June 6th, 2013 Market Update

After the big hit in North America on the ADP Jobs report yesterday we are seeing a relatively flat opening on the way.  Japan was off a point in sympathy with the North American decline as was China.

In Europe markets are higher by a quarter point at midday on bargain hunting and the fact the BOE and ECB are both leaving the asset purchase programs and interest rates alone basically playing the wait and see game going into the summer.

In the US, Initial Jobless Claims came in down 11000 to 346000 last week which is a good number, but really failing to move markets in that the Non-Farm Payrolls are being released tomorrow morning.  Futures in the US are virtually flat this morning.

The new Bank of Canada Governor Stephen Poloz is giving his inaugural talk to the finance committee this morning and I managed to last about 10 minutes until I started to dose off.  It would seem we have in knack in this country of appointing the most boring, dry bank governors on the planet to the job.  Nothing new is coming out of his mouth and it looks like he is doing the right thing and staying the course for now.

Gold is off slightly to 1400, oil is up 1% to 94.62 and the loonie is down 12 bps to 96.60.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

May 1st, 2013 Market Update

Good morning all and welcome to May.  Yes, tax season is finally over and summer is on the way.

Today many markets are closed for May Day celebrations, which in Europe have turned into May Day protests on austerity.

The China Purchasing Managers Index dropped from 50.9 in March to 50.6 in April which still indicates growth however at a slightly lesser pace.

Tomorrow, Mario Draghi will provide us with some insight into how the Euro zone is fairing and provide forecasts for the balance of the year.  It is widely rumoured that the ECB will reduce rates and or look to some other stimulative measures to help the Euro zone recover.

Today UK Factory Orders saw a nice rise in April to 49.8 vs. 48.6 in March which shows the economy is almost in the growth channel (greater than 50.0 is the benchmark) and this surprising upswing for the month has the UK markets rallying as the balance of the region is closed today.

In the US the ADP Private Payroll numbers for April were released this morning with the number coming at 119000 new jobs created vs. estimates of 150000.  The negative number has caused futures to sell off in the US from a slightly positive bias earlier this morning.  This number in most cases sets up the Monthly Non-Farm Payrolls which are due out on Friday morning with estimates of 145000.

Gold is off $7.00 this morning at 1465, oil is off more than a $1.50 at 91.95 and the Loonie is flat at 99.31.

Lastly this morning, we are now in the “Sell in May and go away” month however our quant analyst Martin Roberge would suggest that this may not be the case this year.  He states,

  • ·         The “Sell in May and Go Away” season has now arrived. But an important dilemma for investors this year is the historical script showing that S&P 500 returns above 10% through April usually hold until the end of the year.
  • ·         Thus, even though markets are likely to maintain their uptrend, volatility should increase from here; hence, the need for investors not to chase recent winners but look for laggards.  We decided to resist cutting our equity exposure because beneath the surface, stocks are pricing in recessionary conditions as suggested by the strong outperformance of defensive stocks this year and the much depressed valuation of resource stocks.
  • ·         We don’t want to sound complacent but as we see next, the investment climate and global economic backdrop are more constructive this year than they were at this time in 2011 and 2012. Moreover, should the ECB cut rates and deliver more, it will add to the probabilities of a second-half recovery, which should normally help cyclical stocks to get out of their funk.
  • ·         This is not spring 2011 and 2012. Key differences are: 1) monetary reflation has gone global and central banks have removed tail risks, 2) leading economic indicators (LEIs) are rising worldwide, 3) growth in Chinese exports and imports is recovering, and 4) the US/global trailing EPS-growth cycle has shifted from deceleration to reacceleration

Some positive but continuing cautious analysis which I am in agreement with.  We shall continue to be defensive and adhere to structural allocation models across all mandates going into the summer.

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

www.canaccord.com

 

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ECB May Cut Interest Rates, Jobs In Canada Down

This morning we will see lighter volume in North America as the entire Eastern seaboard is getting pummeled by this storm.  NYC is to get pounded and based on that many traders will stay home today.  The same will hold true for Toronto.

With that said, Europe is still operating and is up about a half a point at midday.  The region, after a couple of weeks of selling, rebounded today after the head of the ECB suggested that interest rate cuts are possible to continue to stimulate the economy.  Also, China continues to stabilize and grow which is positive for the world economies but the risk of inflation is apparent again as growth accelerates.  Also, EU leaders agreed yesterday that they will seek a more accommodative trade deal with the US and have drafted a joint statement that has been sent to the Whitehouse for discussion.

In North America, futures are just slightly higher this morning.  Canadian Employment numbers came out this morning and the news was not good.  In January, 22000 jobs were lost vs. estimates of an additional 5000.  Also, December’s big plus 40000 jobs was revised down to 31000.  The actual unemployment rate fell to 7.00% but due to people coming out of the workforce altogether not from job creation.  We also got January Housing Starts for January and once again we saw a fall off from the previous month to 160000 units.  That is down from 197000 in December and 201000 in November.  While the US is stabilizing and seeing growth in housing and employment, Canada is stalling with the housing market as the main driver in my opinion.

Commodities are mixed this morning with Gold off a couple of bucks and oil up about a quarter point.

Courtesy of:

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

www.canaccord.com

Inflation in China Increases, Europe Flat, US Deficits Up

This morning we find inflation in China has crept back up to 2.5% which caused the Asian markets to sell off overnight.  On the positive side, markets in Japan were up 1.5% as the government approved a $116B(USD) stimulus package to continue to try and ignite the stagnant economy.

In Europe markets are flat this morning with no real news out of the region other than the UK Manufacturing Output numbers for December were slightly lower down 0.3%.

In North America, the Trade numbers in both Canada and US were released for December and both countries saw deficits widening.  In earnings news, Wells Fargo’s profit was up 24% from last year, however the net interest margin on loans did fall.

Ford, after increasing their dividend yesterday announced today that they are adding more than 2200 white collar jobs in the US this year to continue to improve the auto line-up.  Engineering, manufacturing and technology are the main areas that will be added to.

US futures are mixed this morning trading virtually flat currently.

Gold is off about a third of a point and oil is trading lower by about 0.75%.

Lastly, BMO released a report this morning suggesting the Canadian real estate market is in for a soft landing as we go deeper into 2013.  As I have been suggesting of late it would seem that in 2013 we will see declines across the country in real estate values.

Courtesy of:

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

www.canaccord.com