December 5th, 2013 Business Update

A sell-off in Japan overnight as the Asian market caught up with the US.  China in contrast was off just 0.20%.

In Europe at midday markets are flat on no changes in from the ECB as Mario Draghi held his monthly press conference.  There has been some inflation pick-up and reduction in unemployment causing pause in any changes.

In the US the Initial Weekly Jobless Claims were released and declined 23000 from last week to 298000.  Also, Q3 GDP has been revised to 3.6% up from 2.8% and estimated at 3.1%.  Some solid economic numbers leading into the Non-Farm Payrolls tomorrow morning.  Markets are slightly higher.

Canadian futures are trading lower on bank earnings this morning.  Both RBC and CIBC beat on the bottom lines while TD missed.  Revenue was strong at all three however CIBC missed on the top line.  RBC announced that CEO Gord Nixon will be stepping down next fall, which is a little early for a bank CEO in Canada.  TD is splitting 2-1 and increased the dividend by a penny.  CIBC had some one time charges that caused weakness in the quarter.

Gold continues the downward trend off 23.00 to 1224, oil is up a nickel to 97.26 and the loonie is stronger this morning up 0.11 to 93.79.  US and Canadian 10 year bonds are trading a little lower this morning yielding 2.86% and 2.67% respectively.

Lastly, I have added another interesting piece from the Pimco Conference that I attended a couple of weeks ago.  The income story is an important one to most of my clients and most Canadians.  With low real interest rates and it would seem the rise in rates to come, one of the biggest dilemmas currently is how to invest in the asset class while preserving capital and generating a reasonable amount of income.  The article speaks of how Pimco sees the next year and what they do to try and provide a reasonable solution.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

November 25th Business & Market Update

With this week being the start of the holiday season in the US, markets will be fairly quiet going into the Thanksgiving holiday on Thursday and while markets will be open Friday volumes will be much lower.  I will be on the road Thursday and Friday in and out of meetings both days, but accessible and will be checking in often.  The Morning Blog will be attachments only Thursday and back to normal Friday.

Overnight in Asia, markets were mixed with Japan up 1.5% and China down about a half a point.  Japan’s rise is on top of analysts suggesting that Abenomics starting to take effect as the deflationary period in the region is coming to an end.  China on the other hand after a 7% move higher in the last week alone was off on profit taking.

Europe is up a about a half a point on solid US markets, the Iran nuclear deal with the US suggesting the country will curb further nuclear development and comments from the ECB that the region will not slip back into a full recession as growth continues to be positive.

The US and Canadian futures markets are higher this morning by about a quarter point on much of the above news along with the fact the dollar is stronger this morning.

The stronger US currency is causing more concern for gold investors as the commodity is off 10.00 to 1234.00, oil on the Iran deal is down 1.20 to 93.563 and the loonie is trading lower by a quarter cent to 94.80.  The US and Canadian 10 year bonds are lower this morning with yields at 2.75% and 2.59% respectively.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

November 19th, 2013 Business & Market Update

A sloppy overnight and morning session in both Asia and Europe with markets in both regions off.  Asia is down about a quarter point on profit taking after a couple of strong days and Europe is off on weak earnings reports.  The OECD suggested that the ECB increase the pace of asset purchases to avoid a Japanese style deflationary economy going forward.

The US and Canadian futures are virtually flat this morning with a slight bias to the downside.

Gold is flat this morning at 1272, oil is off a quarter to 93.43 and the loonie is down slightly to 95.85.  Bond markets are a little soft this morning with yields in the US and Canada at 2.69% and 2.54% respectively.

Mandate company Home Depot released earnings this morning and beat on both earnings and revenues and provided stronger guidance going into the next year.

Lastly, I will be away tomorrow through Friday at the Pimco Due Diligence conference out west.  Pimco is the biggest fixed income money manager on the planet handling more than $2trillion.  Most of my mandates hold the Monthly Income Fund and I am looking for more ideas going into the New Year.  The conference will be highlighting fixed income themes going forward into the rising interest rate environment that may be coming in the next year and how to capitalize on it.  As you are all aware we have had a positive 30 year run in the bond markets and based on the size of the asset class and the weight in most allocation models the impending rise in rates will cause capital erosion and poor returns if simple buy and hold strategies are maintained.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

November 13th, 2013 Business & Market Update

This morning we are seeing some weakness in Asia as the Chinese continue to try and determine how free of a market they will allow in the future.  The general consensus is a more accessible market is welcome, however at what cost.  China was off overnight by about 1.75%, while Japan was fairly quiet with only a slight decline.

Europe is weaker on on good news out of the UK on employment improving at a faster pace that thought (yes good news is bad news?).  Also, the ECB is trying to determine why Germany continues to have strong current account surplus (they export far more than they import) which does not bolster internal growth in the big Euro economy.  The report is to be released in the early New Year.  Markets in Europe are off about a point.

US and Canadian futures are lower this morning on continuing discussion and speculation on when the Fed will begin to taper bond purchases (QE?).  So everyone is aware, the US cannot go on forever increasing the size of its balance sheet, therefore, at some point in the not so distant future the FOMC will announce a decreased level of purchases.  Why this is a shock to anyone is beyond me, but markets continue to trade on a volatile basis around the rumour.  As I have mentioned in many of my blogs, corrections are normal in bull markets and we will take advantage of lower pricing when and if that occurs.  I have also been repositioning the fixed income portfolios in all mandates to take advantage of a higher interest environment.  US and Canadian futures are trading lower by about a half a point.

Gold is up 5 bucks to 1275, oil is up 0.33 to 93.36 and the loonie is stronger by a couple of basis points to 95.39.  Bond markets are rallying this morning with the US and Canada 10 year bonds yielding 2.74% and 2.63% respectively.

Lastly this morning, the Canadian Finance Minister provided and economic update yesterday in Edmonton and suggested that a surplus of about $3.7bn was possible by 2015.  I have included the highlights from the speech below which were released by the Finance Department yesterday afternoon:

Highlights

  • The federal deficit has been reduced by almost two-thirds, from $55.6 billion in 2009–10 to $18.9 billion in 2012–13. Direct program spending has fallen for the third consecutive year, from $122.8 billion in 2009–10 to $117.7 billion in 2012–13.
  • The projected budgetary balance has improved across the forecast horizon as a result of policy decisions and changes to the forecast since Budget 2013. The Government projects a deficit of $17.9 billion in 2013–14, down from the $18.9-billion deficit recorded in 2012–13. This projection takes into account the estimated federal liability of $2.8 billion for disaster assistance related to the recent flooding in Alberta and the $60 million in assistance announced for the town of Lac-Mégantic. The deficit is projected to decline to $5.5 billion in 2014–15. A surplus of $3.7 billion is projected for 2015–16, even after taking into account a $3.0-billion adjustment for risk.
  • The Government remains on track to return to a balanced budget in 2015. Eliminating the deficit will ensure that the federal debt-to-GDP (gross domestic product) ratio will fall to low, pre-recession levels by 2017–18 and that Canada’s total government net debt-to-GDP ratio remains the lowest in the Group of Seven (G-7).
  • The Government is also on track to achieve the target, announced this September at the G-20 Leaders’ Summit in St. Petersburg, Russia, of reducing the federal debt-to-GDP ratio to 25 per cent by 2021.
  • The Canadian economy has experienced the best performance among G-7 countries over the recovery in terms of both output and job creation.
  • However, the global economic environment remains highly uncertain and downside risks continue to weigh on the outlook. While economic growth in Canada has remained resilient, Canada is not immune to developments outside its borders. Global economic weakness has weighed on our exports, which has restrained Canada’s real GDP growth. More recently, the weak external environment has dampened the prices of our export commodities which, combined with low domestic inflation, has resulted in weaker nominal GDP growth than was expected in Budget 2013.
  • To support jobs and growth, in September 2013 the Government announced that it will freeze the Employment Insurance premium rate at the 2013 level of $1.88 per $100 of insurable earnings for 2014, and additionally that the rate will be set no higher than $1.88 for 2015 and 2016.
  • As announced in the Speech from the Throne, the Government is reintroducing a freeze on departmental operating spending, which will incent departments to use their existing resources more efficiently. The freeze will apply to the 2014–15 and 2015–16 fiscal years and will help ensure a return to balanced budgets in 2015.
  • The Government is undertaking a systematic review of its corporate assets as a normal part of good governance, with a view to improving their efficiency and effectiveness and ensuring value for taxpayers. When it is in the best interest of Canadians, assets will be sold. As a first step, onSeptember 16, the Government divested its interests in 30 million common shares in General Motors. The Government is also updating its spending projections in light of lower-than-expected departmental spending in 2012–13, which reflects the Government’s commitment to the responsible use of public funds—funds are only spent when necessary.

Note: This document incorporates economic, financial and fiscal data available up to and including November 8, 2013, unless otherwise indicated.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

November 7th, 2013 Business & Market Update

Asia sold off overnight by about three quarters of a point awaiting the economic news out of Europe and the US.

Europe at midday is rallying on the news that the ECB has cut its overnight rate in half to 0.25% to combat continued deflation in the region.  Markets are higher by 1.5%.  Draghi suggested that the economy is starting to show positive signs across the entire region and by supplying more liquidity that trend should continue into 2014.

In the US, Q3 GDP on a year over year basis came in at 2.8% vs. estimates at 2.0%.  This is a large beat and shows that economic recovery is continuing at a stronger pace than thought over the last quarter.  The previous month year over year was not revised confirming the stronger numbers.  Also, Initial Weekly Jobless Claims were released and came in at 336000 vs. 335000 estimated.  The decline from last week was 9000.  Last week was revised higher by 5000 so the net over the last two weeks is in the range that is acceptable and it would seem stable.  Futures are pointing higher by about a half a point in the US and about a quarter point in Canada on the back of the positive news.

Gold is selling off into the news down 15.00 to 1302, oil is off 0.32 to 94.48 and the loonie is weaker by 0.30 to 95.70.  USD strength today is moving the commodities markets lower.  Bond markets are stronger across the entire curve this morning with the ten year yields falling in both the US and Canada to 2.64% and 2.53% respectively.

In mandate earnings news this morning, BCE missed by 2 cents on the bottom line but reaffirmed guidance for the balance of the year and the accretive effect of the Astral merger on 2014.  Manulife beat on both the bottom and top lines, RioCan beat on the bottom line and on Funds From Operations (FFO) and Sun Life beat on both the bottom and top line.

Twitter comes to the market today with a final IPO price of $26.00 under the symbol TWTR.  It will be interesting to see how the stock trades out of the box as all will be comparing it to the Facebook debacle of two years ago.

Lastly, tomorrow the October Non-farm Payroll numbers will be released and will be somewhat skewed due to the US government shutdown, however they will provide some insight going into the holiday season.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

November 6th, 2013 Market / Business Update

In Asia overnight markets were generally quiet, however Japan did move higher on great sales and earnings numbers from Toyota.  Japan closed up 0.80%.

Europe bounced back and at midday the EuroStoxx is up 0.70% mainly on the thought that at the ECB policy meeting Thursday some further monetary accommodation will be provided and continued positive economic data.

US and Canadian Futures are trading higher by a third of a point on positive earnings news.

Gold is stronger by 9.00 to 1317, oil rebounded 0.56 to 93.93 and the loonie is stronger by 0.10 to 95.76.  The 10 year US and Canada Bonds continue to creep lower as yields are now at 2.65% and 2.54% respectively.

Mandate earnings news saw, Magna, Keyera and Gibson Energy all beat estimates.

Lastly, unless you have been living under a rock for the past week or so you would have seen the debacle that has become the City of Toronto and the politicians running it with the emphasis on the Mayor.  I would suggest, that regardless of what this public official has done to embarrass himself and the city, he has done what he was elected to do.  Of course this is no excuse for his behavior.  What amazes me is the fact the Ontario government threw almost $1bn away on two gas plants that were never built and the Federal government has been embroiled in a Senate debacle and cover-up for the last year and at the end of the day no one seems to care about either of these situations, in the media anyway.  I am now officially politically agnostic as I just don’t trust any of them!

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

November 5th, 2013 Business & Market Update

Overnight in Asia, Chinese markets were stronger by about a third of a point on news out of the government that growth of 7.2% is required to provide strong employment over the next year.  Japan was also higher as bargain hunters stepped in after a few days of losses.

In Europe the forecasts are coming for 2014 and 2015 and as mentioned yesterday, the road is bumpy but it would seem the big economy is going in the right direction.  2013 will end slightly positive with GDP at about 0.4%.  The forecast for 2014 is 1.1% and 2015 1.7%.  Also, the UK Service Sector advanced at the fastest pace in more than 16 years.  None of this news however is what the markets were looking for as an interest rate cut and or more asset purchases by the ECB is what traders want.  To that end markets in the region are down about a point at midday.

US and Canadian futures are trading down about a quarter point this morning as many are still setting up for the onslaught of economic news coming toward the end of the week.

Gold is up slightly this morning to 1314, oil is off 0.29 to 94.33 and the loonie is down about a quarter cent to 95.68.  Bonds are off slightly with the US and Canadian 10 years’ yielding 2.62% and 2.50% respectively.

Mandate earnings out this morning are showing beats across the board with CVS Caremark, Brookfield Renewable Energy and TransCanada all coming in ahead of estimates.  All three securities are trending higher in the pre-market.

Lastly, a few other things that caught my eye this morning:

  • ·         Twitter has increased the price of the IPO to the mid $20’s from the mid teens.
  • ·         Blackberry settled in down about 17% yesterday and looks to open where it closed this morning as the deal makers are trying to spin the latest developments, I continue to suggest avoidance.
  • ·         EnCana, once the darling of the natural gas industry in Canada this morning came out with a big earnings miss and a re-structuring program that will see the company downsize by about 20%.  The company is also cutting its dividend by two thirds and spinning off Clearwater Minerals in an IPO.
Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca