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

October 8th, 2013 Business and Market Update

Asia was higher overnight by about a half a point on no real news other than bargain hunters coming back into the market after a few days of selling.

Europe is off about a quarter point this morning on news of slower German exports in August.

In North America, the focus is still on the budget and debt ceiling impasse in the US Congress.  There was some movement yesterday suggested by the White House that there could be some short-term increase in the debt ceiling to avoid default.  At the same time some of the far right Reps are suggesting that an increase in the debt ceiling is not required as long as interest payments and other immediate costs are met.  Of course the downside would be all of the services that need funding and where they would rank as to priority.  The fact that there are more than 4 million transactions a day that are performed by the government trying to prioritize them would be virtually impossible.  Also, other nations and economic associations including the IMF have chimed in today suggesting a default on US debt would throw the world into deep recession.  At some point the kids in Washington will get it.

US futures are trading higher by a about a quarter point as markets continue to look at this fight as political only.

Canada is higher in the pre-market by about a quarter point on some positive housing start numbers for August.

Gold is off by 3.00 to 1322, oil is up three quarters of a point to 103.77 and the loonie is flat at 96.90.  The ten year bonds in both the US and Canada are relatively flat this morning at 2.64% and 2.58% respectively.

Lastly, the Canadian government determined that Manitoba Telecom cannot sell its interest in Allstream while in the same breath would allow foreign carriers into the country to compete.  Can you say confusion!  Also, US corporate raider Carl Icahn has disclosed that he has amassed a 6% ownership position in Talisman Energy which has the takeover rumors once again making headlines.  The company has been a lacklustre performer for the past several years but does have some prime energy interests in Canada and a market cap of more than $13bn.  We shall see where this goes.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

September 27th, 2013 Business & Market Update

Seeing some weakness in Japan overnight regardless of the fact that inflation accelerated at the fastest pace in September in the past two years.  China was a little stronger on no real news.

Europe is lower trading on the Debt Ceiling impasse, despite economic confidence in the region moving to a 2 year high.  Markets there are off about a quarter point.  Our former BOC leader Mark Carney, now head of the Bank of England suggested that continued positive recovery in the UK would suggest no new stimulus is necessary at this time.  UK markets are off about three quarters of point on the news.

Moving to the US traders continue to square books for the weekend in regard to the Debt Ceiling issue causing futures to decline this morning by about a third of a point.  In my view it is still short term noise that will be dealt with, maybe not over the weekend or on Monday but a solution will come and we will move on.  Opportunities will be apparent based on this short term positioning and we will take advantage of them should they fit into my mandates.  Interestingly, over the past 25 years, the US government has “shut down” 17 times for varying periods and the response once agreement was made was an average increase in capital markets over the next month of around 0.7%.  I have added a piece this morning from our US Strategist, Tony Dwyer to provide some insight into the big picture.  We are also seeing bonds rally this morning as money goes to safe asset with 10 year yields falling to 2.63% in the US and 2.56% in Canada.

The data that I am more interested in is the Employment numbers for September that will be released next Friday.

Canadian markets are following the US lead down about a quarter point.

Gold is higher by 12.00 to 1336 on a weaker US dollar, oil is off slightly to 102.39 and the loonie is virtually flat at 96.9.

Lastly, whether you agree with the Keystone Pipeline or not, I did find it somewhat refreshing to see our Prime Minister call out the US government yesterday suggesting that we would not take no for an answer.  It was a direct shot at the Obama government which in my opinion needs to happen more often, but that’s for another day.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

September 26th, 2013 Business & Markets

A mixed overnight session in Asia as Japan was higher and China lower.  Japan’s economy is improving on the stimulus that Abe continues to provide while in China there are conflicting reports on the state of the economy as two different reports are somewhat contradictory.

Europe is mixed with the macro index off just slightly, despite continued positive news on the recovery in the region.  UK consumer spending was stronger than expected for for August.

US futures are being driven by some positive employment numbers this morning as Weekly Initial Jobless Claims came in 5000 lower than last week at 305000 and 20000 below estimates of 325000.  Continuous claims were at 2.823mm vs. 2.818mm estimated, which is neutral.  The second Q2 GDP revision came in at estimates at 2.5%.  Markets are looking to open up about a quarter point.

Canadian futures are relatively flat this morning with no economic news today with markets continuing to be range bound.

In regard to the Debt Ceiling deadline, I am in the camp that there will be some type of solution by month’s end as the last time the government shut down (in the mid-90’s) is cost GDP about a half a point and a couple of billion dollars to get things restarted.  The global recovery is also a factor as strong economic and political leadership out of the US is paramount in continuing the process.

Gold is down a couple of bucks to 1331, oil is up 0.32 to 102.37 and the loonie is unchanged at 96.96.  The US and Canadian 10 year bonds are trading slightly lower this morning with yields rising to 2.65% and 2.57% respectively.

Lastly, I am seeing some positive indicators that would suggest the 4th quarter could be stronger.  The shipping indices continue to march higher.  Iron Ore (to China) has been increasing for the last 2 quarters out of Brazil and Australia.  Coal and grain shipments have also been moving higher over the last quarter as the dry goods index and the shipbuilding index continue to advance.  We are also seeing Intermodal rail indices over the last few weeks improve dramatically.  Could set up well for a reasonable Q4.  We shall see……

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

September 24th, 2013 Business and Market Update

A quiet overnight in Asia as markets there were weaker by about a quarter point.  China PMI was a stronger yesterday which caused markets to rally initially and profit taking then took over as markets sold off into the close.

In Europe, we are seeing gains with markets up about a half a point mostly on Merkle’s re-election and stronger business confidence numbers out of Germany.  Merkle however did not get a majority (5 seats short) and will have to form a coalition government to get legislation passed which is cause for some concern as the big economy continues to recover.

In the US we are seeing unchanged futures this morning as the focus is on the debt ceiling that must be ratified by the 30th of the month.  The new limit that will take the country through to the end of next year will need to raise from the current $16.7tr level.  Of course both sides of the aisle are at odds on how to limit the cumulative debt.  I am confident a deal will be struck adding a trillion to the current number.  The Case Shiller July Housing numbers were released this morning and were bang on estimates at 12.4% year over year.  Stable is the word I would use to describe sector currently.

TSX 60 futures are a little lower this morning following the US lead.  Of course the big news out of Canada is the bid of $9.00 per share from Fairfax Financial Holdings for Blackberry.  Yes the smart phone maker actually has a bid that has been ratified by the board.  Prem Watsa the CEO of Fairfax and a board member of BB up until the end of last month has a 10% ownership stake in BB.  The bid is smart on many fronts the most important of which is it puts a floor on the shares.  It starts a bidding war (not that I think it will a big fight) but many analysts have already stated that the parts are worth more.  The other thing the bid does is take the company private, which does take an incredible amount of public heat off the stock and may buy the company some time to regroup.  At the end of the day, no matter how it is sliced up, it is a shame this great Canadian story will end with whimper like a few recent others before it.

Gold is down 15.00 to 1312, oil is off 0.67 to 102.05 and the loonie is off slightly to 97.17.  The US and Canadian 10 year bonds are stronger this morning with yields falling to 2.69% and 2.61% respectively.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca