This morning in Europe, the ECB has been appointed the the Unions top banking supervisor, which I have been suggesting for many months that this is a requirement to provide some degree of financial stability to the region. With this supervisory role comes all the bells and whistles that we have in North America in regard to guarantees, deposit insurance etc. Of course this will not happen overnight and there will be many more heated discussions in the weeks months and years to come however the progress continues to show that the Euro Union moving in the right direction to provide a stable economic environment for the region. While this news is positive, the markets in the region are off about a quarter point on the continuing fiscal cliff stalemate in the US.
Moving to North America, the FOMC released their recent minutes from their monthly meeting late yesterday afternoon and while the monetary stimulus was enhanced with an additional $45bn per month of US treasury purchases on top of the current $40bn per month or mortgage back purchases, Mr. Bernanke made it clear that monetary stimulus alone will not rescue the US economy and the current fiscal discussions going on in Washington need to be successful to avert a recession next year. Of course that commentary caused markets to reverse later in the day yesterday and the follow through this morning, while muted has caused futures to trade flat currently. I have attached the FOMC Minutes (highlights are my emphasis) and a commentary from Credit Suisse FYI.
Also in the US this morning we got the Retail Sales numbers for November which were a little below estimates. We also got the Weekly Jobless Claims which were very positive for the 3 week in a row as 29000 less claimants’ were recorded with the number coming down to 343000 vs. estimates of 369000 and last week at 372000.
Gold however has not fared as well as the recent rally coupled with Bernanke’s comments on employment caused the sellers to come out late yesterday and again this morning as the commodity is down more than 1.5% on big volume once again trading down through the $1700.00 level. Oil is also lower on supply numbers down about a half a point.
In Canada we got the New House Price index for October which showed continued slowing growth with a 2.4% year over year increase however for the month prices were flat.
Gold miner Agnico Eagle (a stock currently in my mandates) has announced they will be increasing the dividend by 10% starting in the next quarter. More evidence that the miners are starting to get the message that income streams are what keep investors interested especially in the higher Beta securities as the volatility in the sector continues.
Kenneth A. Dick, BA, CIM, CFP, FCSI
Portfolio Manager & Branch Manager
Independent Wealth Management