July 3rd, 2013 Business and Market Update

In Asia the Chinese PMI numbers were released and were a nice surprise to the upside in regard to the services sector.  However the construction industry is continuing to stagnate. Markets there were off about a point overnight.

In Europe, while we continue to see improvement across the board for a reasonable recovery in the the second half of the year, markets have sold off at midday by about 1.5% on news that Portugal is once again in trouble as 10 year bonds there broke through the 8% level yesterday.  There have been some issues within the government in regard to difference of opinion on the austerity programs running in the country.  Threatened resignations from a couple of ministers in the finance department have the markets concerned.

In the US lots of employment information this morning and most of it good.  The ADP Private Payrolls for June were released and came in well above the estimate of 160000 at 188000.  We also got Initial Weekly Jobless Claims that were just below estimates of 345000 at 343000.  Both numbers suggest that the employment picture continues to improve, albeit at a slow pace.  Markets are trending lower however on the world news and the unrest in Egypt.  Futures are off about a quarter point, which is about half as much as when I came into the office at 7am indicating the jobs numbers have had some effect on moderating markets.  The monthly employment numbers for June will be released on Friday, due to the US Independence Day holiday tomorrow.

Canadian futures are lower by about a quarter point regardless of the resource uptick.

Gold is higher by about 5 bucks to 1250, oil continues its run higher on the continued unrest in Egypt by about 1.75 to 101.25.  This latest run on oil is due to the situation in Egypt which does suggest that no matter what anyone suggests self sustaining fossil fuel production makes a great deal of sense for North America as the unrest in the Middle East never seems to end.  The loonie is virtually flat at 94.75.

With the US holiday tomorrow, markets to the south close at 1pm today and reopen on Friday. Also, volumes in Toronto will be light through to the end of the week.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

May 23rd, 2013 Market Update

Well, it would seem with Mr. Bernanke confusing the markets yesterday and the Chinese PMI (Purchasing Managers Index) dropping below 50.0 for May to date which signals contraction, has the markets in decline across the globe today.  The biggest hit is in Japan down 7.32% (the market is still up over 43% year to date).  China and Europe are off about 2.5% and futures in the US are down about three quarters of a point.

Of course, as per usual, the reaction is extreme and in my view represents a buying opportunity for investors.  Traders will get slaughtered on both sides of the market with these extreme fluctuations and I continue to look for value and add to positions on weakness.  Hedging the fixed income component of portfolios looking out to the world, corporate, high yield and mortgage debt will help to offset the downside and volatility in Canadian government debt.

As I mentioned yesterday, Mr. Bernanke would comment on how and when the bond buying program would taper off and his commentary and answers to the questions asked seemed to confuse traders as to which way to go.  Bond prices decreased to the point where there was some parody in yield on both the long bond and dividend yield on the S&P 500 which caused equities to sell off on the yield trade.  Move to safer assets (which many would question these days) from equities.  This morning bond prices have reversed trading higher at the long end by about a quarter point, which would suggest that both equities and bonds are not trading in concert.

Of course the good news out of Europe on the PMI number increasing there and the US initial Jobless Claims falling 23000 from last week to 340000 did not seem to have any effect on the markets this morning.  Traders are looking for excuses to get out and the news yesterday and today was the trigger.

Gold is moving higher on the news this morning up about 20 bucks to 1388.00.  Oil is off on the news down 1.25 to 93.00 and the loonie is stronger up 17bps to 96.63.

As mentioned yesterday the big collusive oligopoly is releasing earnings over the next few days and TD Bank came this morning with a miss of a cent a share.  Revenue was in line.  Loan loss provisions were lower which helped increase earnings due to the housing market continuing to slow.  US operations represented about a third of the retail banking income.  Wholesale banking income (trading, investment banking and corporate lending) rose the highest up 12% for the quarter.  In summary, a slight miss with no real organic growth.  The stock will trade down on the news this morning and the general down trend in the markets today.

Last but not least, the US House of Representatives voted once again to pass the Keystone XL Pipeline’s northern leg from Alberta to Nebraska.  The vote which passed easily still needs Senate approval which may be a more difficult task as the Senate is controlled by the Democrats.  Obama’s office has stated that they have recommended that the President veto the bill should it pass both branches of government, however if the Senate gets enough positive votes the veto could be bypassed.  For the record this is the 5th time the bill has passed in the house over the last 5 years.  The Nebraska to gulf shores leg is almost complete which shows how far behind the northern leg is currently.  Energy independence, job creation and a strong environmental report, stamped by the White House, it would seem are not enough for the left side of the aisle to get this thing built.  In the interim Trans Canada along with the other pipeline companies in Canada continue to look for other markets to export to and will find markets for the product.  While we all would like a fossil fuel free world, the reality is that it is not going to happen in the near term.  Becoming energy independent in North America would save billions in defense spending in the Middle East redirecting those assets home to programs that are necessary to all namely, infrastructure, education and health care to name a few.  Politics and reality once again prove to be like oil and water.  The saga continues..

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca