November 8th, 2013 Business & Market Update

In Asia overnight, markets were weaker by about a point on a higher Chinese trade surplus in October.

Europe is off about three quarters of a point on the credit downgrade by S&P on France.  The downgrade of one notch is attributable to the slower pace of recovery for the second largest economy in the region.

In the US, the Non-Farm Payrolls for October were released this morning and were well above estimates at 204000 vs. 120000.  A massive beat to say the least.  Also, September was revised up 15000 to 163000.  The unemployment rate increased slightly to 7.3% from 7.2% on an increase in rate of those no longer looking for work.  Of course this news was initially met with futures selling off (you know by now that good news is bad for the markets?) With futures trading down about a quarter point.  This number brings the tapering discussion back into play and thus the debt markets are falling like a stone this morning with the 10 year US bond yielding 2.73% up from 2.64% yesterday.  Oh how memories are short, keep in mind the debt ceiling and budget talks will be back on the front burner early in the new year which will likely take us for another ride on the big political coaster.  I continue to tweak all mandates to take into account the changes and the pace of change and as investors we are looking beyond the next report and continue to invest in positions that will provide preservation of capital with a strong income component and sustainable longer term growth.

Canadian employment was also released this morning and beat by a couple of thousand jobs to 13200 for October.  There were no revisions to September and the rate ticked up a notch to 7.0%.  TSX futures were lower by a quarter point however the Canadian 10 year bond yield was up about half of its US counterpart at 2.58%.

The good jobs news has the USD rallying and thus trashing gold as the metal is off 17.00 to 1291.  Oil is up on the news to 94.45 and the loonie is down about a third of a cent to 95.31.

In mandate earnings news this morning Telus beat on earnings and met revenues.  The company also increased the dividend by 12.5%.  Arc Resources met on both bottom and top line, as did CI Financial, Firm Capital and InterPipe.  Brookfield Asset Management beat across the board.

Lastly, Twitter increased on its first day of trading yesterday by 80% and the entire float on the issue turned over at least once!  Not bad considering most earnings estimates would not suggest the company will be profitable until 2015 at the earliest.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 7th, 2013 Business & Market Update

Asia sold off overnight by about three quarters of a point awaiting the economic news out of Europe and the US.

Europe at midday is rallying on the news that the ECB has cut its overnight rate in half to 0.25% to combat continued deflation in the region.  Markets are higher by 1.5%.  Draghi suggested that the economy is starting to show positive signs across the entire region and by supplying more liquidity that trend should continue into 2014.

In the US, Q3 GDP on a year over year basis came in at 2.8% vs. estimates at 2.0%.  This is a large beat and shows that economic recovery is continuing at a stronger pace than thought over the last quarter.  The previous month year over year was not revised confirming the stronger numbers.  Also, Initial Weekly Jobless Claims were released and came in at 336000 vs. 335000 estimated.  The decline from last week was 9000.  Last week was revised higher by 5000 so the net over the last two weeks is in the range that is acceptable and it would seem stable.  Futures are pointing higher by about a half a point in the US and about a quarter point in Canada on the back of the positive news.

Gold is selling off into the news down 15.00 to 1302, oil is off 0.32 to 94.48 and the loonie is weaker by 0.30 to 95.70.  USD strength today is moving the commodities markets lower.  Bond markets are stronger across the entire curve this morning with the ten year yields falling in both the US and Canada to 2.64% and 2.53% respectively.

In mandate earnings news this morning, BCE missed by 2 cents on the bottom line but reaffirmed guidance for the balance of the year and the accretive effect of the Astral merger on 2014.  Manulife beat on both the bottom and top lines, RioCan beat on the bottom line and on Funds From Operations (FFO) and Sun Life beat on both the bottom and top line.

Twitter comes to the market today with a final IPO price of $26.00 under the symbol TWTR.  It will be interesting to see how the stock trades out of the box as all will be comparing it to the Facebook debacle of two years ago.

Lastly, tomorrow the October Non-farm Payroll numbers will be released and will be somewhat skewed due to the US government shutdown, however they will provide some insight going into the holiday season.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

November 5th, 2013 Business & Market Update

Overnight in Asia, Chinese markets were stronger by about a third of a point on news out of the government that growth of 7.2% is required to provide strong employment over the next year.  Japan was also higher as bargain hunters stepped in after a few days of losses.

In Europe the forecasts are coming for 2014 and 2015 and as mentioned yesterday, the road is bumpy but it would seem the big economy is going in the right direction.  2013 will end slightly positive with GDP at about 0.4%.  The forecast for 2014 is 1.1% and 2015 1.7%.  Also, the UK Service Sector advanced at the fastest pace in more than 16 years.  None of this news however is what the markets were looking for as an interest rate cut and or more asset purchases by the ECB is what traders want.  To that end markets in the region are down about a point at midday.

US and Canadian futures are trading down about a quarter point this morning as many are still setting up for the onslaught of economic news coming toward the end of the week.

Gold is up slightly this morning to 1314, oil is off 0.29 to 94.33 and the loonie is down about a quarter cent to 95.68.  Bonds are off slightly with the US and Canadian 10 years’ yielding 2.62% and 2.50% respectively.

Mandate earnings out this morning are showing beats across the board with CVS Caremark, Brookfield Renewable Energy and TransCanada all coming in ahead of estimates.  All three securities are trending higher in the pre-market.

Lastly, a few other things that caught my eye this morning:

  • ·         Twitter has increased the price of the IPO to the mid $20’s from the mid teens.
  • ·         Blackberry settled in down about 17% yesterday and looks to open where it closed this morning as the deal makers are trying to spin the latest developments, I continue to suggest avoidance.
  • ·         EnCana, once the darling of the natural gas industry in Canada this morning came out with a big earnings miss and a re-structuring program that will see the company downsize by about 20%.  The company is also cutting its dividend by two thirds and spinning off Clearwater Minerals in an IPO.
Kenneth A. Dick, BA, CIM, CFP, FCSI

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

October 25th 2013 Market Update

Asian markets tumbled about 2.5% overnight on the potential for the PBOC to tighten credit and the strength of the Yen against the USD.

In Europe, markets are off slightly at midday as the Asian news and business morale in Germany declining in September.  The loss is about a fifth of a point as the UK economy increased at the fastest pace since 2010 in the last quarter.

US futures are flat this morning regardless of the fact Durable goods (ex transports) for Sept were lower than expected.  Canadian futures are also pointing to a relatively flat opening.

Gold is off this morning about 9.00 to 1340, oil is rebounding up half a point to 97.55 and the loonie is off another 0.25 cents to 95.73.  The US and Canadian 10 year bonds are flat this morning yielding 2.51% and 2.42% respectively.

In mandate earnings news, Eastman Chemical and Microsoft both beat on the top and bottom lines.  In the case of Microsoft it was also announced that the current CEO will be stepping down next year.  Consumer products companies Sherwin Williams and P&G both missed estimates slightly but met or beat on revenues.

Lastly this morning, Twitter announced the terms of the coming IPO and have lowballed both pricing and size.  Lessons learned from the Facebook debacle a couple of years ago.  This deal will be highly subscribed regardless of the fact the company has not been profitable since it began.  We shall watch with some interest but will not be participating in the deal.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

October 4th, 2013 Business – Market Updates

Asia traded lower overnight in concert with the decline in the North American markets yesterday.  Japan was off about a point on a stronger yen and China was a little higher.

Europe is trending higher at midday with markets there up about a half a point as US futures are pointing slightly higher.

Canada is looking to open higher by about a tenth of a point.

Today is looking quiet as the lack of economic data coming out of the US is causing many to sit on the side lines until some sort of deal is reached between warring political parties in Washington.

Gold is trading up a couple of bucks to 1319, oil is up 0.70 to 104.00 and the loonie is off slightly to 96.76.  The ten year bonds in the US and Canada are off a little today with yields increasing to 2.64% and 2.57% respectively.

Lastly, Twitter filed the documents for its IPO yesterday suggesting that the company be valued in the $12bn range.  They are looking to raise about $1bn with the deal.  With that said, it is interesting that with the filing financials had to be included and it would seem the company does not make money and has not since its inception.  To the contrary, they lost $69mm in 2012 on surging revenues.  Should be an interesting deal much like Facebook was when it went public in 2011.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management