Inflation in China Increases, Europe Flat, US Deficits Up

This morning we find inflation in China has crept back up to 2.5% which caused the Asian markets to sell off overnight.  On the positive side, markets in Japan were up 1.5% as the government approved a $116B(USD) stimulus package to continue to try and ignite the stagnant economy.

In Europe markets are flat this morning with no real news out of the region other than the UK Manufacturing Output numbers for December were slightly lower down 0.3%.

In North America, the Trade numbers in both Canada and US were released for December and both countries saw deficits widening.  In earnings news, Wells Fargo’s profit was up 24% from last year, however the net interest margin on loans did fall.

Ford, after increasing their dividend yesterday announced today that they are adding more than 2200 white collar jobs in the US this year to continue to improve the auto line-up.  Engineering, manufacturing and technology are the main areas that will be added to.

US futures are mixed this morning trading virtually flat currently.

Gold is off about a third of a point and oil is trading lower by about 0.75%.

Lastly, BMO released a report this morning suggesting the Canadian real estate market is in for a soft landing as we go deeper into 2013.  As I have been suggesting of late it would seem that in 2013 we will see declines across the country in real estate values.

Courtesy of:

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

Market Update For January 4th, 2013

This morning we are getting some movement in the gold market as the FOMC yesterday came out with some “hawkish” comments in regard to monetary accommodation suggesting that the stimulus may be cut off sooner than indicated earlier. The news has the gold down over 2.5% today to about $1640 per ounce. Bonds are showing a little weakness on the news down about a quarter point.

In Europe inflation remained unchanged at 2.2% and while the number is good it is still above the 2% target set by the ECB. Euro markets are up slightly this morning on the news.

In North America we got the employment number this morning and Canada once again surprised with an increase of 39000 jobs in December vs. 5000 estimated. Also the unemployment rate fell to 7.1% from 7.2% in November. In the US 155000 new jobs were created last month vs. 152000 estimated which was in line and continues to show that there is consistent job creation occurring in the US. November’s numbers were revised up to 171000 vs. 147000. The unemployment rate edged up slightly to 7.8% from, 7.7%. US futures are looking to open slightly higher on the news. Canada however will likely be lower due to the gold decline regardless of the good employment numbers.

Lastly this morning we continue to see the real estate bubble deflating with some numbers out of both Vancouver and Toronto. In Vancouver, real estate sales feel more than 20% year over year in 2012 and the trend is forecast to continue. In Toronto, condo sales have ground to a halt with December sales off 27% from the previous month. Listings are increasing and units are just not moving. Will 2013 be the year the bubble bursts, we shall see.

Courtesy of:

Kenneth A. Dick, BA, CIM, CFP, FCSI
Portfolio Manager & Branch Manager
Independent Wealth Management