October 17th, 2013 Business and Market Update

Well, they got it done, sort of.  As I mentioned yesterday, the probability for a short-term deal was high and that is exactly what the US congressional and senate leaders ratified last night.  They have until January 15th, 2014 to get a bipartisan budget put together and until February 7th, 2014 to get a new level approved on the debt ceiling.  For now however all can get back to work.  The fallout however has been a loss of production in the billions over the 16 day period.

Markets in Asia, followed the US overnight rallying as a deal was imminent.  Europe on the other hand is following US futures selling off about a half a point as now all eyes are back on the cost of the shutdown and the real economic and earnings news that should drive markets.  Moving to real numbers, the Weekly Jobless Claims in the US fell to 358000 from more than 370000 last week.

Gold is up large this morning more than 30.00 to 1317 on the weak dollar as the deal in Washington would suggest more debt, no cuts to spending and no tapering in the near future.  Oil is off 1.20 to 101.07 and the loonie is stronger by 0.20 to 97.03 on the US dollar weakness.  Bonds are rallying as the taper talk will likely be off the table until sometime in the New Year.  The US and Canadian 10 year bonds are yielding 2.61% and 2.56% respectively.

In earnings news, mandate companies Hubbell Inc and Union Pacific both reported earnings that beat estimates and met or exceeded revenue targets.

Lastly, the Prime Minister in Brussels today to try and ink a trade deal with the Euro Union.  The news has been back burner while the mess in the US has been playing out.  The deal will help both Canada and Europe continue to move goods and services freely between the regions and provide some economic incentive to do so.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

August 20th, 2013 Business & Market Update

Overnight in Asia, markets were off more than 2% on the declines in North America and continued concerns over the situation in the middle east and the Fed minutes release later today.

Europe is off about 1% at midday for the same reasons.

The North American futures however are pointing higher with the US up about a third of a point and Canada just slightly positive.

Gold is up about 4.00 to 1370, oil is lower by 0.90 to 105.96 and the loonie is off half a cent at 96.19.

Bonds are rallying today with 10 year yields in Canada at 2.68% and in the US at 2.83%.  My analysis on the fixed income markets going forward has been completed and I will be implementing the changes before the end of the month.

Lastly, for those that may have forgot , the US Debt Ceiling limit that was extended to September 30th from May is looming and will once again need to be raised.  I do believe it will happen, however the bond buying that the Fed continues to do will have to be pulled back at some point to reduce the continuing escalation of the cumulative debt.  Also, Obama care is at the point of implementation and it will also cause the public debt to increase along with taxes.  With that said, there will also be some great opportunities in the health care area as more are able to utilize services they could not before.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

July 12th, 2013 Business & Market Update

It would seem that the Chinese are starting to come to terms with the fact that growth at 8 to 10% a year is just not sustainable over time and a senior official in the finance department has suggested that 6 to 7% is more realistic for the balance of the fiscal year.  That comment caused the markets over there to fall by about a point and a half overnight.  Japan was relatively flat.

In Europe, we are seeing modest gains at midday with markets higher by about a quarter point.  Factory output in May fell for the first time in four months showing that the economy is still fragile in the region.  On the positive side, S&P has upgraded its outlook on Irelands credit rating suggesting the debt may fall faster than anticipated. While other countries in the union seem to be fighting continuously politically as to how to get things done, Ireland’s political parties have put the politics aside and got things done. Pretty rare in the world today but a great example to other countries in financial crisis.

The US markets are set to open slightly higher as JP Morgan and Wells Fargo both beat consensus estimates.  JP Morgan’s loan loss provisions were lower by 78% and both the top and bottom lines were stronger regardless of  higher mortgage interest rates for the quarter.

Markets have had a nice rebound this week based on the clarification by the FOMC on the tapering program in regard to asset purchases.  The gains have been across the board as cash and fixed income assets continue to flow into the capital markets.

In Canada we are going to see about a quarter point advance on the open following the US lead.

Commodities are mixed with gold off 7 to 1273, oil up 0.60 to 104.99 and the loonie down a fifth of a cent to 96.29.

Bond yields have retreated this week after the Fed minutes release with the ten year treasury yield falling back to 2.55% from 2.66% last week.  In Canada we got a similar move with 10 year GOC bonds yielding 2.42% down from 2.51% last week.

For now we seem to be in a holding pattern going deeper into earnings season which will tell the story in regard to continued recovery.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

June 25th, 2013 Business Update

The volatility show continues however, yesterday we did see some buying (investors) coming into the game in the defensive sectors that have been grossly oversold over the past month causing markets to finish off the lows of the days and many of the “bond surrogate” stocks actually finish higher.

Overnight in China, the PBOC reiterated that they have and will continue to provide liquidity to banks that require funding to maintain reserves.  That news caused a massive reversal in the capital markets causing the Shanghai index to finish down about three quarters of a point.

Europe on the other hand has rallied at midday up about 1.50% on the positive news out of China and from the ECB suggesting the exit from stimulative monetary policy in the region is a long way away.

In the US, Durable Goods Orders were released and were north of estimates both on a gross basis and stripping out transports.  Also, the Case Shiller Home Index was stronger once again month over month and year over year ahead of estimates.  Of course with these crazy markets does good news economically mean higher markets?  It should, but of course it also means less liquidity (in the future) as the Fed reduces the stimulus.  The bottom line, and the markets have it right this morning, is as the economy improves so should markets and futures are higher this morning by about three quarters of a point.

Canadian futures are also higher by about the same amount.

Bond markets are higher on bargain hunting and to make things even more confusing so are the commodities.  Gold is up 4 bucks to 1280, oil is up 40 cents to 95.59 and the loonie is up slightly to 95.28.

Bottom line folks, don’t get caught up in the daily noise.  Portfolios are in great shape as the recovery continues and other than allocation model balancing and some sector rotation the strategy continues.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

June 21st, 2013 Business Update

The last day of spring was a red one with markets all over the planet down about 2.5% on the day with no safe place to hide.  Gold was off more than $80.00 and bonds, the safe place that all are supposed to go fell in price as yields rose.  If you were going to suggest that none of that made any sense, you would be correct.  Every asset class yesterday fell in value (except cash) which in most cases would suggest a capitulation as traders try run away.  Not surprisingly, this is when investors remain in the game, rotate sectors in an orderly manner and add to oversold positions (in this case essential services).

Overnight in Asia, bargain hunters came back to the table driving Japan higher by more than 1.5%.  China and Australia both were off about a half a point on real economic news as China injected some cash into the banking system.

Europe is trading slightly higher as markets there have turned in the last hour on new real news other than day traders are taking profit at midday and waiting for direction as North American markets open.

Futures in the US are higher by about a half a point as are TSX 60 futures.  Investors and traders are looking for some bargains this morning after the sell off yesterday.

Gold is up 6 bucks to 1292, oil is flat at 95.07 and the loonie is off half a cent to 95.63.

The Friday bond report reiterates what I have been commenting on all week, so the news is not new.  With that said, in the US, 2yr yields were up to 0.327% vs. 0.278% last Friday, 10yr – 2.406% vs. 2.138% and 30yr – 3.48% vs. 3.32%.  In Canada, 2yr – 1.179% vs. 1.112%, 10yr – 2.239% vs. 2.124% and 30yr – 2.804% vs. 2.689%.  Again, while yields have increased I believe all will agree that giving the US or Canadian Government money for 30 years at 2.8% or 3.32% would be financially prudent.

The speed at which markets are moving continues to suggest organized methodical changes to portfolios which I continue to practice.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

 

Market Update For January 4th, 2013

This morning we are getting some movement in the gold market as the FOMC yesterday came out with some “hawkish” comments in regard to monetary accommodation suggesting that the stimulus may be cut off sooner than indicated earlier. The news has the gold down over 2.5% today to about $1640 per ounce. Bonds are showing a little weakness on the news down about a quarter point.

In Europe inflation remained unchanged at 2.2% and while the number is good it is still above the 2% target set by the ECB. Euro markets are up slightly this morning on the news.

In North America we got the employment number this morning and Canada once again surprised with an increase of 39000 jobs in December vs. 5000 estimated. Also the unemployment rate fell to 7.1% from 7.2% in November. In the US 155000 new jobs were created last month vs. 152000 estimated which was in line and continues to show that there is consistent job creation occurring in the US. November’s numbers were revised up to 171000 vs. 147000. The unemployment rate edged up slightly to 7.8% from, 7.7%. US futures are looking to open slightly higher on the news. Canada however will likely be lower due to the gold decline regardless of the good employment numbers.

Lastly this morning we continue to see the real estate bubble deflating with some numbers out of both Vancouver and Toronto. In Vancouver, real estate sales feel more than 20% year over year in 2012 and the trend is forecast to continue. In Toronto, condo sales have ground to a halt with December sales off 27% from the previous month. Listings are increasing and units are just not moving. Will 2013 be the year the bubble bursts, we shall see.

Courtesy of:

Kenneth A. Dick, BA, CIM, CFP, FCSI
Portfolio Manager & Branch Manager
Independent Wealth Management

www.canaccord.com