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Category Archives: The Markets

Terry Broaders

Weekly Update July 14 2015

“Wisdom Begins In Wonder” -Socrates

 

TSX Back In Positive Territory as Global Concern Eases

North American markets posted solid gains Friday as traders took in encouraging developments in the Greek debt negotiations and a rebound on Chinese markets that continued to gain traction. The S&P/TSX composite index closed up 132.58 points at 14,411.07, as the latest employment survey from Statistics Canada showed a big increase in full-time employment in June despite an overall loss of 6,400 jobs as 71,200 part-time positions were eliminated. In New York, Dow Jones industrial soared 211.79 points to 17,760.41, although the widely watched index ended the week only slightly above where it started. The Nasdaq shot up 75.30 points to 4,997.70 and the S&P 500 advanced 25.31 points to 2,076.62. The Canadian dollar rose for a second consecutive day, up 0.17 of a U.S. cent to 78.87 cents. Meanwhile, Greece and its creditors appeared to be narrowing their differences after Athens offered an austerity package that included concessions in key areas such as tax increases and cuts to pensions.

 

Greek Drama in Context

The Greek drama is likely to be a source of uncertainty and volatility for global financial markets over coming days and, perhaps, weeks. The Eurozone is considered to be in a better place today than it was during these prior stressful episodes. Four key reasons support this view.

There is small direct economic linkages. The Greek economy represents 1.9% of Eurozone GDP and an incredibly small end-market for major-economy exports (e.g., 0.1% of GDP for France, 0.1% for Spain, 0.2% for Italy, and 0.2% for Germany).

Eurozone economies are in a better place to absorb shocks. Fiscal pressure is receding as many of the formerly weak links such as Italy, Ireland, Spain and Portugal make progress on structural budget balances. At the same time, these economies are beginning to grow once again and have shifted their current accounts into net creditor positions.

Private Sector financial exposure is modest. According to Bank for International Settlements’ data, total foreign claims on Greece have declined by 70% since 2009 to a manageable level of about €65 billion (~US$73 billion). Note that the private sector holds only €63 billion of Greek debt, of which €18 billion is held by non-Greeks.

Stronger firewalls are in place. After €250 billion in capital raises since 2008, Eurozone banks are much stronger than they were in 2010-12. At the same time, the Eurozone now has several facilities in place to limit the impacts of illiquidity and/or a financial crisis. These include a €500 billion crisis resolution mechanism , the Outright Monetary Transactions facility whereby the European Central Bank (ECB) can purchase bonds in the secondary market in order to stop a downward spiral in sovereign bond prices, and Quantitative Easing which is a central bank tool used to prevent price deflation from hampering a country’s efforts to right size over-indebtedness.

 

Blog Links

But I will Not Live To Age 90 !

Sweet Rewards of a Retirement Well Planned

What Does Greece Mean To You

 

 

Sources: Bloomberg; Investment Executive; advisor.ca

Terry Broaders

Weekly Update June 9 2015

 

“I Am Looking For An Honest Man” -Diogenes

 

TSX End Lower In a Broad Decline

Canadian stocks fell Friday for a second day, ending at a two-month low, after gold miners slumped as the dollar surged amid better-than-forecast hiring gains in the U.S. and Canada. The Standard & Poor’s/TSX Composite Index slipped 62.23 points, or 0.4 per cent, to 14,957.16 in Toronto. The gauge dropped 0.4 per cent for the week. Canada added six times as many jobs in May as economists predicted, with the job market proving robust even as the economy recovers from the effects of plunging crude-oil prices. Nine of 10 industries in the S&P/TSX declined Friday on trading volume 10 per cent lower than the 30-day average. The loonie was up 0.42 of a U.S. cent to 80.39 cents.

The Dow and S&P 500 eased on Friday as increasing expectations the Federal Reserve could raise rates as soon as September offset optimism over a recovery in the U.S. labour market. Stronger-than-expected jobs data for May and a pickup in wages were the latest signs of better momentum in the economy. Wall Street’s top banks said they expect the Fed to begin raising interest rates in September, followed by another increase before the end of the year, according to a Reuters poll. The Dow Jones industrial average fell 56.12 points, or 0.31 per cent, to 17,849.46, the S&P 500 lost 3.01 points, or 0.14 per cent, to 2,092.83 and the Nasdaq Composite added 9.33 points, or 0.18 per cent, to 5,068.46. For the week, the S&P 500 fell 0.7 per cent, its second straight week of losses, the Dow was down 0.9 per cent and the Nasdaq was down 0.03 per cent.

 

Canada Adds 59,000 Jobs in May

Canada’s economy added 59,000 jobs last month, but the jobless rate stayed the same at 6.8 % because more people were looking for work. Statistics Canada reported Friday that employment increased in Ontario, British Columbia and Nova Scotia, while it declined in Newfoundland and Labrador, Manitoba and New Brunswick. The rest of the country’s labour force was just about unchanged. Most of the jobs were in the private sector, fairly evenly distributed between full-time and part-time jobs. Two sectors; manufacturing and health care; were responsible for most of the gains, with 22,000 jobs added in the former and 21,000 in the latter. “With the U.S. economy showing clear signs of improvement, this is perhaps a sign that the Canadian non-energy economy is finally beginning to shift into a higher gear, aided by the lower Canadian dollar,” said David Madani, an economist with Capital Economics in Toronto. “We still think that the worst effects of this aren’t over, and still expect the economy to grow at a fairly unspectacular pace over the rest of the year,” he said. The 59,000 figure is much stronger than the 10,000 new jobs expected by a consensus of economists polled by Bloomberg.

 

Market Update as of June 5 2015

The TSX closed at 14957, down -77 points or -0.51% over the past week. YTD the TSX is up 1.38%.

The DOW closed at 17850, down -161 points or -0.89% over the past week. YTD the DOW is up 0.10%.

The S&P closed at 2093, down -14 points or -0.66% over the past week. YTD the S&P is up 1.70%.

The Nasdaq closed at 5069, down -1 points or -0.02% over the past week. YTD the Nasdaq is up 7.24%.

Gold closed at 1171, down -19.00 points or -1.60% over the past week. YTD gold is down -0.09%.

Oil closed at 58.88, down -1.54 points or -2.55% over the past week. YTD oil is up 11.75%.

The USD/CAD closed at 1.243424, down -0.0008 points or -0.07% over the past week. YTD the USD/CAD is up 5.95%.

 

Sources: Bloomberg; Investment Executive; advisor.ca

Odette Morin

The Death of Money

death money

 

 

 

 

 

 

 

A client of mine told me that she recently read the book called “The Death of Money”.  She asked my opinion on it.  She stated that she found the book “frightening”.  This book is a classic example of Doom and Gloom propaganda.  The book describes in detail what central banks do and how they affect currencies and global economies.  I have not read it, but I think it concludes that the central bank’s policies of excessive money supply could lead to outcomes like hyperinflation or devaluation of currencies (thus, “the death of money”).

I am generally weary of any extreme predictions or economic forecast. Doom and gloom and apocalyptic economic predictions have always been around.  I’ve heard it all over the years, the fall of currencies, countries, capitalism, disruptive technologies.  It’s normal investor behaviour to worry about investments and there are a lot of sources that try to pray on those fears, even profit from them.  Just like there are also “euphoric” and “sky is the limit” type economic predictions.

I always remind myself that stock markets have been around for 100+ years.  In the past century we’ve gone through events like the great depression, world wars, civil wars, cold wars, oil crises, financial crashes, rise and fall of emerging market nations, fiscal cliffs, the shift from British Pound to U.S dollar as the world currency reserve, etc…  In spite of all these events, markets are still around.  The financial crash of a 2008-09 was the most significant bear market event since the great depression of the late 20’s.  Six years later, the S&P 500 has not only recovered but is currently trading at record highs.

I also remind myself of the companies that make up the various markets.  Companies like Royal Bank, Telus, Coca Cola, Apple, Canadian National Railway, Fortis, Shopper’s, Amazon, Tim Horton’s, Suncor and so on.  Do we stop talking on cell phones, buying soft drinks and groceries, pumping gas, using bank accounts, drinking coffee, buying goods online, paying heating bills, and requiring medication because of central bank activity? The economic backdrop is important, but it is the ability of a company to make money that drives its stock price.  A bad economy will have a impact, but I do not think we should worry about all major companies disappearing overnight.

I hope this makes sense to you and give you a more rational look at things.

Terry Broaders

Weekly Update March 16 2015

“Truth Is Mighty – Mighty Scarce” -Bob Edwards, Publisher

 

Energy Sector Hurts The TSX

The S&P/TSX composite index fell 39.23 points on Friday to 14,731.49 as the TSX energy sector dropped 0.55% and oil prices declined for a fourth day with the April contract down $2.21 to $44.84 (U.S.). Oil prices dropped Friday after the International Energy Agency said U.S. oil production was up 115,000 barrels a day in February. The IEA warned that “behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly.”  The drop in oil came as the Canadian dollar fell 0.53 of a U.S. cent to 78.19 cents after falling below the 78-cent level during the morning for the first time since March 2009.  The move followed a report by Statistics Canada that the economy shed 1,000 jobs during the month and the national unemployment rate rose 0.2 of a point to 6.8%. New York markets also tumbled as traders also looked to the U.S. Federal Reserve’s meeting on interest rates next week. The Dow Jones industrials dropped 145.91 points to 17,749.31, the Nasdaq was down 21.53 points to 4,871.76 and the S&P 500 index shed 12.55 points to 2,053.4.

 

Household Debt Hits New High

The ratio of household debt to disposable income hit a new high in the fourth quarter as incomes increased at a slower pace than consumer borrowing, according to Statistics Canada. The ratio reached 163.3% in the quarter. That means households owed about $1.63 in consumer credit, mortgage, and non-mortgage loans for every dollar of disposable income. BMO chief economist Doug Porter said the increased debt is not surprising given the Bank of Canada’s decision to cut its key interest rate by a quarter of a percentage point in January. However, Porter noted that although debt has been rising, financial assets have too, as stock markets have rebounded and Canadians have been putting more away in their savings accounts. Household net worth rose 0.9% in the fourth quarter. On a per capita basis, household net worth was $233,000 in the fourth quarter.

 

Blog Links

RRSPS Do Not Have To Be Deducted All At Once

 

Market Update As Of March 13 2015

The TSX closed at 14732, down -221 points or -1.48% over the past week. YTD the TSX is down -0.15%.

The DOW closed at 17749, down -108 points or -0.60% over the past week. YTD the DOW is down -0.47%.

The S&P closed at 2053, down -18 points or -0.87% over the past week. YTD the S&P is down -0.24%.

The Nasdaq closed at 4872, down -55 points or -1.12% over the past week. YTD the Nasdaq is up 3.07%.

Gold closed at 1156, down -10.00 points or -0.86% over the past week. YTD gold is down -1.37%.

Oil closed at 45.14, down -4.53 points or -9.12% over the past week. YTD oil is down -14.33%.

The USD/CAD closed at 1.278289, up 0.0171 points or 1.36% over the past week. YTD the USD/CAD is up 8.93%.

 

Sources: Bloomberg; Investment Executive; BMO; advisor.ca

Terry Broaders

Weekly Update March 2 2015

“I Thought I Was Pretty Good Until I Saw Hendrix” -Brian May, Queen Guitarist & Astrophysicist

 

TSX Declines As Oil Prices Rise

The Toronto stock market pulled back slightly Friday amid soft U.S. economic data despite rising resource and financial stocks. The S&P/TSX composite index closed down 6.82 points at 15,234.34. The Canadian dollar gained 0.15 of a U.S. cent to 79.98 cents. New York indexes were also lower following a report that U.S. gross domestic product grew at an annual rate of 2.2% in the fourth quarter, weaker than the 2.6% first estimated. A bigger surprise was a glum reading on the manufacturing sector in the U.S. Midwest, which fell to a 5 1/2 year low and into contraction territory in February. Analysts says they believe there is something unusual in the Chicago Purchasing Managers Index reading and think it will be treated with skepticism by traders. The Dow Jones industrials lost 81.72 points to 18,132.70, while the Nasdaq gave back 24.36 point to 4,963.53. Oil prices gained $1.59 to US$49.76 a barrel.

 

Charitable Canadians

The amount of charitable donations reported by tax filers increased in 2013 over the previous year, while the actual number of donors fell 1.0%. Total donations rose 3.5% to $8.6 billion, with gains in every province and territory except the Northwest Territories, where donations were 2.7% lower. The largest increases were in Prince Edward Island +7.5%, Manitoba +6.0% and Alberta +5.9%.

In 2013, 21.9% of all tax filers claimed charitable donations, compared with 22.4% in 2012. Manitoba 25.3%, Prince Edward Island 24.1% and Saskatchewan 23.4% had the highest percentage of tax filers declaring a donation. Nationally, the median donation was $280 in 2013, meaning that half of those claiming a donation gave more than $280, while the other half gave less than $280.  Although Nunavut had proportionately fewer donors than other provinces and territories, it had the highest median charitable donation of $500 among tax filers claiming charitable donations. In descending order here are the median donation amounts for each province and territory: Nunavut $500; Alberta $420; British Columbia $400; Prince Edward Island $400: Manitoba $390; Yukon $390; Saskatchewan $380; Newfoundland & Labrador $350; Northwest Territories $350; Ontario $340; Nova Scotia $320; New Brunswick $310; Quebec $130.

 

Market Update As Of February 27 2015

The TSX closed at 15234, up 63 points or 0.42% over the past week. YTD the TSX is up 3.25%.

The DOW closed at 18133, down -7 points or -0.04% over the past week. YTD the DOW is up 1.68%.

The S&P closed at 2105, down -5 points or -0.24% over the past week. YTD the S&P is up 2.28%.

The Nasdaq closed at 4964, up 8 points or 0.16% over the past week. YTD the Nasdaq is up 5.01%.

Gold closed at 1215, up 14.00 points or 1.17% over the past week. YTD gold is up 3.67%.

Oil closed at 49.33, down -1.59 points or -3.12% over the past week. YTD oil is down -6.38%.

The USD/CAD closed at 1.251377, down -0.0024 points or -0.19% over the past week. YTD the USD/CAD is up 6.63%.

 

 

Sources: Bloomberg; Investment Executive; advisor.ca

Terry Broaders

Weekly Update February 24 2015

“Prejudices Are What Fools Use for Reason” -Francois-Marie Arouet, aka Voltaire

 

TSX Little Changed As Greece Secures Bailout Extension

The Toronto stock market closed little changed Friday amid relief that Greece and its eurozone partners had agreed to extend by four months the bailout loans that have kept the country afloat. The S&P/TSX composite index declined 8.09 points to 15,172.24. In return for the extension, Greece committed not to pursue any “unilateral” measures that might affect the country’s budget targets. Greece has committed to provide a list of reforms based on its current bailout program for assessment on Monday. The Canadian dollar moved down 0.3 of a U.S. cent to 79.71 cents as Statistics Canada reported retail sales slid 2.1 per cent in December to $42.1 billion, the largest decline since April 2010. New York’s Dow Jones industrials jumped 154.67 points to 18,140.44, the Nasdaq gained 31.27 points to 4,955.97 and the S&P 500 index was up 12.85 points to 2,110.3. Oil prices continued to lose ground on data showing high supply levels in the U.S., down $1.02 to US$50.81 a barrel.

 

Working Canadians Worried About Running Out of Money in Retirement

More than half of working Canadians are uncertain whether they have the knowledge to plan for retirement, according to a Sun Life Financial Inc poll. While 47% of Canadians surveyed feel they have the knowledge to plan their retirement, 53% are unsure of whether they know enough to plan for their retirement. People have doubts regarding retirement, with 41% feeling they lack sufficient knowledge regarding how much retirement income they will need. Also, 37% are unaware of how taxes will affect their retirement savings and income. Only half of Canadians are able to state how many years of retirement they expect to have. Despite this lack of certainty, only 22% of Canadians have a written financial plan and only 33% work with a financial advisor. More than one-third of working Canadians believe they risk running out of money in retirement, as opposed to one in seven retirees who feel the same.

For the first time since Sun Life Financial began the survey, the number of Canadians who expect to be working full time past the age of 65 has now surpassed those who believe that they will be fully retired. This number has grown over the past seven years as three out of five Canadian workers now expect to work either full time or part time when they retire. When working Canadians were asked the top reason as to why they expect to be working past traditional retirement age, 21% said it was to earn enough money to pay basic living expenses; 18% of Canadians, don’t believe that government pensions will suffice and 16% would like to earn enough money to live well. The survey was conducted by Ipsos Reid between Dec. 5 and 22, 2014. A sample of 3,000 Canadians between the ages of 30 and 65 were interviewed online.

 

Market Update as of February 20 2015

The TSX closed at 15171, down -99 points or -0.65% over the past week. YTD the TSX is up 2.83%.

The DOW closed at 18140, up 121 points or 0.67% over the past week. YTD the DOW is up 1.72%.

The S&P closed at 2110, up 13 points or 0.62% over the past week. YTD the S&P is up 2.53%.