The big picture

The big picture

Obama announces economic team



Markets responded favourably to president-elect Barack Obama’s announcement of several key members of his economic team. On Monday, he tapped New York Federal Reserve President Timothy Geitner as his Treasury Secretary and named Lawrence Summers his Chief White House Economic Adviser. On Wednesday, he appointed former Federal Reserve Chairman Paul Volcker to head a new White House panel to create jobs and bring stability to the country's financial system. In making these announcements, Obama promised Americans that “help is on the way.”



Indeed, more help is already on the way. The U.S. government introduced a pair of new programs Tuesday that will provide US$800 billion to help unfreeze the market for consumer debt and to make mortgage loans cheaper and more available.

The new programs from the Federal Reserve and Treasury Department are the latest efforts to get the U.S. financial system back to more normal operations.



In Canada, federal Finance Minister Jim Flaherty did not announce any fiscal stimulus in Thursday’s economic update. However, he intends to move up the tabling of the next federal budget “as soon as possible” in order to introduce a package of infrastructure spending and other measures to stimulate the sagging economy.



The markets

Stocks looking up — except BCE



Volatility is going to remain high, but it’s hard not to get excited when markets post solid gains. In fact, the four trading days between Friday the 21st and Wednesday the 26th were the best four days of consecutive gains for U.S. markets since 1933, with the S&P 500 advancing 18%, the Nasdaq adding 16.4% and the Dow gaining 15.5%.



Over the same period, the S&P/TSX only managed a gain of 11.8%, with much of that underperformance likely attributable to the collapse of the BCE takeover deal. BCE shares dropped 34% on Wednesday, subtracting 133 points from the TSX in the process, on news that the $50 billion privatization deal led by the Ontario Teachers’ Pension Plan is now very unlikely to proceed after BCE failed to meet certain solvency tests in an auditor’s report. If you would like a copy of our latest report on BCE, please feel free to contact me.


Our recommendation
Consider banks for dividend yield



· Equities. Gareth Watson, Associate Director, Portfolio Advisory Group, suggests that some Canadian bank shares offer attractive and sustainable dividend yields. Consider Royal Bank and Bank of Nova Scotia.



· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, recommends investors consider adding exposure to high quality corporate bonds, such as Canadian banks and insurance companies, which continue to offer attractive yields relative to government issues.



· Portfolio strategy. Some regions and sectors have been hit harder than others. Consider reviewing your portfolio allocations to take advantage of lower relative valuations in these areas.











Jeff Wareham
Wealth Advisor

ScotiaMcLeod
148 Fullarton Street,
Suite 1801
London, ON
N6A 5P3

Tel: (519) 660-3260
Toll Free: (800) 265-1242
Fax: (519) 660-3208
Email Jeff
Visit my website

Greg Holland
Tel: (519) 660-3239
Email Greg

Ann Martin
Tel: (519) 660-3260
Email Ann


















Unsubscribe



Privacy Policy and Legal Disclaimer
TM Trademarks used under authorization and control of The Bank of Nova Scotia.
ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF

This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author is an employee of ScotiaMcLeod, a division of Scotia Capital Inc. ("SCI"), but the data selection, analysis and views expressed herein are solely those of the author and not those of SCI. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor SCI can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your investment advisor, who can assess all relevant particulars of any proposed investment or transaction. SCI and the author accept no liability of whatsoever kind for any damages or losses incurred by you as a result of reliance upon or use of this publication in contravention of this notice. All performance data represents past performance and is not indicative of future performance. Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and outstanding equity securities of Royal Bank. Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respect to equity or debt securities of, or have provided advice for a fee with respect to Royal Bank. TM Trademark used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPF.