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Frank Mueller

Weekly Update – October 13, 2017

“Try not to become a (wo)man of success. Rather become a (wo)man of value” – Albert Einstein

TSX Hits 7-1/2-Month High on Rising Commodity Prices

The Toronto Stock Exchange’s S&P/TSX composite index rose by 64.97 points (0.41%) on the day to close at 15,807.17. This represents a gain of 78.85 points (0.50%) over last week’s 15,728.32 finish.

Gains were driven primarily by commodities & resources, with helpful assists from telecoms & financials.

Gold rose by about $20 USD per ounce week-over-week, boosted by a Friday gain of $9.60 per ounce, to finish the week at $1,306.10 per ounce.

Encouraging Chinese import data, as well as tensions in the Middle East – and President Trump’s ominous tones regarding the Iran Nuclear Deal – all played a part in driving oil prices. Brent crude jumped nearly a dollar per barrel to settle at $57.17 (USD) per barrel.

The Loonie rose 27 basis-points for the week, rising from an even 80 cents (USD) to 80.27 cents.

NASDAQ Hits Another Record High; S&P 500 and Dow Jones Industrial Average All Gain on the Week

NASDAQ struck another record high on Friday, as technology sector shares experienced healthy gains. Settling at 6,605.80, the NASDAQ saw a weekly increase of 0.24%.

The S&P 500 and the Dow Jones Industrial Average also enjoyed gains week-over-week, with 0.15% and 0.43% jumps, respectively. The S&P 500 finished Friday up 2.24 points (0.09%) at 2,553.17; meanwhile, the Dow Jones Industrial Average rose by 30.71 points (0.13%) to settle at 22,871.72.

Retail sales numbers for September experienced their highest jump in nearly 3 years, helping push indices higher. Residual demand for consumer goods on the heels of Hurricane’s Harvey and Irma also pushed prices higher, helping markets.

Sources: Globe Advisor

Frank Mueller

Weekly Update – October 6, 2017

“Once the speculative tide starts running, few can resist its pull” – John Train

TSX Retreats on Sagging Oil

The Toronto Stock Exchange’s S&P/TSX composite index dropped 47.98 points (0.30%) on the day to close at 15,728.32. On the week, the TSX gained 88 points (0.56%).

The main drag on the TSX on Friday was the cost of a barrel of oil, which dropped by 3%. November Oil Futures shed $1.54USD per barrel to settle at $49.25USD per barrel.

Gold crept higher by 0.45% ($5.70USD per ounce) to finish the week at $1,278.90USD.

The Loonie rose by almost half a penny against the Greenback and settled at an even 80 cents USD.

S&P 500 Ends 6-Day Streak of Record Highs on Declining Jobs Numbers

U.S. non-farms jobs numbers declined for the month of September by 33,000 jobs, according to the Department of Labor. This marks the first monthly jobs decline in 7 years, when the U.S. was still digging its way out of the Great Recession. Analysts believe the aftermath of Hurricanes Harvey and Irma left many southern workers either temporarily displaced, or resulted in new hires being delayed.

The S&P 500’s 6-day streak of record highs was snapped due to the jobs data, settling at 2,549 on a loss of 2.74 points (0.11%); however, the previous streak of record highs lifted the S&P to a weekly gain of 1.19%.

Changes Coming to Canadian Tax Proposals

Finance Minister Bill Morneau confirmed on Wednesday that, after the close of the 75-day consultation window – the Federal Government’s tax proposals will be reviewed and will likely be changed somewhat.

The 3 major changes originally proposed by Minister Morneau centered mostly around Privately Controlled Canadian Corporations, and included: restricting income sprinkling/splitting, limiting passive investments within the corporation, and limiting business owners’ ability to convert regular income into capital gains. You can get a more complete picture of these initial proposals by reading Anthony’s blog.

It can reasonably be assumed that the pushback received during the 75-day consultation window was strong and steady, causing the Federal Government to reconsider the initial proposals. It should be noted, however, that there will not be another consultation period, so any changes made to the initial proposals will not be subject to future feedback.

WEEKLY MARKET WRAP-UP

North America
The TSX closed at 15723, up 88 points or 0.56% over the past week. YTD the TSX is up 2.92%.
The DOW closed at 22774, up 368 points or 1.64% over the past week. YTD the DOW is up 15.24%.
The S&P closed at 2549, up 30 points or 1.19% over the past week. YTD the S&P is up 13.85%.
The Nasdaq closed at 6590, up 94 points or 1.45% over the past week. YTD the Nasdaq is up 22.42%.
Gold closed at 1277, down -19.00 points or -0.39% over the past week. YTD gold is up 12.21%.
Oil closed at 49.31, down -2.27 points or -4.40% over the past week. YTD oil is down -5.57%.
The USD/CAD closed at 0.8, changed 0.0000 points or 0.00% over the past week. YTD the USD/CAD is up 7.83%.

Europe/Asia
The MSCI closed at 2016, up 24 points or 1.20% over the past week. YTD the MSCI is up 15.00%.
The Euro Stoxx 50 closed at 3603, up 8 points or 0.22% over the past week. YTD the Euro Stoxx 50 is up 9.48%.
The FTSE closed at 7523, up 150 points or 2.03% over the past week. YTD the FTSE is up 5.32%.
The CAC closed at 5360, up 30 points or 0.56% over the past week. YTD the CAC is up 10.24%.
DAX closed at 12956, up 127.00 points or 0.99% over the past week. YTD DAX is up 12.85%.
Nikkei closed at 20691, up 335.00 points or 1.65% over the past week. YTD Nikkei is up 8.25%.
The Shanghai closed at 3349, changed 0.0000 points or 0.00% over the past week. YTD the Shanghai is up 7.89%.

Fixed Income
The 10-Yr Bond closed at 2.37, up 0.0400 points or 1.72% over the past week.YTD the 10-Yr Bond is down -3.27%.

Sources: Globe Advisor, Dynamic Funds

Frank Mueller

Weekly Update – September 29, 2017

“Only when the tide goes out do you discover who’s been swimming naked” – Warren Buffett

TSX Hits 4-Month High, Now Positive for the Year

The Toronto Stock Exchange’s S&P/TSX composite index gained 16.69 points (0.11%) on the day to close at 15,634.94. The TSX gained 180.71 points this week (1.17%) over last Friday’s close of 15,454.23. In the process, the TSX rose to a 4-month high. 7 of the TSX’s main sectors were up on the day.

September saw the TSX gain nearly 3%.

The Loonie dropped to 80.14 cents to the U.S. Dollar, as the Canadian economy was flat for July, ending an 8-month streak of growth. After surpassing the 82-cent mark, the Loonie has started to pull back somewhat; indeed, the July economic numbers weighed on our Dollar.

U.S. Markets Continue to Sizzle

The S&P 500 and the NASDAQ both hit record highs (again) on Friday. Year-to-date returns in the U.S. have been stellar, with the NASDAQ up over 20%, the Dow Jones Industrial Average up 13.37%, and the S&P 500 up a touch over 12.5%. The Technology sector was the top S&P 500 sector – this is not a recording.

However, as mentioned in Anthony’s Year-To-Date Market Recap, Canadian investors have not felt the full impact of these gains due to the rising Canadian Dollar (up 7.83% YTD).

For the month, the S&P 500 posted a 1.9% gain, the DJIA jumped 2.1%, and the NASDAQ increased by 1.05%.

Weekly Market Wrap-Up

North America

The TSX closed at 15635, up 181 points or 1.17% over the past week. YTD the TSX is up 2.34%.
The DOW closed at 22406, up 56 points or 0.25% over the past week. YTD the DOW is up 13.37%.
The S&P closed at 2519, up 17 points or 0.68% over the past week. YTD the S&P is up 12.51%.
The Nasdaq closed at 6496, up 69 points or 1.07% over the past week. YTD the Nasdaq is up 20.68%.
Gold closed at 1282, down -23.00 points or -1.46% over the past week. YTD gold is up 12.65%.
Oil closed at 51.58, up 0.92 points or 1.82% over the past week. YTD oil is down 1.23%.
The USD/CAD closed at 0.8, down -0.0100 points or -1.23% over the past week. YTD the USD/CAD is up 7.83%.

Europe/Asia

The MSCI closed at 1992, up 2 points or 0.10% over the past week. YTD the MSCI is up 13.63%.
The Euro Stoxx 50 closed at 3595, up 54 points or 1.52% over the past week. YTD the Euro Stoxx 50 is up 9.24%.
The FTSE closed at 7373, up 62 points or 0.85% over the past week. YTD the FTSE is up 3.22%.
The CAC closed at 5330, up 49 points or 0.93% over the past week. YTD the CAC is up 9.63%.
DAX closed at 12829, up 237.00 points or 1.88% over the past week. YTD DAX is up 11.74%.
Nikkei closed at 20356, up 59.00 points or 0.29% over the past week. YTD Nikkei is up 6.50%.
The Shanghai closed at 3349, down -4.0000 points or -0.12% over the past week. YTD the Shanghai is up 7.89%.

Fixed Income

The 10-Yr Bond closed at 2.33, up 0.0700 points or 3.10% over the past week. YTD the 10-Yr Bond is down 4.90%.

Sources: Globe Advisor, Dynamic Funds

Frank Mueller

Weekly Update – September 22, 2017

“The stock market demands conviction; it victimizes the unconvinced” – Peter Lynch

TSX Flat to Finish the Week, But Gains 1.25% Overall

The Toronto Stock Exchange’s S&P/TSX composite index finished with a drop of 0.69 points on the day, settling at 15,454.23. For the week, the TSX rose by 281.20 points (1.85%), and hit a 14-week high in doing so. 7 of the 10 main index sectors were up on the day.

The TSX concluded the week on Friday with a 0.31-point rise to settle at 15,173.03. This finish represents a rise of 1.25% over last week’s finish at 14,985.32. Declines in energy and utilities weighed on the TSX, while the consumer discretionary/staples sector gained on the day.

The Loonie barely moved vs the Greenback on Friday, and sat at 81.10 cents USD as of 2:45pm PST, off by about a cent compared to last Friday’s finish of 82.08 cents.

Light, Sweet Crude Oil Barrel futures finished the week above $50 at $50.66 per barrel.

Gold again dropped this week – off $23.00 USD on the week – to finish the week at $1,300.50 USD, as investors eased away from the safe-haven asset.

U.S. Federal Intends to Reduce Balance Sheet, Signals Rate Hike to Close Out 2017

The U.S. Federal Reserve announced its intention to reduce its balance sheet of ≈ $4.2 Trillion (USD) in U.S. Treasury bonds and mortgage-backed securities. Fed Chair Janet Yellen also signaled a rate hike before the end of 2017.

The market pegs the odds of a December rate hike at about 70%. Prior to the Federal Reserve meeting earlier this week, the odds of a December rate hike sat at 51%, according to investors.

The Federal Reserve offered no answers for the inflation decrease this year, and Michael Dowdall – investment strategist at BMO Global Asset Management – offered that “Clearly, the Fed doesn’t have answers on the 2017 low inflation weakness, but they’re still very sensitive to falling behind the curve so they want to stay in front of the inflation curve.”

On the heels of the Fed announcement to hold rates and reduce the balance sheet, valuations spiked. The S&P 500 was trading at 17.6 times expected earnings as of end-of-day Thursday; comparatively, the S&P 500’s 10-year average is 14.3 times expected earnings.

Sources: Globe Advisor, Advisor.ca

Frank Mueller

Weekly Update – September 15, 2017

“An investment in knowledge pays the best interest” – Benjamin Franklin

TSX Flat to Finish the Week

The Toronto Stock Exchange’s S&P/TSX composite index concluded the week on Friday with a 0.31-point rise to settle at 15,173.03. This finish represents a rise of 1.25% over last week’s finish at 14,985.32. Declines in energy and utilities weighed on the TSX, while the consumer discretionary/staples sector gained on the day.

5 of the main 10 sectors were up on the day, and 5 were down.

The Loonie was flat against the Greenback at 82.08 cents USD as of 2:27pm PST, a modest rise of 8 basis-points compared to last week’s finish of 82 cents even.

Light, Sweet Crude Oil Barrel futures dropped 6 cents USD to finish at $49.83 USD.

Gold dropped for the week – and on Friday, by $5.80 USD per ounce – to finish the week at $1,323.50 USD, down 2.0% from last week’s $1,351 USD finish.

Southern United States Pick Up the Pieces Following Hurricane Irma, Wall Street Continues Ascent

Tropical Storm Harvey and Hurricane Irma have now come and gone, and many Southern US states are picking up the pieces.

On Wall Street, the S&P 500 rose by 4.59 points (0.18%) to finish Friday just above the 2,500 mark at 2,500.21. The Dow Jones Industrial Average (DJIA) rose by 0.29% to 22,268.34. The NASDAQ also posted a gain on the day, rising 19.38 points (0.3%) to finish at 6,448.47.

All three of the NASDAQ, the DJIA and the S&P 500 hit all-time intraday highs on Friday.

Wall Street appeared somewhat indifferent to reports of a drop in US retail sales – at least partially due to the two storms battering the southern states – as well as a drop in industrial output, the first since January. Indeed, US stocks have shrugged off multiple potential economic headwinds in 2017, including rising rates, tropical storms, political turmoil in the White House, President Trump’s seeming inability to pass largely pro-Republican key items of interest (such as Healthcare reform), and of course, North Korea.

North Korea Tests Another Missile Over Japan, Wall Street Indifferent

The North Koreans testfired yet another missile over Japan. The missile test was the second in as many weeks. However, while global leaders have been quick to denounce the North Koreans’ aggressive posturing, the US markets continue to hum, with focus more squarely on the Federal Reserve’s coming meeting next week (on September 19th & 20th).

Sources: Globe Advisor, Advisor.ca

Frank Mueller

Weekly Update – September 8, 2017

“Every day is a good day to be alive, whether the sun’s shining or not” – Marty Robbins

Bank of Canada Raises Overnight Rate to 1.00%, TSX Drops for Fifth Straight Day

The Toronto Stock Exchange’s S&P/TSX composite index continued its retreat on Friday. On the day, the TSX finished down 39.21 points (0.26%), dipping below 15,000 in the process to settle at 14,985.32. 6 of the 10 main index sectors dropped for the day.

For the week, the TSX was down 207 points, or 1.36%, from last week’s finish of 15,191.60.

The week’s big news came on the Bank of Canada announcement to raise the overnight rate by 25 basis points to 1.00%. You can read a bit more about the announcement here.

The announcement – as expected – pushed the Loonie higher against the Greenback, finishing the week at an even 82 cents, up 1.32 cents (1.63%) for the week. The Loonie is now at its highest mark against the US Dollar since May 2015.

Gold finished higher this week, as investors move to safe haven assets, rising to $1,351 (USD) per ounce.

Hurricane Irma Threatens Southern States, Geopolitical Concerns Add to Worries

On the heels of Tropical Storm Harvey comes Hurricane Irma, expected to hit Florida on Sunday. Irma is one of the most powerful Atlantic storms (if not THE most powerful) in over a century. Investors are taking caution, as Irma’s damage and destruction could be catastrophic.

The S&P 500 ended lower on Friday; however, the Dow Jones Industrial Average (DJIA) managed to finish in positive territory, with a modest 13.01 point (0.06%) gain. The NASDAQ was down 37.68 points, or 0.59%.

North Korea tested another nuclear missile this week, their 6th such test. South Korea is bracing for another possible missile test on Saturday. This situation, coupled with the repeated storms hitting the U.S., to say nothing of the intense flooding and storms in Southeastern Asia, has pushed concerns onto the trading floor. Many major markets across the world finished down for the week.

Major Markets Year-To-Date (YTD)

North America
The TSX closed at 14985, down -207 points or -1.36% over the past week. YTD the TSX is down -1.91%.
The DOW closed at 21798, down -190 points or -0.86% over the past week. YTD the DOW is up 10.30%.
The S&P closed at 2461, down -16 points or -0.65% over the past week. YTD the S&P is up 9.92%.
The Nasdaq closed at 6360, down -75 points or -1.17% over the past week. YTD the Nasdaq is up 18.15%.
Gold closed at 1351, up 23.00 points or 2.35% over the past week. YTD gold is up 18.72%.
Oil closed at 47.58, up 0.29 points or 0.61% over the past week. YTD oil is down -8.89%.
The USD/CAD closed at 0.8229, up 0.0147 points or 1.82% over the past week. YTD the USD/CAD is up 10.92%.

Europe/Asia
The MSCI closed at 1965, down -1 points or -0.05% over the past week. YTD the MSCI is up 12.09%.
The Euro Stoxx 50 closed at 3448, up 4 points or 0.12% over the past week. YTD the Euro Stoxx 50 is up 4.77%.
The FTSE closed at 7378, down -61 points or -0.82% over the past week. YTD the FTSE is up 3.29%.
The CAC closed at 5114, down -9 points or -0.18% over the past week. YTD the CAC is up 5.18%.
DAX closed at 12304, up 161.00 points or 1.33% over the past week. YTD DAX is up 7.17%.
Nikkei closed at 19275, down -417.00 points or -2.12% over the past week. YTD Nikkei is up 0.84%.
The Shanghai closed at 3365, down -2.0000 points or -0.06% over the past week. YTD the Shanghai is up 8.41%.

Fixed Income
The 10-Yr Bond closed at 2.06, down -0.1000 points or -4.63% over the past week. YTD the 10-Yr Bond is down -15.92%.

Sources: Dynamic Funds, Thomson Reuters DataStream, Globe Advisor, BNN, Advisor.ca