“We Attract What We Are Prepared To Receive” – Charles F. Glassman

Markets Mixed

The Toronto stock market was lower on a fresh reading on American consumer confidence.  The S&P/TSX composite index dropped 48.58 points to 14,540.31. The Canadian dollar was down 0.02 of a cent at 91.92 cents US.

New York’s U.S. indexes were mainly higher as the Dow Jones industrials rose 8.57 points to 16,455.38.The Nasdaq fell 7.66 points to 4,061.63 while the S&P 500 index added 0.74 of a point to 1,871.59. Markets headed for a negative week after data showed the economic recovery in Europe is slower than thought while retail giant and economic barometer Wal-Mart Stores delivered a disappointing outlook for the second quarter. The University of Michigan’s latest consumer sentiment index also offered a glum reading. The index registered 81.8 for this month, well below the 85 level that was expected and lower than the 84.1 reading in April. Wes Mills, chief investment officer Scotia Private Client Group says “ you add into that it’s been a long great recovery, and so you hit a key level like 1,900 on the S&P, and some asset allocation models kick in and people start buying bonds and selling equities.” Mills thinks this situation portends a market that is likely in for a good deal of sideways action along with a fair bit of volatility as traders look for direction.

 

Canadian Banks Are Safe Havens

New reports suggest the stability of the Canadian banking sector is paying off in a variety of ways for clients, investors, the Canadian economy as a whole. A Bank of Canada report released this week proves what many have known for some time: When it comes to surviving global economic volatility, there is no safer place to be than the Canadian big banks. “After the financial crisis the world realized that not all large financial institutions are created equal. The collapse, or near collapse, of some of the biggest names in finance made investors taker a deeper look at the institution where their wealth was held,” says Adam Doering, vice president, Waterfront Group, CIBC Wood Gundy

The latest Bank of Canada Review contains a report suggesting Canadian dollar-denominated bonds are being bought up by foreign central bank reserves in greater amounts than ever. That is, central banks around the world are recognizing the stability of the Canadian financial system and investing assets in Canadian dollar-denominated assets. According to the Bank of Canada, foreign central banks now hold about US$200 billion worth of Canadian dollar debt; this amount represents 1.8 per cent of official foreign reserves.

 

Market Update as of May 16 2014

The TSX closed at 14515, down -19.060 points or -0.13% over the past week. YTD the TSX is up 6.56%.

The DOW closed at 16491, down -92.34 points or -0.56% over the past week. YTD the DOW is down -0.52%.

The S&P closed at 1878, down -0.48 points or -0.03% over the past week. YTD the S&P is up 1.62%.

The Nasdaq closed at 4091, up 19.13 points or 0.47% over the past week. YTD the Nasdaq is down -2.06%.

Gold closed at 1293, up 3.10 points or 0.24% over the past week. YTD gold is up 7.39%.

Oil closed at 102.05, up 2.02 points or 2.02% over the past week. YTD oil is up 3.49%.

The USD/CAD closed at 1.085927, down -0.0043 points or -0.40% over the past week. YTD the USD/CAD is up 2.14%.

 

Sources: Bloomberg;  advisor.ca; Investment Executive