October 31st 2013 Business & Market Updates

Yup its Halloween, which of course also means its month end and it looks like the pundits got both September and October wrong as markets world wide for the most part rallied.

Looking at the overnight numbers, Asia was off about a point following the close in the US yesterday.

Europe on the other hand is rallying up about half a point at midday as investors continue to look for value in the region.

US futures are off slightly this morning despite the fact the Initial Weekly Jobless Claims were virtually at estimates coming in at 340000 vs. 338000.  Also, as mentioned yesterday the FOMC did release the minutes of their two day meeting (attached) and stated that there would be no change to asset purchases or interest rates until both inflation and employment further improved.  The comments indicated that economic improvement is continuing but still at a sluggish pace.  Muddle through comes to mind again.  This is the new normal for the foreseeable future in my view.  As always, I have highlighted in RED the points in the release that I think were interesting.  Bottom line accommodative monetary policy continues.

I have also added the most recent view from Canaccord US Strategist, Tony Dwyer who is suggesting that while the markets are somewhat overbought with the run up in the last couple of months and a correction would not be a surprise, the trend continues to be higher and he continues to affirm his 1955 target on the S&P with a modest 15 multiple.  He is suggesting a modest 4 to 7% correction only and that those that are investors to stay where they are as the rally on the other side of the correction, if indeed it does occur, will be strong.

Canada released GDP numbers for August this morning beating estimates year over year at 2.0% vs. 1.7%.  Canadian futures are off about a half a point however on weak gold prices this morning.

Gold is down 23 bucks to 1325, oil is off 0.33 to 96.44 mostly on supply increases and the loonie has rebounded a third of a cent this morning to 95.77.  The bond market is flat with US and Canadian 10 year yields at 2.50% and 2.39% respectively.

Mandate earnings released after the close last night and this morning for the most part were meets or beats.  AltaGas beat on earnings and beat revenues by a large margin, American Railcar missed by a penny but also saw huge revenue increases, Visa met estimates with revenues were slightly below mostly due to declining demand by consumers in Q3, Williams beat by a large amount on both earnings and revenues and lastly, Valeant Pharma beat on both earnings and revenues.  In all a pretty solid group.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

 

 

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

www.glwm.ca

October 23rd 2013 Business Update

It would seem that real estate news out of China yesterday spooked investors in Asia and Europe in regard to a possible tightening of monetary policy in the region.  Markets in Asia were off about 1.5% overnight.  In Europe markets are lower by about a point at midday on the Asian news and the fact the ECB will holding financial institutions to a higher level of disclosure when it comes to capital requirements.  This is a good thing in my view longer term as it will breed more confidence in the Euro banks, however the short-term view is less profitability for these institutions.

US Futures are off about a third of a point and Canadian futures are down about a quarter point.

Gold is retreating this morning down 8.00 to 1333 as is oil down more than 1% to 96.80.  The loonie is off 0.34 cents this morning to 96.85.  Bonds are up slightly with US and CDN 10 year yields at 2.50% and 2.46% respectively.

In mandate earning news, CNR reported after the close last night and beat estimates by about 10% on earnings and about 5% on revenues.  The all important operating ratio feel below 60% to 59.8% which shows continual improvement (the lower the number the better).  Carloads and tonnage were both up more than 3% and the company will buy back more than 15 million shares over the next year.  The stock will open higher about 2% this morning according to the pre-market.

The Bank of Canada will release its policy statement this morning at 11am EDT and the assumption is nothing much will come of it.  If there is anything interesting worth getting out I will send another mail later today.

Lastly, yesterday was Apple day as the company announced the new iPad Air for the holiday season.  The lower priced and not as heavy tablet boast loner battery power and higher resolution.  Not really a big Apple announcement by any means.  It would seem that the company needs some “wow” factor to continue the run it has been on the last while.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 22nd, 2013 Business / Market Update

Overnight in Asia, markets were fairly quiet, despite a big increase last month in Chinese home prices.  The biggest in three years which has some wondering how inflationary this may be and will the PBOC respond.

In Europe, markets are higher by about a half of a point on the jobs news out of the US.  The monthly Non-Farm Payrolls for September were finally released this morning and the number was far below estimates coming in at 148000 vs. 180000 estimated.  The unemployment rate fell to 7.2% from 7.3% on the participation rate falling.  However, the news was not all bad as August was revised higher by 24000 to 193000.  Bottom line growth is occurring however until Washington gets its act together many companies will not actively hire.  Some form of tax reform must take place to assure companies that hiring and expending capital into bricks and mortar will be rewarded down the road.    US futures are higher by a quarter point this morning on the news.

Gold is up 14.00 to 1328 on a weaker US dollar, oil is off another 0.27 to 98.95 and the loonie is flat at 97.04.  The US and Canadian 10 year bonds continue to strengthen this morning as yields are 2.54% and 2.50% respectively.

In mandate earnings news, Lockheed-Martin beat on both earnings and revenues and indicated higher guidance for the balance of the fiscal year.  Whirlpool also beat on both earnings and revenues but cautioned on the balance of the year.  Both stocks are set to open higher this morning.  After the market close CN Rail will report,  I will provide the details tomorrow.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 18th, 2013 Market Update

Some good news out of China overnight as the economy there grew in the last quarter annualized at 7.8% which was greater than estimates.  Also, Industrial Output was stronger with Retail Sales slightly below estimates.  The markets were stronger overnight up a quarter point.

Europe is stronger at midday by about half a point as trade talks were completed with Canada opening the door for the US to continue negotiations.  Canada’s deal expands the free trade deal to 42 countries from 14 and is positive for both regions.

US futures are higher this morning on earnings news as GE, Google and Morgan Stanley all beat estimates.  Kansas City Southern missed on earnings by a small margin but beat on revenues.  Futures are higher by about a quarter point.

Gold is off 4.00 to 1317 on US dollar strength, oil is higher by 0.85 to 101.51 and the loonie is flat at 97.15.  Bond markets are rallying again this morning as the US and Canada 10 year bonds are yielding 2.58% and 2.53% respectively.

After a couple of crazy weeks, it would seem that this week will come to an end on a quieter basis allowing all to take a breath and regroup.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 16th, 2013 Business & Market Update

The debate continues on in Washington as there are less than 15 hours remaining to get a budget and debt limit deal done.  Will it get done is the question and if it does what will it mean.  IF it doesn’t what are the ramifications.  It would seem that there are some in regard to this debate that do not care about the ramifications, which in my view is insanity.  However, my view does not count.  All we can hope for is cooler heads will prevail in the end.

Asia was mixed overnight as Japan was higher on a weaker yen and China sold off more than 1.8% on concerns with the US political fight.

Europe is lower by about a quarter point at midday once again on the US uncertainty.

In contrast, US futures are higher by about 0.75% on earnings news as both Bank of America and US Bank both beat estimates with good revenue numbers and decreases in loan losses.  As we go through the five year line on the 2008 decline, many of those bad mortgages are now off the books of many of the big US banks and balance sheets continue to strengthen.  Both stocks are mandate positions.

Gold is up 8 bucks to 1281, oil is lower by 0.13 to 101.07 and the loonie is stronger by 0.10 to 96.47.  Bond yields have been inching higher this week as the 10 year US and Canada bonds are yielding 2.74% and 2.66% respectively.

Bond rating service Fitch has put the US on credit watch with a negative bias, which was to be expected as the deadline on the debt ceiling continues to near.  I would expect Moody’s and S&P to do the same if no deal is reached today.

Lastly, the NYSE has scored a coup over Nasdaq by getting the listing for the new Twitter IPO due out later this year.  After the debacle at the Nasdaq last year when Facebook went public, the NYSE was the favored exchange going into the negotiations.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca

October 15th, 2013 Business and Market Update

Looks like there has been some movement over the weekend in Washington as hints of a deal are starting to emerge on the news wires this morning.  No details just yet but flat US futures are suggesting that something is brewing.  Stay tuned.

In Asia overnight, markets were higher by about a quarter point following the US rise on Friday and Monday and reacting to the positive news out of Germany on investor sentiment rising yet again.  Euro stocks are up about a half a point on the news.

Earnings season gets under way in earnest today as Coke and JNJ beat on both bottom and top line numbers.  Citigroup however missed estimates by a couple of cents with the hit coming from charges and fixed income trading.  That news caused the futures to pull back from higher levels earlier.

With a deal somewhat imminent in Washington, Gold has pulled back again this morning down more that 16.00 to 1260.  Oil is trading down a buck to 101.46 and the loonie is off 20bps to 96.46.  The US and Canadian 10 year bonds are mixed this morning with yields coming in at 2.71% and 2.62% respectively.

Lastly, Blackberry has put ads in papers worldwide to try and explain the current situation that they are in and how they are going to move forward.  To me it seems to be a desperate attempt to hold onto what they have.  We shall see how effective the ads turn out to be.

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

Branch Manager & Portfolio Manager | Independent Wealth Management

Canaccord Genuity Wealth Management

www.glwm.ca