April 16th, 2013 Market Update

Another sombre morning as we all send our thoughts and prayers out to those affected by the terrorist attack at the Boston Marathon yesterday.  While it has been suggested it was small in nature, three are dead, including an 8 year old and more than 100 injured many critically.  The cowardice that this act makes us all angry, but the focus should be on the health of those affected and support for the authorities in bringing those responsible to justice.

Moving to the markets it was a relatively quiet night in Asia as markets there were mixed.  Europe following the release of German investor morale declined in April to date which has the markets there off about a quarter point at midday.

In the US positive earnings from Goldman Sachs, Ameritrade, Johnson & Johnson and Coke are causing futures to increase after the big sell off yesterday.  Currently we are looking at about a 1% increase on the open.  US Bank, a mandate company met estimates for the first quarter.

CPI was released for March and was slightly below estimates as inflation continues to be absent.  With that said, US Housing starts were up 7% vs. 1.4% estimated which is a large beat.  Housing permits were lower however down 3.9% vs. 0.3% estimates.

Gold is rebounding this morning up about $35.00 to just under $1400.00.  Oil is down another 20 cents to 88.82 and the Loonie is up this morning to 97.75.

We should see some upside in Canada today in sympathy with the US increase and bargain hunters coming in and looking for deals after the sell off yesterday.  We also got February Manufacturing Data that was up 2.6% vs. 0.6% estimated.  This is a solid upside surprise for the Canadian economy.

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


April 8th, 2013 Business Market Update

Today, we are seeing more upside in the Japanese markets as the asset buying program began in earnest.  The Nikkei Index rose another 2.8% overnight, bringing the upside move over the past 10 days to about 10%.  Of course the corresponding downside in the Yen at around 6% would suggest the race to the bottom (currency wise) is on.

Europe is trending higher on some positive German Industrial Output numbers for February and markets there are up about half a point at midday.

On a sad note, former British Prime Minister Margaret Thatcher has passed away at age 87 from a stroke.  The Russians dubbed her the Iron Lady because of her strong personality and relentless negotiating abilities.  She took the UK economy in the late 70’s which was on the verge of collapse and not only turned it around but changed in many ways how the country has been governed to date.  Her relationship with the US and the rest of Europe was strong and she will be remembered as one of the strongest PM’s in UK history.  RIP.

Moving to the North America, futures are higher by about a quarter point on the Asian and Euro news and the start of earnings season today.  Forecasts are for more surprises to the upside than down and for the top line to continue its decline.  If we do get some upside surprises to the top line we very could see the market continue to rally higher against the weaker economic number that were released last week.  Looking at the Employment numbers from Friday, there were a few things that stood out:

  • ·         The underemployment rate fell from 14.3% to 13.8%.  People are in jobs they want to be in.
  • ·         Self-Employed and small business saw increases which, in my view is very positive.
  • ·         The workforce continues to shrink and rightly so as the boomer demographic is retiring thus skewing the unemployment numbers.
  • ·         Last month was revised higher causing the raw number to be much better than announced.

In Canada the numbers were terrible vs. the estimates in raw form, but again the self-employed (small business) saw an increase in the month by 39000.

At the end of the day it is one month, and we shall see if the trend continues but for now we shall stay the course.

Gold is down a couple of bucks trading at 1573, oil is up more than half a point to 93.30 and the Loonie is flat at 98.25.

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

Portfolio Manager & Branch Manager


April 3rd, 2013 Business News

Overnight, the Nikkei Index (Japan) rose 3% after a few days off and continued news of easier monetary policy which will aid the export firms in the country.  The balance of Asia was mixed regardless of China’s Services Sector PMI numbers moving to new highs for March.

In Europe, after a strong up day yesterday, profit taking is occurring today going into Mario Draghi’s monthly press conference tomorrow.  On average markets in Europe are off about a half a point on low volume trade.

In North America, the ADP Employment Survey was released this morning which should provide some insight into the Government numbers which will be released on Friday morning.  The number came in below estimates at 158000 vs. 200000,  however February was revised up by more than 39000 jobs to 237000, which is suggests a relatively neutral bias.  Looking into the numbers further, 74000 of the new jobs created were by companies with less than 50 employees, which in my view is a very positive trend as small business, the driver of the north American economies’, continues to see solid growth.

In earnings news Monsanto, a mandate position posted strong Q2 earnings beating estimates by 10%.  Top line numbers were also ahead of estimates and were up 15% year over year.  The company also increased guidance for 2013 by 10%.  The big driver was the corn business in both North America and South America.

Futures in the US are flat this morning on the employment numbers.

Gold is continuing its downward spiral this morning off another $5 to $1570 after a big down day yesterday of more than $25 per ounce.  Oil is also trading lower off 70 cents to 96.50 and the Loonie is up slightly this morning at 98.68.

In Canada, Valeant Pharma, a mandate company is increasing its bid for Obagi Medical Products to $24.00 per share from $19.75.  The increased offer will bring some pressure to the stock today.

Lastly this morning, the ED Clark era at TD is coming to an end next November with an announcement this morning that Bharat Masrani, the current head of US operations will be taking over.  Clark will be know for his entry in a big way into the US and Masrani is the man that has run the show for him down there.  Masrani was instrumental in adjusting the risk profile of the bank in the mid 90’s and got the institution through the tech wreck and the 2008 crisis.  With all that said however, since Clark took over as CEO in 2002, the stock has returned approximately 139% to shareholders (8.24% compounded), which is a pretty impressive number.  However, the Royal Bank over the same period is up approximately 325% (14.06% compounded) and the Bank Index is up approximately 240% (11.77% compounded).  Mr. Clark has been paid more than $100mm all in since he took over the role and will have a very nice retirement package to sit back and enjoy.  While I understand the shareholder value he has created, it is sub-par to the rest of group and his compensation is just simply grotesque.

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

Portfolio Manager & Branch Manager