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Terry Broaders

Weekly Update May 12 2017

“We Are A Fact Gathering Organization Only. We Don’t Clear Anybody. We Don’t Condemn Anybody” – J. Edgar Hoover, First FBI Director

 

Stock Markets Dip After Weak U.S. Economic Data

Major North American stock indices declined Friday after disappointing U.S. economic data and weak corporate earnings.  The Toronto Stock Exchange’s S&P/TSX composite index fell 12.67 points to 15,537.88. In New York, the Dow Jones industrial average lost 22.81 points to 20,896.61, while the S&P 500 index shed 3.54 points to 2,390.90. The Nasdaq composite index gained 5.27 points to 6,121.23. Those drops came as the U.S. Department of Commerce said retails sales in April rose 0.4% from March, falling below already-low analyst expectations, said Patrick Blais, a senior portfolio manager at Manulife Asset Management.

Shares of major department stores also fell Friday. Nordstrom’s stock, for example, slipped US$5.01, or 10.84%, to US$41.20 after the company released its first-quarter results Thursday. The Seattle-based chain’s same-store sales, which dropped by 0.8%, fell below analyst expectations.   “It kind of re-emphasized the risk that consumer spending will stay weak,” said Blais.  Consumer spending is a large part of the American economy, accounting for some 60% of GDP, he said. If U.S. consumers aren’t spending the fear is GDP growth will slow.

Meanwhile, the Canadian dollar fell 0.04 of a U.S. cent to an average value of US72.92¢. In commodities, the June crude contract gained a penny to US$47.84 per barrel and June gold rose US$3.50 to US$1,227.70 an ounce.

 

It’s Harder Than You Think To Detect Fraud And Lies 

Detecting lies and misleading statements isn’t easy; just ask the participants of a recent Journal of Behavioural Finance study, which tested the ability of 154 randomly selected, U.S.-based financial professionals.

The study was conducted by three City University of New York professors and Jason Voss, a content director at CFA Institute. They asked the participants, who were affiliated with the CFA Institute, to watch videos as well as listen to quarterly conference calls from public companies, and the goal was to assess how well they could identify liars and pinpoint misleading statements, reports The Wall Street Journal.  In particular, the calls they listened to were ones that “included statements that the SEC had identified as misleading or false,” says WSJ.  The average accuracy rate of the participants was 49.4% when it came to successfully identifying truth versus lies, says WSJ. According to the Journal of Behavioural Finance, their “lie detection accuracy was poor; participants performed no better than would be expected by chance. Accuracy in identifying lies about financial fraud was especially poor.”

Why did the finance professionals fail the test?  One reason they performed poorly, says WSJ, was due to truth bias (as Psychology Today explains, this bias is based on “a normal reaction because, in general, people tend to believe others,” and it’s hard not to believe what you hear, see and read). WSJ adds the participants “also did worse when they were highly confident of their performance.”

 

 

 

Sources: Bloomberg; Investment Executive; advisor.ca;

Terry Broaders

Weekly Update April 7 2017

“A Rich Man Is Nothing But A Poor Man With Money ” – W.C. Fields

 

TSX Ends Lower On Friday

Canada’s main stock index ended modestly lower on Friday as financial and natural resource shares lost ground, while concerns about escalating geopolitical tensions after a U.S. strike in Syria prompted a risk-off sentiment among investors. The Toronto Stock Exchange’s S&P/TSX composite index was down 30.05 points, or 0.19 per cent, at 15,667.13 shortly after the closing bell. Wall Street’s three major indexes edged lower on Friday to end well below session highs after a weaker-than-expected job report, a U.S. missile strike in Syria and comments by a key Federal Reserve official on the Fed’s plan to reduce its balance sheet. The Dow Jones Industrial Average fell 7.06 points, or 0.03 per cent, to 20,655.89, the S&P 500 lost 1.93 points, or 0.08 per cent, to 2,355.56 and the Nasdaq Composite dropped 1.14 points, or 0.02 per cent, to 5,877.81.
The news of the U.S.-Syria attack sent global stocks lower when it was announced, with the S&P 500 futures index falling as much as 0.5 per cent. But most of the losses ebbed after U.S. officials described the attack as a one-off that would not lead to wider escalation. U.S. employers added about 98,000 jobs in March, the fewest since last May and well below economists’ expectation of 180,000, as bad weather hit hiring at construction sites. However, wage growth ticked up slightly and the unemployment rate fell. Oil prices rose on Friday, trading near a one-month high and closing the week up 3 per cent after the United States fired missiles at a Syrian government air base, raising concern that the conflict could spread in the oil-rich region.

 

Canada Gains 19,400 Jobs 

Canada’s labour market pumped out another 19,400 net jobs last month, with the vast majority of the new work being full-time. However, Statistics Canada’s job survey Friday also showed the bulk of those new positions were created in the category of self-employment, which can include people working for a family business without pay. The report found that while 95% of the new jobs created last month were full-time, 95% of them were also self-employed positions. The agency says the country’s unemployment rate crept up in March to 6.7% from 6.6% because more people were looking for work. Compared to a year earlier, the categories of full-time and part-time work have each increased 1.5%.
The country lost 2,400 positions in the services sector last month, but added 21,800 factory jobs thanks to the biggest month-to-month surge in manufacturing work since 2002. The manufacturing sector added 24,400 positions, mostly in Ontario and to a lesser degree in Alberta, to climb back up to the same level it was 12 months earlier. Still, compared to its peak in the early 2000s, the manufacturing sector has about 630,000 fewer jobs, a drop of 27%, Statistics Canada said. Alberta easily saw the biggest overall job boost among provinces, adding 20,700 full-time jobs last month. At the other end of the spectrum, Quebec shed 17,800 full-time positions.

 

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Sources: Bloomberg; Investment Executive; advisor.ca;

Terry Broaders

Weekly Update March 31 2017

A Dog Is The Only Thing On Earth That Loves You More Than Yourself” – Josh Billings

 

TSX Ends Lower Despite BlackBerry Jump

Canada’s main stock index ended modestly lower on Friday, weighed by financial and railway companies, though better-than-expected results from BlackBerry offset some of the losses as its stock surged. The Toronto Stock Exchange’s S&P/TSX composite index was down 31.01 points, or 0.2 per cent, at 15,547.75. BlackBerry Ltd, which said it expects to be profitable on an adjusted basis in 2018 and nearly halved its operating costs, was one of the bright spots in the market. Shares surged 11.1 per cent to $10.30.
Wall Street fell on Friday, pulled down by Exxon and JPMorgan Chase as investors wrapped up a strong quarter and weighed whether corporate earnings reports will justify the market’s lofty valuations. Major indexes have hit multiple record highs since the election of President Donald Trump on bets that he would improve economic growth by cutting taxes and boosting infrastructure spending. The rally has also benefited from robust economic data and a pickup in corporate earnings growth. For the quarter ending Friday, the S&P 500 gained 5.5 per cent, its strongest quarterly performance since the last quarter of 2015. The Dow Jones Industrial Average fell 0.31 per cent to end at 20,663.22 points, while the S&P 500 lost 0.23 percent to 2,362.72. The Nasdaq Composite slipped 0.04 per cent to 5,911.74. Next week promises to be an interesting start to the second quarter. President Trump and Chinese President Xi Jinping will meet in Florida and the U.S. president has set the tone for a tense few days by tweeting that Washington could no longer tolerate massive trade deficits and job losses.

 

48% of Canadians Have No Will 

Warren Buffett famously noted that, when it comes to inheritances, the perfect amount to leave children is enough so that they feel they can do anything, but not so much that they can do nothing. Sounds like a plan for success. The only problem is, many Canadians don’t have a plan at all. A BMO report on estate planning finds that 48% of survey respondents don’t yet have wills. For those aged 35 to 54, that figure jumps to 55%. And, with family dynamics becoming more complex with multiple marriages and children, the lack of a will is sure to create problems. In fact, problems often arise even when a will is in place.
For example, almost 60% of those surveyed indicate they have received an inheritance, but nearly half feel the distribution of their parents’ estates wasn’t fair. And the survey found that leaving a fair amount to each beneficiary was important to many respondents’ parents. Better communication could have been a preventative measure, but 40% of respondents said their parents hadn’t discussed estate intentions with them.
The Oracle of Omaha addresses the problem with this wisdom, offered at the Berkshire Hathaway annual general meeting in 2013, and cited in the BMO report: “Your children are going to read your will someday. .… It’s crazy for them to read it, after you’re dead, for the first time. You’re not in a position to answer questions.”
The BMO Wealth Management survey was conducted by ValidateIt Technologies Inc. between December 7 and December 17, 2016. The online sample size was 1,003 Canadian respondents age 18 and over.

 

BLOG LINKS 

Your Can Now See Fees On Your Statements.  Reread How Fees Work In This Country.

Your Tax Return Checklists for 2016 Tax Year Preparation 

 

Sources: Bloomberg; Investment Executive; advisor.ca;

Terry Broaders

Weekly Update March 24 2017

“We Are Motorhead, And We Play Rock & Roll” – Lemmy Kilmister

 

TSX Index Extends Recent Rally

Canada’s main stock index extended its rally for a third consecutive day on Friday after beginning the week at its lowest level this year, as Wall Street idled on the latest “Trumpcare” news. The Toronto Stock Exchange’s S&P/TSX composite index inched forward 9.06 points to 15,442.67, with consumer discretionary and utilities sectors leading advancers. In New York, stock indices were mixed, with little movement in either direction. The Dow Jones industrial average shed 59.86 points to 20,596.72, the S&P 500 index fell 1.98 points to 2,343.98, and the Nasdaq composite index gained 11.05 points to 5,828.74.
The markets continued to tread water despite “some pretty meaningful news,” said Stephen Lingard, senior vice president and portfolio manager at Franklin Templeton Solutions. U.S. President Donald Trump announced the presidential permit to build the Keystone XL pipeline has been granted. The news came more than eight years after the initial application and after his predecessor Barack Obama rejected the project. In currencies, the Canadian dollar fell 0.16 of a U.S. cent to US74.74¢. A Statistics Canada report released Friday showed the country’s annual pace of inflation ticked lower last month. In February, the consumer price index rose 2.0% on a year-over-year basis compared with a 2.1% increase in January.  In commodities, the May crude contract advanced US27¢ to US$47.97 per barrel and the April gold contract gained US$1.30 to US$1,248.50. April natural gas contracts rose US2.5¢ to about US$3.08 per mmBTU and May copper contracts shed about US1.4¢ to US$2.63.

 

Inflation Ticked Lower in February 

The annual pace of inflation in Canada ticked lower in February as higher prices for gasoline were offset in part by lower costs for fresh fruit and vegetables. Statistics Canada said Friday that the consumer price index rose 2% on a year-over-year basis in February, compared with a 2.1% increase in January. Economists had expected it rise 2.1% in February as well. Prices were higher in seven of the eight major components, with food the only one to decline. Excluding gasoline, the February consumer price index was up 1.3% compared with a year ago following a 1.5% in January. Transportation costs gained 6.6% compared with a year ago, boosted by a 23.1% rise in gasoline _ which was at an unusually low level in early 2016. Shelter costs rose 2.2%. Food costs fell 2.3% as prices for food bought from stores fell 4.1%. Prices for food bought from restaurants rose 2.3% but fresh vegetables dropped 14.0% and fresh fruit slipped 13.3%, partly deflecting a spike in prices last winter.

The annual pace of inflation slowed in seven provinces on a year-over-year basis in February while Ontario and B.C. both held steady at 2.3%. Manitoba was the only province to show an increase in the annual pace of inflation as it increased to 2.3% compared with 2.1% in January. Statistics Canada said the Bank of Canada’s three preferred measures for core inflation saw year-over-year increases last month of 1.3%, 1.9% and 1.6%.

 

BLOG LINKS 

Highlights Of The 2017 Federal Budget

Your Can Now See Fees On Your Statements.  Reread How Fees Work In This Country.

Your Tax Return Checklists for 2016 Tax Year Preparation 

Terry Broaders

Weekly Update March 17 2017

“Replace Negative Thoughts With Positive Thoughts And You’ll Have Positive Results” – Willie Nelson

 

TSX Slips On Materials And Financials

Gold miners and large financial services companies dragged Canada’s main stock index lower Friday, as Wall Street made modest moves. On Bay Street, the S&P/TSX composite index dropped 71.92 points to 15,490.49 with the materials sector being biggest decliner on the commodity-heavy index.  In New York, markets were mixed. The Dow Jones industrial average fell 19.93 points to 20,914.62, while the S&P 500 index inched down 3.13 points to 2,378.25. The Nasdaq composite index gained 0.24 of a point at 5,901.00. The Canadian dollar sat just below the 75-cent mark, up 0.06 of a U.S. cent at US74.98¢. In commodities, the May crude oil contract added US7¢ at US$49.31 per barrel and the April natural gas contract rose US5¢ at US$2.95 per mmBTU. The April gold contract added US$3.10 at US$1,230.20 an ounce and May copper gained a cent to US$2.69 a pound.

 

Canadian Household Debt Creeps Up To Another Record 

The amount Canadians owe compared with how much they earn hit another record high last year. Statistics Canada said the amount of household credit market debt rose to 167.3% of adjusted household disposable income in the fourth quarter (Q4), up from 166.8% in the third quarter. That means there was $1.67 in credit market debt for every dollar of adjusted household disposable income.

Fuelled by mortgages and low interest rates, household debt has been climbing steadily in recent years. Policymakers have raised concerns about household debt and see it as a key risk to the economy. While interest rates have been low for years, making borrowing money cheap for Canadians, some have expressed concerns about what could happen when rates rise or if there is a shock to the economy that results in a large number of job losses. Total household credit market debt, which includes consumer credit, and mortgage and non-mortgage loans, totalled nearly $2.029 trillion in the final quarter of last year. Mortgage debt accounted for 65.5% of the total. In Q4 2016, households borrowed an additional $28.4 billion on a seasonally adjusted basis, up from $18.7 billion added in the previous quarter. However, even as borrowing rose, household sector net worth at market value rose 1.0% in Q4 2016 to $10.268 trillion, boosted by gains in the stock market. The latest reading on household debt from Statistics Canada came as consumer credit company Equifax said in its national consumer credit trends report that total consumer debt held by Canadians, including mortgages, in Q4 2016 increased 6% cent compared with a year ago to $1.718 trillion.  The Equifax report also noted that while 46% of consumers were decreasing their debt, 37% were borrowing more.

 

 

BLOG LINKS 

Your Tax Return Checklists for 2016 Tax Year Preparation 

 

Sources: Bloomberg; Investment Executive; advisor.ca;

Terry Broaders

Weekly Update March 10 2017

“A Liar Will Not Be Believed, Even When He Speaks The Truth” – Aesop

 

TSX Makes a Small Gain In Flat Markets On Friday

Canada’s main stock index ended barely higher on Friday as sharp gains for gold miners were overshadowed by a slump in shares of Toronto-Dominion Bank after a report it pressured employees to meet high sales revenue goals. The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed up 9.84 points, or 0.06 per cent, at 15,506.68. The index lost 0.7 per cent on the week. Shares in TD, Canada’s No. 2 lender, fell 5.6 per cent to $66, its biggest one-day decline since December 2014. The financials group slipped 1.1 per cent, despite some of its biggest members moving higher as solid domestic jobs data broadly boosted bond yields.  Of the index’s 10 main groups, just financials and energy were in negative territory.

In New York, the Dow Jones industrial average gained 44.79 points to 20,902.98, the S&P 500 index added 7.73 points to 2,372.60, and the Nasdaq composite index advanced 22.92 points to 5,861.73. The loonie gained a quarter of a cent to US74.28¢ while the April crude contract dropped by US79¢ to US$48.49 a barrel.  Crude oil resumed a sharp decline and global equity markets rose on Friday after a robust U.S. jobs report drove home the strength of the world’s biggest economy and set the stage for the Federal Reserve to raise interest rates next week.  Banking stocks in the euro zone hit their highest in more than a year on expectations the European Central Bank, after a meeting on Thursday, will tighten policy in March 2018.

 

Canada’s Unemployment Rate at 6.6%; Lowest In Two Years 

Canada’s unemployment rate dropped to 6.6% last month, its lowest level in more than two years, Statistics Canada said Friday.  The decline of 0.2 percentage points from the previous month brought the rate down to a number not seen since January 2015.  The agency’s February employment survey indicated the national labour market added 15,300 jobs overall last month, higher than analyst expectations. Economists had projected a gain of 2,500 jobs and the unemployment rate to stay at 6.8%, according to Thomson Reuters. “This continues the string of improving Canadian economic data and suggests that the underlying economy continues to gain steam,” said BMO senior economist Benjamin Reitzes in a note to analysts. “One more piece of evidence that the Canadian economy has turned the corner.”

The Statistics Canada report found most of the February job gains came from full-time work, offset by a decline in the number of people working part-time.  It said an estimated 105,000 more people found full-time employment last month while part-time positions dropped by 90,000. That was in contrast to the January labour market survey, which showed a surge in part-time work.  In the 12 months to February, Canada saw a net gain of 288,000 jobs with most of the increase coming in the last six months of  22016.  Much of the increased job activity was seen in the West with British Columbia, Saskatchewan and Manitoba all seeing gains. In contrast, fewer people were working in Nova Scotia and Newfoundland and Labrador while employment was little changed in the other five provinces.  Women in the 25-to-54 age bracket saw more work, marking the third monthly increase in that category. Men in the same age range saw employment holding steady in February after a notable increase the previous month.

 

BLOG LINKS 

Your Tax Return Checklists for 2016 Tax Year Preparation 

 

Sources: Bloomberg; Investment Executive; advisor.ca;