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

April 3rd, 2013 Business News

Overnight, the Nikkei Index (Japan) rose 3% after a few days off and continued news of easier monetary policy which will aid the export firms in the country.  The balance of Asia was mixed regardless of China’s Services Sector PMI numbers moving to new highs for March.

In Europe, after a strong up day yesterday, profit taking is occurring today going into Mario Draghi’s monthly press conference tomorrow.  On average markets in Europe are off about a half a point on low volume trade.

In North America, the ADP Employment Survey was released this morning which should provide some insight into the Government numbers which will be released on Friday morning.  The number came in below estimates at 158000 vs. 200000,  however February was revised up by more than 39000 jobs to 237000, which is suggests a relatively neutral bias.  Looking into the numbers further, 74000 of the new jobs created were by companies with less than 50 employees, which in my view is a very positive trend as small business, the driver of the north American economies’, continues to see solid growth.

In earnings news Monsanto, a mandate position posted strong Q2 earnings beating estimates by 10%.  Top line numbers were also ahead of estimates and were up 15% year over year.  The company also increased guidance for 2013 by 10%.  The big driver was the corn business in both North America and South America.

Futures in the US are flat this morning on the employment numbers.

Gold is continuing its downward spiral this morning off another $5 to $1570 after a big down day yesterday of more than $25 per ounce.  Oil is also trading lower off 70 cents to 96.50 and the Loonie is up slightly this morning at 98.68.

In Canada, Valeant Pharma, a mandate company is increasing its bid for Obagi Medical Products to $24.00 per share from $19.75.  The increased offer will bring some pressure to the stock today.

Lastly this morning, the ED Clark era at TD is coming to an end next November with an announcement this morning that Bharat Masrani, the current head of US operations will be taking over.  Clark will be know for his entry in a big way into the US and Masrani is the man that has run the show for him down there.  Masrani was instrumental in adjusting the risk profile of the bank in the mid 90’s and got the institution through the tech wreck and the 2008 crisis.  With all that said however, since Clark took over as CEO in 2002, the stock has returned approximately 139% to shareholders (8.24% compounded), which is a pretty impressive number.  However, the Royal Bank over the same period is up approximately 325% (14.06% compounded) and the Bank Index is up approximately 240% (11.77% compounded).  Mr. Clark has been paid more than $100mm all in since he took over the role and will have a very nice retirement package to sit back and enjoy.  While I understand the shareholder value he has created, it is sub-par to the rest of group and his compensation is just simply grotesque.

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

Portfolio Manager & Branch Manager