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

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

August 29th, 2013 Business and Market Update

A bit of a rally yesterday as many went bargain hunting as the day progressed.  Of course the threat of war in the middle east is hovering over markets and as we go into the long weekend caution will be the word for all.

In Asia overnight, markets rallied on the North American rise by about a point.  Euro markets are showing gains at midday of about a quarter point.

In North America, the US futures are pointing higher this morning by about a quarter point on higher Q2 GDP of 2.5% vs. 2.2% estimated.  Also the Weekly Jobless Claims came 6000 less than last week at 331000 which was also better than estimates of 339000.  With the housing rally in the US stalled, the GDP and employment numbers are promising.

Gold is off this morning by  7.00 to 1410, oil is lower by 0.50 to 109.56 on no new news out of the middle east, the loonie is lower by 18 bps to 95.15 and the 10 year yields are up in both Canada and the US to 2.67% and 2.82% respectively.

The last of the three big banks reported this morning and all beat estimates on earnings and matched revenue expectations.  Both TD and RBC increased dividends while CIBC will buy back up to 8 million shares over the coming year.  All suggested that margin compression will continue through the balance of fiscal 2013 and 2014 and there has been some slowdown mortgage applications in the last quarter.  The profit beat from all came from the wealth management divisions with an average increase of more than 15%.  Wholesale, retail and capital markets saw an average decrease of 10%.  In all, reasonable reports for the banking oligopoly.

Lastly, Verizon is making a bid for 45% of Vodaphone the big Euro cell company which will provide a solid position in that market.  It also suggests that Verizon may have shelved its Canadian plans for the time being, which in turn should help the Telco’s here in Canada.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

August 27th, 2013 Business & Market Update

Some good news out of Europe this morning as German Manufacturing increased to the highest level in 16 months indicating that the economy in the region is continuing to improve.  However the systemic risk of the Syrian crisis is front and centre today as all of the West and many other nations are continuing to make accusations as to the use of chemical weapons and with the accusations threats of retaliation from the US, the UK and NATO en masse have been causing markets world wide to fall

Asia was off about three quarters of a point overnight, Euro markets are down about 1.5% US futures are off about a point and Canada is down about a third of a point.

Oil has rallied on the news up over $2.00 to 108.01 which is what is causing the Canadian markets to see moderate losses only. Gold is also rallying on the news up over 26.00 to 1419 as are bonds with money moving back into the safe haven of US Treasuries.  The loonie is down a quarter cent to 94.94.

Both BMO and BNS came with earnings this morning and both beat estimates and matched, for the most part, on revenues.  BMO’s numbers were interesting and I would suggest the beat was not as big as indicated mostly due to the loan loss provisions that were hard to determine for the quarter.  Unlike BNS, BMO did not increase their dividend.  In all a respectable quarter from both institutions however caution remains going forward.

Lastly, home ownership in Canada continues to be a priority for most however ownership continues to be difficult for many as prices are putting many out of the market.  RBC released a report yesterday that suggests many have been priced out of the market and are concerned with the level of debt that they need to take on to purchase a home.  This in my view is a positive development and over time will cause a correction in prices as demand continues to decline to more moderate levels.  Many are starting to realize that while mortgage rates are low and accessible that same dynamic is what continues to push prices higher. Also, the Case Shiller US home price index rose 12.1% year over year through the end of July, which confirms the continued recovery in the US housing market.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management