December 2nd, 2013 Business & Market Update

Some good news out of China overnight as November Manufacturing outpaced estimates, however markets there were off about a half a point.  Japan was flat.

In Europe, at midday markets are mixed with the EuroStoxx Index down about a fifth of a point contrary to positive news out of the UK as manufacturing there was also stronger for November.

US markets are back at full speed today after the extended long weekend and it would seem that while the shopping spree down there was strong sales numbers were lower due to deeper discounts.  Futures however are marginally stronger this morning.  Canada is following suit up slightly over Fridays close.

Gold is off 14.00 to 1237 on the continual strengthening of the US Dollar, oil is up 0.38 to 93.10 and the loonie continues to fall off about 0.14 cents to 94.08 the lowest level in two years.  Bonds are trading lower this morning with the US and Canadian 10 year notes yielding 2.77% and 2.58% respectively.

Tomorrow marks the start of the big Canadian banking oligopoly announcing earnings as BMO is first to report.  National will report Wednesday, CIBC, RBC and TD on Thursday and BNS on Friday.  Generally estimates are suggesting slight beats across the board with the possibility of dividend increases from TD and RBC.

I have added some further insight from the Pimco Due Diligence Conference that I attended recently in regard to the US Housing market which Pimco has done exhaustive research on in regard to their investment in non-agency mortgage backed securities.  While there has been a solid recovery, there is a great deal of room left in many regions of the country for continued growth.  A key takeaway was the fact the residential real estate is a market of houses not a housing market.  The difference is the fact that not all markets are the same (Manhattan vs. south Florida as an example).  A national number indicating housing starts, pricing and permits does not provide a realistic picture regionally of where value lies.  Not surprisingly, when asked about the Canadian market, for the most part the response was that it is overvalued.  Of course the same analysis applies in regard to regions.  I am sure you will find it very interesting.

Lastly, while on the road Thursday and Friday last week I was unpleasantly surprised at the traffic in the town of Peterborough, ON (population 135,000) due to the Canadian version of Black Friday.  I had meetings most of the day in town and it was like driving around in downtown Toronto.  I saw accidents on the road and in parking lots, line-ups at banks, gas stations and malls that were insane.  All to get a deal on something that is probably not needed at the end of the day.  While I understand it is good for the economy that the consumer is out there spending, I wonder at what cost from a debt perspective?  This is one US tradition that I would be happy to export back to them!!

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

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