“Credit worthiness is like virginity, it can be preserved but not restored very easily, so it is crazy to play around with it.” -Warren Buffett

 

Markets Are Positive

The Toronto stock market closed sharply higher Friday, rising to its highest level in more than two years following strong economic data from China and solid earnings reports from General Electric, Morgan Stanley and Google. The S&P/TSX composite index ran ahead 99.64 points to 13,136 after closing above 13,000 on Thursday for the first time since late July 2011. The increase came amid relief that U.S. lawmakers had reached an agreement to extend the debt limit, thus averting a possible default.“Things are aligning for Canada,” said Wes Mills, chief investment officer at Scotia Asset Management PM Advisor Services. “Canada has lagged for a couple of years now on the U.S. in particular. Technically, the TSX has broken out (and) we should be able to challenge the 14,000 level.”The Canadian dollar was off 0.01 of a cent to 97.13 cents US as inflation pressures increased slightly in September.

U.S. indexes were higher as the Dow Jones industrials erased early losses to advance 28 points to 15,399.65, while the Nasdaq rose 51.13 points to 3,914.28 as Google’s stock price cracked the US$1,000 level. The S&P 500 index was ahead 11.35 points at a record high of 1,744.5. There was positive news from the world’s second-biggest economy as China’s growth rebounded in the latest quarter to 7.8% from a two-decade low of 7.5% in the second quarter, helped by government stimulus measures. Strong economic data, solid earnings and relief that at least a short-term fix for the U.S. debt crisis was attained sent the TSX up 1.9% this past week while the Dow industrials climbed 1.07%.

 

U.S. Reaches Debt Deal

World equity markets rose and short-term U.S. Treasury debt rallied on Wednesday as lawmakers neared a last-minute deal to prevent the United States from defaulting on its debt. U.S. Senate Majority leader Harry Reid said a bipartisan compromise was reached in the Senate to lift the government’s $16.7-trillion borrowing limit and re-open the government, which has been shuttered since October 1. News that a deal had emerged was enough to push U.S. stocks within striking distance of an all-time high. It comes after days of political wrangling over the U.S. budget and the debt limit, which has sparked substantial preparation by dealers in government securities in case of a default.  “Any deal that gets us out of the current box, where we have a potential imminent default, is good,” said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors in Wilmington, Delaware.

 

Sources: Bloomberg; Investment Executive; advisor.ca