December 2nd, 2013 Business & Market Update

Some good news out of China overnight as November Manufacturing outpaced estimates, however markets there were off about a half a point.  Japan was flat.

In Europe, at midday markets are mixed with the EuroStoxx Index down about a fifth of a point contrary to positive news out of the UK as manufacturing there was also stronger for November.

US markets are back at full speed today after the extended long weekend and it would seem that while the shopping spree down there was strong sales numbers were lower due to deeper discounts.  Futures however are marginally stronger this morning.  Canada is following suit up slightly over Fridays close.

Gold is off 14.00 to 1237 on the continual strengthening of the US Dollar, oil is up 0.38 to 93.10 and the loonie continues to fall off about 0.14 cents to 94.08 the lowest level in two years.  Bonds are trading lower this morning with the US and Canadian 10 year notes yielding 2.77% and 2.58% respectively.

Tomorrow marks the start of the big Canadian banking oligopoly announcing earnings as BMO is first to report.  National will report Wednesday, CIBC, RBC and TD on Thursday and BNS on Friday.  Generally estimates are suggesting slight beats across the board with the possibility of dividend increases from TD and RBC.

I have added some further insight from the Pimco Due Diligence Conference that I attended recently in regard to the US Housing market which Pimco has done exhaustive research on in regard to their investment in non-agency mortgage backed securities.  While there has been a solid recovery, there is a great deal of room left in many regions of the country for continued growth.  A key takeaway was the fact the residential real estate is a market of houses not a housing market.  The difference is the fact that not all markets are the same (Manhattan vs. south Florida as an example).  A national number indicating housing starts, pricing and permits does not provide a realistic picture regionally of where value lies.  Not surprisingly, when asked about the Canadian market, for the most part the response was that it is overvalued.  Of course the same analysis applies in regard to regions.  I am sure you will find it very interesting.

Lastly, while on the road Thursday and Friday last week I was unpleasantly surprised at the traffic in the town of Peterborough, ON (population 135,000) due to the Canadian version of Black Friday.  I had meetings most of the day in town and it was like driving around in downtown Toronto.  I saw accidents on the road and in parking lots, line-ups at banks, gas stations and malls that were insane.  All to get a deal on something that is probably not needed at the end of the day.  While I understand it is good for the economy that the consumer is out there spending, I wonder at what cost from a debt perspective?  This is one US tradition that I would be happy to export back to them!!

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

August 27th, 2013 Business & Market Update

Some good news out of Europe this morning as German Manufacturing increased to the highest level in 16 months indicating that the economy in the region is continuing to improve.  However the systemic risk of the Syrian crisis is front and centre today as all of the West and many other nations are continuing to make accusations as to the use of chemical weapons and with the accusations threats of retaliation from the US, the UK and NATO en masse have been causing markets world wide to fall

Asia was off about three quarters of a point overnight, Euro markets are down about 1.5% US futures are off about a point and Canada is down about a third of a point.

Oil has rallied on the news up over $2.00 to 108.01 which is what is causing the Canadian markets to see moderate losses only. Gold is also rallying on the news up over 26.00 to 1419 as are bonds with money moving back into the safe haven of US Treasuries.  The loonie is down a quarter cent to 94.94.

Both BMO and BNS came with earnings this morning and both beat estimates and matched, for the most part, on revenues.  BMO’s numbers were interesting and I would suggest the beat was not as big as indicated mostly due to the loan loss provisions that were hard to determine for the quarter.  Unlike BNS, BMO did not increase their dividend.  In all a respectable quarter from both institutions however caution remains going forward.

Lastly, home ownership in Canada continues to be a priority for most however ownership continues to be difficult for many as prices are putting many out of the market.  RBC released a report yesterday that suggests many have been priced out of the market and are concerned with the level of debt that they need to take on to purchase a home.  This in my view is a positive development and over time will cause a correction in prices as demand continues to decline to more moderate levels.  Many are starting to realize that while mortgage rates are low and accessible that same dynamic is what continues to push prices higher. Also, the Case Shiller US home price index rose 12.1% year over year through the end of July, which confirms the continued recovery in the US housing market.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management