good piece this morning on the current confusion that seems to be rocking the markets and puts some clarity to it.  I have attached the highlights of the report below and the entire PDF above.  He is suggesting that the real indicators should provide a continued run in the markets.  He still has a 2014 target on the S&P at 1955 which would represent an approximate upside of 20% from here:

What would turn us more cautious? This is the question we get most often, and the answer is that we would get more defensive if:

  • Core inflation expectations rose enough to cause the Fed to aggressively tighten- the opposite is happening. (page 5)
  • The tightening monetary policy began to discount a pending recession via a sharp flattening of the yield curve- the opposite is happening (page 9)
  • The flatter yield curve caused bank lending standards to tighten- the opposite is happening (page 26)
  • High yield debt to treasury yield spread begins to trend significantly higher- the opposite is happening (page 13)
  • Economic data began trending lower- the opposite is happening (pages 15 & 20)
  • The current uptrend in valuation reversed- the opposite is happening (pages 35-38)

Summary. The increased likelihood of Fed tapering has pushed market-driven interest rates up and generated fear of negative economic effect. We believe the opposite may happen because the yield curve steepened, credit spreads have remained historically tight, and the sharpness of the rise in 10-year yields has been dramatic enough to suggest a decline in long rates over coming weeks. Our fundamental thesis remains firmly in place, and until we get consistently stronger economic numbers OR core inflation expectations begin to rise, we expect the Fed to stay on course and not taper bond purchases through 2013. Bottom line: we continue to urge investors to not fight the Fed or the tape, and with the uptrend in place, the economy in the fundamental sweet spot, and the SPX trading at less than 15x our conservative 2014 estimate of $115, our conviction level for SPX 1955 remains high.

Lastly, with the tragic events in Quebec still unfolding, the debate continues on how to transport crude.  I am of the view we are early on this as there are still people missing, but of course both sides need to make sure the line in the sand is drawn.  The pipeline people suggest that there method is safer, the rail people suggest their method is safer and greener and the green people want neither!  I am quite sure that neither is not an option unless we go back to the horse and buggy era until all of these COST EFFECTIVE alternatives have been made available to all.  The bottom line is we need crude to live at the present time and for the foreseeable future and I would suggest that both methods are going to be required to handle the transport of the commodity efficiently.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

US Futures Down, Canadian Penny Phased Out

This morning we are seeing some downside in the capital markets as politics is once again playing a role in the direction of markets.

Spain is in the news this morning as opposition parties are calling for the resignation of the current leader over accusations of a corruption scandal and in Italy, former PM Berlusconi is seeing an increase in support for the upcoming election which could signal some problems for the reforms that have been put in place.  The weakness is occurring after continued positive economic news out of North America, Europe and China last week.

Markets in Europe are off about 1.5% at midday.

US futures are trading down in sympathy by about a half a point, with US Treasury bonds trading higher.

Gold and Oil are both lower this morning, with oil off over 1.5%.

After the “big” BB10 release last week RIM has also changed its name to Blackberry in trying to rebrand and build on the new product.  The new symbol is BB for those that care.

Lastly this morning, today marks the demise of the penny in Canada.  The coin will be phased out over the balance of the year and many businesses starting this morning will no longer accept the coins (evidenced by my coffee purchase at Tim’s this morning).

Courtesy of:

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

Portfolio Manager & Branch Manager

Independent Wealth Management