Another summer long weekend is approaching, and cottage season really is in full swing If your summer revolves around your beautiful recreational property, you may want to consider the impact of capital gains tax on your piece of paradise. Cottages are frequently great investments, but the growth in their value may make it difficult to pass them on to the next generation. If you are concerned about passing on your cottage, without passing on a major tax burden, give me a call. There are simple, and often inexpensive, strategies to avoid this risk
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Wednesday, July 29, 2009
Friday, July 24, 2009
Wareham Weekly Insights
The big picture
Bank of Canada declares recession over
On Thursday, the Bank of Canada joined the central banks of the U.S., Japan and Australia, declaring the recession over in their respective countries. Earlier in the week, U.S. and Canadian central banks promised to keep borrowing rates at record lows well into next year to nurture a recovery. “We have a very long haul here,” cautioned Fed chairman Bernanke. “It’s not going to feel like a very strong economy.” America’s climb out of the recession is being slowed by rising unemployment; however, the U.S. index of leading economic indicators rose 0.7% in June, the third straight monthly gain, pointing to solid GDP growth by the fourth quarter of 2009.
The Bank of Canada projects the Canadian economy will bounce back at least twice as strongly as the U.S., advancing by 1.3% during July to September, and 3% in the fourth quarter (annualized rates). Canadian retail sales rose more than expected in May, posting the fourth gain in five months, led by auto sales. Spending also jumped for building and home supplies, as consumers took advantage of tax incentives on home renovations.
The markets
Markets rally and consumers go to the movies
The Dow Jones Industrials Index rose above the key 9,000 mark for the first time since January, and the S&P 500 rose to its highest close since November on strong corporate profits and economic data. The TSX came close to breaking through its June high and reaching levels last seen in October. Apple reported its best-ever revenue and earnings in a non-holiday quarter, and will market a special iPhone for the Chinese market that could sell 14-million units in the first year.
At Starbucks, cost cuts boosted profits and store traffic is improving. Starbucks will close 40 more stores, for a total of 805 closures worldwide since July 2008. Moviegoers flocked to the sixth Harry Potter film, setting a new worldwide box office record of US$104-million for opening day. Cineplex in Canada launched a trial of D-Box, a new technology using special chairs that move to mimic the screen action. In car news, Porsche’s CEO was ousted as Volkswagen continues to position itself in what has been an epic struggle between the two carmakers. According to German reports, both firms have now agreed to settle their differences and get on with a merger.
Our recommendation
Favour shorter-maturity bonds as rates set to rise
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, says the group believes that equity markets will endure a pullback or period of consolidation over the coming weeks, while seeking greater fundamental evidence and support for a sustained bull market. Although stocks advanced dramatically since the March lows, Q2 earnings results in the U.S. are coming in ahead of expectations, which may prompt a brief rally before equities resume a sideways trend.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights the desk's current recommendations as follows: Term Call – below benchmark duration. Sector Call – Underweight Canadas, overweight Provincial and Municipals; neutral on corporates. Currency Call – favour the C$, so no tactical FX calls at this time. Alternative Strategies – underweight high yield, overweight Emerging Markets Debt, neutral on inflation protected bonds.
· Portfolio strategy. When market volatility leads to large shifts in the weights of individual holdings, we recommend clients rebalance portfolios to maintain a discipline that encourages profit taking on strength, while adding on weakness in other positions that may have underperformed.
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.
Bank of Canada declares recession over
On Thursday, the Bank of Canada joined the central banks of the U.S., Japan and Australia, declaring the recession over in their respective countries. Earlier in the week, U.S. and Canadian central banks promised to keep borrowing rates at record lows well into next year to nurture a recovery. “We have a very long haul here,” cautioned Fed chairman Bernanke. “It’s not going to feel like a very strong economy.” America’s climb out of the recession is being slowed by rising unemployment; however, the U.S. index of leading economic indicators rose 0.7% in June, the third straight monthly gain, pointing to solid GDP growth by the fourth quarter of 2009.
The Bank of Canada projects the Canadian economy will bounce back at least twice as strongly as the U.S., advancing by 1.3% during July to September, and 3% in the fourth quarter (annualized rates). Canadian retail sales rose more than expected in May, posting the fourth gain in five months, led by auto sales. Spending also jumped for building and home supplies, as consumers took advantage of tax incentives on home renovations.
The markets
Markets rally and consumers go to the movies
The Dow Jones Industrials Index rose above the key 9,000 mark for the first time since January, and the S&P 500 rose to its highest close since November on strong corporate profits and economic data. The TSX came close to breaking through its June high and reaching levels last seen in October. Apple reported its best-ever revenue and earnings in a non-holiday quarter, and will market a special iPhone for the Chinese market that could sell 14-million units in the first year.
At Starbucks, cost cuts boosted profits and store traffic is improving. Starbucks will close 40 more stores, for a total of 805 closures worldwide since July 2008. Moviegoers flocked to the sixth Harry Potter film, setting a new worldwide box office record of US$104-million for opening day. Cineplex in Canada launched a trial of D-Box, a new technology using special chairs that move to mimic the screen action. In car news, Porsche’s CEO was ousted as Volkswagen continues to position itself in what has been an epic struggle between the two carmakers. According to German reports, both firms have now agreed to settle their differences and get on with a merger.
Our recommendation
Favour shorter-maturity bonds as rates set to rise
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, says the group believes that equity markets will endure a pullback or period of consolidation over the coming weeks, while seeking greater fundamental evidence and support for a sustained bull market. Although stocks advanced dramatically since the March lows, Q2 earnings results in the U.S. are coming in ahead of expectations, which may prompt a brief rally before equities resume a sideways trend.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights the desk's current recommendations as follows: Term Call – below benchmark duration. Sector Call – Underweight Canadas, overweight Provincial and Municipals; neutral on corporates. Currency Call – favour the C$, so no tactical FX calls at this time. Alternative Strategies – underweight high yield, overweight Emerging Markets Debt, neutral on inflation protected bonds.
· Portfolio strategy. When market volatility leads to large shifts in the weights of individual holdings, we recommend clients rebalance portfolios to maintain a discipline that encourages profit taking on strength, while adding on weakness in other positions that may have underperformed.
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.
Health Care Costs
Health care reform is a huge issue in the media these days, with the US government struggling to deal with Medicare, Medicaid, and health care for all. Canadians face their own funding crisis. Although we have universal health care, many health costs are passed on to retirees, and these costs may present real hardship in your later years. The greatest risk comes from a prolonged stay in a nursing home for one spouse, as the other struggles to maintain the home. New alternatives exist which may significantly reduce this risk, and I rarely see these options used when I review financial plans.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Wednesday, July 22, 2009
build a portfolio that protects you from a downturn, but prepares you if the market continues to surge
Yesterday, the Bank of Canada came out with what must be considered a pretty optimistic outlook on the state of the economy. This morning, the Bank of England struck a similarly optimistic tone. With major central banks seeing the recession nearing its close, and signs that stability is returning to global investment markets, what should you do? Ideally, you should build a portfolio that protects you from a downturn, but prepares you if the market continues to surge.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Tuesday, July 21, 2009
you should consider alternatives.........
Last week, we saw a major market rally, but I think it is important to keep short term equity market performance in context. If this first decade of the millenium were to end today, the entire gain of the TSX over this decade would be fairly close to our gain last week. On the American side, the story is much worse, with equity returns for the decade deep in negative territory, and the picture is even more bleak if adjusted for Canadian currency, This does not mean you should avoid equities, but it does mean you should consider alternatives like bonds, preferred shares, and even GICs to diversify away from equity mutual funds, since this decade proves that equity investing really does require long term patience.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Friday, July 17, 2009
Wareham Weekly Insights
The big picture
Confidence continues to build on the back of stability
“The good news is things are stabilizing, there are encouraging signs, there is a brighter future ahead,” federal Finance Minister Jim Flaherty said, but he cautioned recovery will be gradual. President Barack Obama urged Americans to be patient with his economic recovery plan. The plan “was not designed to work in four months,” Obama said. “It was designed to work over two years.” U.S. Treasury Secretary Timothy Geithner said he sees signs of confidence returning to the U.S. financial sector and feels the economy has improved faster than expected. Industrial production in June shrank less than forecast, signalling the sector is on the verge of stabilizing. Meanwhile, new construction of homes and apartments picked up to the fastest pace in seven months in June, another indication that the U.S. housing slump may be levelling out.
China’s economy grew by a surprisingly strong 7.9% in the second quarter, fuelled by a massive economic stimulus package and aggressive bank lending. Japan’s central bank held its key interest rate steady at 0.1% and extended its emergency measures to the end of 2009, as it downgraded its 12-month outlook to 1.0% growth from 1.2%.
The markets
Stocks rally on earnings optimism and donuts take Manhattan
Stock markets rallied this week on the back of better-than-expected earnings from U.S. firms such as Intel and Goldman Sachs. JPMorgan Chase also beat analysts’ estimates with a $2.7-billion second-quarter profit, 36% higher than a year ago. General Electric, a bellwether of the world economy, beat Wall Street’s earnings expectations but posted a 17% drop in revenues. In addition, the Canadian dollar shot up to 89 cents U.S., drawing strength from the improved earnings outlook and rising gold prices.
Tim Hortons is opening 12 stores in New York City, and is on track to turn a profit at its 500+ U.S. stores this year, even as it goes head-to-head against McDonald’s new McCafé beverage line. Meanwhile, with retail sales down 9.4% in June versus last year, stores in the U.S. are taking novel approaches to drive sales – Sears Holding Corp., which runs both Sears and Kmart, has already launched an online Christmas promotion. Japanese beverage leaders Kirin Holdings Co. and Suntory Holdings are in merger talks; combined, the companies would control 50% of the Japanese beer market. Bailout talks between the U.S. Treasury and major business lender CIT Group have collapsed, potentially driving the company into bankruptcy.
Our recommendation
Rising yields will favour shorter-maturity bonds
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, says their continuing conviction is that equity markets will endure a pullback or period of consolidation over the coming weeks, while seeking greater fundamental evidence and support for a sustained bull market. Although stocks moved too far too fast since the March lows, early indications are that Q2 earnings results in the U.S. are coming in ahead of expectations which may prompt a brief rally before equities resume a sideways trend.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recently changing its forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter-maturity bonds. Municipal debt appears to show relative value, with yields higher than Canadian bank deposit notes in the five-year and greater maturity range. For passive buy-and-hold investors, the safety you receive from Municipals presents this as a decent opportunity to diversify from the corporate sector and continue to pick up decent yield.
· Portfolio strategy. With significant volatility still a factor in the markets, it’s important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.
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.
Confidence continues to build on the back of stability
“The good news is things are stabilizing, there are encouraging signs, there is a brighter future ahead,” federal Finance Minister Jim Flaherty said, but he cautioned recovery will be gradual. President Barack Obama urged Americans to be patient with his economic recovery plan. The plan “was not designed to work in four months,” Obama said. “It was designed to work over two years.” U.S. Treasury Secretary Timothy Geithner said he sees signs of confidence returning to the U.S. financial sector and feels the economy has improved faster than expected. Industrial production in June shrank less than forecast, signalling the sector is on the verge of stabilizing. Meanwhile, new construction of homes and apartments picked up to the fastest pace in seven months in June, another indication that the U.S. housing slump may be levelling out.
China’s economy grew by a surprisingly strong 7.9% in the second quarter, fuelled by a massive economic stimulus package and aggressive bank lending. Japan’s central bank held its key interest rate steady at 0.1% and extended its emergency measures to the end of 2009, as it downgraded its 12-month outlook to 1.0% growth from 1.2%.
The markets
Stocks rally on earnings optimism and donuts take Manhattan
Stock markets rallied this week on the back of better-than-expected earnings from U.S. firms such as Intel and Goldman Sachs. JPMorgan Chase also beat analysts’ estimates with a $2.7-billion second-quarter profit, 36% higher than a year ago. General Electric, a bellwether of the world economy, beat Wall Street’s earnings expectations but posted a 17% drop in revenues. In addition, the Canadian dollar shot up to 89 cents U.S., drawing strength from the improved earnings outlook and rising gold prices.
Tim Hortons is opening 12 stores in New York City, and is on track to turn a profit at its 500+ U.S. stores this year, even as it goes head-to-head against McDonald’s new McCafé beverage line. Meanwhile, with retail sales down 9.4% in June versus last year, stores in the U.S. are taking novel approaches to drive sales – Sears Holding Corp., which runs both Sears and Kmart, has already launched an online Christmas promotion. Japanese beverage leaders Kirin Holdings Co. and Suntory Holdings are in merger talks; combined, the companies would control 50% of the Japanese beer market. Bailout talks between the U.S. Treasury and major business lender CIT Group have collapsed, potentially driving the company into bankruptcy.
Our recommendation
Rising yields will favour shorter-maturity bonds
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, says their continuing conviction is that equity markets will endure a pullback or period of consolidation over the coming weeks, while seeking greater fundamental evidence and support for a sustained bull market. Although stocks moved too far too fast since the March lows, early indications are that Q2 earnings results in the U.S. are coming in ahead of expectations which may prompt a brief rally before equities resume a sideways trend.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recently changing its forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter-maturity bonds. Municipal debt appears to show relative value, with yields higher than Canadian bank deposit notes in the five-year and greater maturity range. For passive buy-and-hold investors, the safety you receive from Municipals presents this as a decent opportunity to diversify from the corporate sector and continue to pick up decent yield.
· Portfolio strategy. With significant volatility still a factor in the markets, it’s important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.
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.
it really is important to revamp your portfolio
Canadian investors pay the highest management fees in the world. Over the last ten years, North American markets have experienced essentially no growth. As a result, many listeners may have mutual funds that have been around for years, with little or no growth, and frequently with significant losses. Over the past few years, I have spoken frequently about the impact of management fees on the long term growth of mutual fund portfolios. It is highly unliikely that we will see another 10 years of zero growth, but it really is important to revamp your portfolio, and ensure you have your costs under control. Tune in tomorrow at 9:30, for Beyond Funds Market Weekly, and I will give you some ideas on rebuilding your portfolio, and controlling your costs, in this difficult market environment.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Wednesday, July 15, 2009
Signs of recovery may drive the market higher
Last week was pretty negative for North American markets. This week, US earnings reports will give us a sense of the state of the economy. Signs of recovery may drive the market higher, but negative news might accelerate the recent sell off. So far, the earnings have been encouraging, but over the next few months, we are likely to see ongoing uncertainty, as the market seeks direction. On Saturday, I discussed positioning your portfolio for the current market volatility. I focused on choosing investments with income, like dividends or interest, as the core for surviving these dangerous times. If you missed my show, visit www.am980.ca, or give me a call, and we may discuss it one on one.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Monday, July 13, 2009
Signs of recovery may drive the market higher
Last week was pretty negative for North American markets. This week, US earnings reports will give us a sense of the state of the economy. Signs of recovery may drive the market higher, but negative news might
accelerate the recent sell off. Over the next few months, we are
likely to see ongoing uncertainty, as the market seeks direction. On Saturday, I discussed positioning your portfolio for the current market volatility. I focused on choosing investments with income, like dividends or interest, as the core for surviving these dangerous times. If you missed my show, visit www.am980.ca, or give me a call, and we may discuss it one on one.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
accelerate the recent sell off. Over the next few months, we are
likely to see ongoing uncertainty, as the market seeks direction. On Saturday, I discussed positioning your portfolio for the current market volatility. I focused on choosing investments with income, like dividends or interest, as the core for surviving these dangerous times. If you missed my show, visit www.am980.ca, or give me a call, and we may discuss it one on one.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Wareham Weekly Insights
The big picture
Economies edge towards recovery
Leaders of the world’s biggest developed and emerging nations met in Italy this week for a three-day summit on issues ranging from the economic crisis and international trade to gas prices and climate change. Leaders have agreed to avoid devaluing their currencies to promote their exports, but struggled to reach consensus on a proposal to cut greenhouse gas emissions by half by 2050.
Australia’s central bank held its interest rate unchanged for the third month, citing a stabilizing global situation and a stronger-than-expected domestic economy. The Bank of England will pump extra new money into markets and keep its key interest rate at a record-low 0.5% in a bid to kick-start lending. British Chamber of Commerce chief economist David Kern said, “The worst phase of the recession is over, but serious downward pressures persist.”
Canada was at the back of the class in an annual report card issued Monday by the Conference Board, ranking 11th for economic performance in 2008 among 17 peer countries. On a bright note, analysts were surprised as the value of building permits leapt 14.8% in May from April, to $5 billion, versus an expected gain of 0.7%. Statistics Canada said net job losses in June totaled 7,400 and the unemployment rate rose to 8.6 percent from 8.4 percent in May. Overall, fewer Canadians lost their jobs in June than expected even as the unemployment rate hit an 11-year high, adding credence to the view that the economy is stabilizing.
Oil creates slippery slope for markets
World stock markets slipped as oil prices took a six-day slide, after a bleak U.S. jobs report last week and a bigger-than-expected increase in U.S. gasoline reserves. Prices stabilized at US$60, boosted by news that this week’s jobless numbers were down sharply and by better-than-expected quarterly results posted by aluminum company Alcoa.
Google announced it will offer its own operating system in the second half of 2010, a direct challenge to Microsoft Windows, the most widely used operating system in the world. The Jean Coutu Group, Quebec’s leading pharmacy chain, said it plans to grow by one-third to 400 stores within five to seven years, capitalizing on the province’s aging population. A judge approved General Motors’ restructuring plan, allowing the company to emerge from bankruptcy and leave behind much of its costs and liabilities. The U.S. government will own about 61% of the “new GM” and the Canadian government will control an 11.7% share.
Our recommendation
Favour shorter-maturity bonds as rates set to rise
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, says their continuing conviction is that equity markets will endure a pullback or period of consolidation over the coming weeks, while seeking greater fundamental evidence and support for a sustained bull market. Investors may be motivated to take profits based on the conclusion that stocks have in fact moved too far too fast and have few pending catalysts to generate further gains until the Q2 earnings season commences in late July.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recently changing its forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter-maturity bonds. Municipal debt appears to show relative value with yields higher than Canadian bank deposit notes in the five-year and greater maturity range. For passive buy-and-hold investors, the safety you receive from Municipals presents this as a decent opportunity to diversify from the corporate sector and continue to pick up decent yield.
· Portfolio strategy. With significant volatility still a factor in the markets, it’s important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.
The month in review
June: Global economy reaching a turning point
In June, there were encouraging signs that the global economy is stabilizing, but markets were volatile as weak commodity prices and mixed economic data gave investors doubts on the strength and speed of an economic recovery. Leaders around the world expressed cautious optimism that the recession was slowing and the general consensus is that the worst-case scenario has been avoided. Ten U.S. banks repaid $68 billion of bailout money and U.S. President Barack Obama unveiled a proposal for sweeping reforms to bank and market regulation.
Market rally falters
In June, markets continued the rally that started in March, but then stalled as oil and commodity prices softened mid-month. Despite the pullback, March 1 to June 30 marked the best quarterly gain for North American markets in a decade. Oil prices in June peaked at US$73 per barrel compared to US$145.29 per barrel price nearly a year ago.
Canadian dollar pulls back with commodities
The Canadian dollar gained 9.4% in May, passing the $0.90 cents U.S. mark, then fell in late June as the price of oil and metals weakened. The Canadian dollar ended the month in the area of $0.85 cents U.S.
Global central banks hold rates
Central banks in the U.S., Canada, England, Europe, Australia and Japan put interest rate cuts on hold this month, satisfied that their policies are working, with growing signs that economic contraction is slowing.
Global economies continue to stabilize
While it may be too early to call it a recovery, statistics are indicating that the rate of decline is slowing, suggesting a bottom to the recession. In the U.S., there were positive signs of stabilization in the manufacturing and housing sectors – orders for U.S. manufactured durable goods rose by 1.8% in May, the strongest increase since December 2007. As well, U.S. mortgage applications climbed. However, at the same time, a far bigger-than-expected rise in unemployment for June brought the unemployment rate up to 9.5%.
Canada’s report on April economic growth was released, showing the pace of economic contraction is slowing, as the economy inched down just 0.1% from March, one of the smaller declines since the recession began. China reported a strong recovery in industrial production and Japan saw rising exports and output, while European economies were mixed.
Auto restructuring
General Motors filed for bankruptcy protection on June 1 and the Canadian and U.S. governments became reluctant shareholders to aid in the transformation of the 100-year-old automaker. GM was given a July 10 deadline to get court approval for a restructuring plan and bankruptcy sale, which will result in a “new GM” with a smaller workforce and fewer factories and dealerships. Debt-mired Porsche is looking for a “white knight” and seems to be pinning its hopes on the Gulf state of Qatar, after rebuffing an offer from VW and being rejected for financing by Germany’s state bank.
Ins and outs
Research In Motion will launch a new Blackberry in July to rival Apple’s June launch of the new iPhone 3G S, which sold 1 million units during its first weekend in market. In other news, after 127 years, Nortel is being wound down, with its wireless network business being sold to Nokia Siemens.
·
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.
Economies edge towards recovery
Leaders of the world’s biggest developed and emerging nations met in Italy this week for a three-day summit on issues ranging from the economic crisis and international trade to gas prices and climate change. Leaders have agreed to avoid devaluing their currencies to promote their exports, but struggled to reach consensus on a proposal to cut greenhouse gas emissions by half by 2050.
Australia’s central bank held its interest rate unchanged for the third month, citing a stabilizing global situation and a stronger-than-expected domestic economy. The Bank of England will pump extra new money into markets and keep its key interest rate at a record-low 0.5% in a bid to kick-start lending. British Chamber of Commerce chief economist David Kern said, “The worst phase of the recession is over, but serious downward pressures persist.”
Canada was at the back of the class in an annual report card issued Monday by the Conference Board, ranking 11th for economic performance in 2008 among 17 peer countries. On a bright note, analysts were surprised as the value of building permits leapt 14.8% in May from April, to $5 billion, versus an expected gain of 0.7%. Statistics Canada said net job losses in June totaled 7,400 and the unemployment rate rose to 8.6 percent from 8.4 percent in May. Overall, fewer Canadians lost their jobs in June than expected even as the unemployment rate hit an 11-year high, adding credence to the view that the economy is stabilizing.
Oil creates slippery slope for markets
World stock markets slipped as oil prices took a six-day slide, after a bleak U.S. jobs report last week and a bigger-than-expected increase in U.S. gasoline reserves. Prices stabilized at US$60, boosted by news that this week’s jobless numbers were down sharply and by better-than-expected quarterly results posted by aluminum company Alcoa.
Google announced it will offer its own operating system in the second half of 2010, a direct challenge to Microsoft Windows, the most widely used operating system in the world. The Jean Coutu Group, Quebec’s leading pharmacy chain, said it plans to grow by one-third to 400 stores within five to seven years, capitalizing on the province’s aging population. A judge approved General Motors’ restructuring plan, allowing the company to emerge from bankruptcy and leave behind much of its costs and liabilities. The U.S. government will own about 61% of the “new GM” and the Canadian government will control an 11.7% share.
Our recommendation
Favour shorter-maturity bonds as rates set to rise
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, says their continuing conviction is that equity markets will endure a pullback or period of consolidation over the coming weeks, while seeking greater fundamental evidence and support for a sustained bull market. Investors may be motivated to take profits based on the conclusion that stocks have in fact moved too far too fast and have few pending catalysts to generate further gains until the Q2 earnings season commences in late July.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recently changing its forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter-maturity bonds. Municipal debt appears to show relative value with yields higher than Canadian bank deposit notes in the five-year and greater maturity range. For passive buy-and-hold investors, the safety you receive from Municipals presents this as a decent opportunity to diversify from the corporate sector and continue to pick up decent yield.
· Portfolio strategy. With significant volatility still a factor in the markets, it’s important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.
The month in review
June: Global economy reaching a turning point
In June, there were encouraging signs that the global economy is stabilizing, but markets were volatile as weak commodity prices and mixed economic data gave investors doubts on the strength and speed of an economic recovery. Leaders around the world expressed cautious optimism that the recession was slowing and the general consensus is that the worst-case scenario has been avoided. Ten U.S. banks repaid $68 billion of bailout money and U.S. President Barack Obama unveiled a proposal for sweeping reforms to bank and market regulation.
Market rally falters
In June, markets continued the rally that started in March, but then stalled as oil and commodity prices softened mid-month. Despite the pullback, March 1 to June 30 marked the best quarterly gain for North American markets in a decade. Oil prices in June peaked at US$73 per barrel compared to US$145.29 per barrel price nearly a year ago.
Canadian dollar pulls back with commodities
The Canadian dollar gained 9.4% in May, passing the $0.90 cents U.S. mark, then fell in late June as the price of oil and metals weakened. The Canadian dollar ended the month in the area of $0.85 cents U.S.
Global central banks hold rates
Central banks in the U.S., Canada, England, Europe, Australia and Japan put interest rate cuts on hold this month, satisfied that their policies are working, with growing signs that economic contraction is slowing.
Global economies continue to stabilize
While it may be too early to call it a recovery, statistics are indicating that the rate of decline is slowing, suggesting a bottom to the recession. In the U.S., there were positive signs of stabilization in the manufacturing and housing sectors – orders for U.S. manufactured durable goods rose by 1.8% in May, the strongest increase since December 2007. As well, U.S. mortgage applications climbed. However, at the same time, a far bigger-than-expected rise in unemployment for June brought the unemployment rate up to 9.5%.
Canada’s report on April economic growth was released, showing the pace of economic contraction is slowing, as the economy inched down just 0.1% from March, one of the smaller declines since the recession began. China reported a strong recovery in industrial production and Japan saw rising exports and output, while European economies were mixed.
Auto restructuring
General Motors filed for bankruptcy protection on June 1 and the Canadian and U.S. governments became reluctant shareholders to aid in the transformation of the 100-year-old automaker. GM was given a July 10 deadline to get court approval for a restructuring plan and bankruptcy sale, which will result in a “new GM” with a smaller workforce and fewer factories and dealerships. Debt-mired Porsche is looking for a “white knight” and seems to be pinning its hopes on the Gulf state of Qatar, after rebuffing an offer from VW and being rejected for financing by Germany’s state bank.
Ins and outs
Research In Motion will launch a new Blackberry in July to rival Apple’s June launch of the new iPhone 3G S, which sold 1 million units during its first weekend in market. In other news, after 127 years, Nortel is being wound down, with its wireless network business being sold to Nokia Siemens.
·
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.
Wednesday, July 8, 2009
Further market weakness over the summer
After the dramatic spring rally, markets have pulled back significantly over the last few days. I believe we are likely to see further weakness over the summer. In this volatile environment, where it is difficult to anticipate the direction stock prices may go, I believe it is critical to get paid for investing. Money market funds are paying next to nothing, and GICs are not much better. I continue to emphasize three areas in these challenging time; bonds, dividend paying stocks, and preferred shares. There are many options offering yields of 6, to 10 percent. In volatile markets, these payments help cushion the blow of fluctuating stock prices. If you are going to invest, you might as well get paid.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Bonds in long term financial strategy
Over the past few months, I have suggested that investors looking to rebuild and rebalance their portfolio should be looking at the important role bonds may play in their long term financial strategy. Corporate bonds have delivered superb returns over the past few months. Although there are still some excellent returns to be had in the corporate area, I am currently looking at municipal bonds and real return bonds for investors who do not wish to experience the volatility we have seen over the last couple of years. If you are looking to protect your wealth, give me a call, and we can discuss where bonds may fit in.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Friday, July 3, 2009
Wareham Weekly Insights
Market Watch
The big picture
Mixed economic signals
This week, there were positive signs of stabilization in the U.S. manufacturing and housing sectors, but, at the same time, a far bigger-than-expected rise in unemployment for June brought the unemployment rate up to 9.5% as U.S. Nonfarm payrolls shed another 467,000 jobs. President Barack Obama had warned that unemployment would top 10% as it would take time for an economic recovery to translate into job growth. The impact of unemployment has hit California hard – the state has declared a fiscal emergency with a US$26.3-billion deficit caused by a dramatic drop in revenues from personal income taxes.
In Europe, the European Central Bank (ECB) kept its main interest rate steady at a record low of 1.0% as ECB chief Jean-Claude Trichet downplayed the threat of deflation. Canada’s report on April economic growth was released, showing the economy inched down 0.1% from March, one of the smaller declines since the recession began. Hardest hit were manufacturers and retailers. While the pace of economic contraction is slowing, economists agree that we’re not out of the woods just yet, as evidenced by auto plant shutdowns and the strong Canadian dollar causing havoc in May and June.
The markets
Quarter ends on a high note
The TSX rally that started in early March continues to slow, nevertheless Canadian and U.S. markets chalked up their best quarterly gain since 1990. Markets got a quarter-end boost as bank stocks rallied on Monday and oil prices jumped more than 2% to $73 a barrel on Tuesday on reports of rebel attacks on an oil facility in Nigeria – prices have since retreated to the $66 per barrel range. It was a year ago today (July 3, 2008) that oil prices settled at a record high of $145.29 per barrel.
In the auto industry, the U.S. government gave GM a deadline of July 10 to get approval to sell its assets. The #1 U.S. automaker filed for bankruptcy protection on June 1. Porsche is considering an offer from the gulf state of Qatar, which could solve its debt problems, particularly after Germany rejected the carmaker’s €1.75-billion loan application on Tuesday. In other news, Elan’s shares soared Thursday after Johnson & Johnson said it would pay US$1 billion to the Irish drug maker to gain access to Alzheimer’s disease treatments. Starbucks has lowered costs and introduced new, healthier menu options to help bolster declining sales – quarterly sales fell 8% in the U.S. in April, while the number of customer transactions fell 5%.
Our recommendation
Rising yields make shorter-maturity bonds more attractive
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, believes the current rally is losing steam and at best may move sideways during a period of consolidation, or indeed give back part of recent gains. Investors may be motivated to take profits based on the conclusion that stocks have in fact moved too far too fast and have few pending catalysts to generate further gains until the Q2 earnings season commences over the next few weeks.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recently changing their forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter-maturity bonds. Corporate spreads have narrowed significantly since the beginning of the year, due to investor risk appetite returning. As such, we see better relative value in municipal bonds where spreads have not declined to the same degree.
· Portfolio strategy. With significant volatility still a factor in the markets, it’s important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.
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.
The big picture
Mixed economic signals
This week, there were positive signs of stabilization in the U.S. manufacturing and housing sectors, but, at the same time, a far bigger-than-expected rise in unemployment for June brought the unemployment rate up to 9.5% as U.S. Nonfarm payrolls shed another 467,000 jobs. President Barack Obama had warned that unemployment would top 10% as it would take time for an economic recovery to translate into job growth. The impact of unemployment has hit California hard – the state has declared a fiscal emergency with a US$26.3-billion deficit caused by a dramatic drop in revenues from personal income taxes.
In Europe, the European Central Bank (ECB) kept its main interest rate steady at a record low of 1.0% as ECB chief Jean-Claude Trichet downplayed the threat of deflation. Canada’s report on April economic growth was released, showing the economy inched down 0.1% from March, one of the smaller declines since the recession began. Hardest hit were manufacturers and retailers. While the pace of economic contraction is slowing, economists agree that we’re not out of the woods just yet, as evidenced by auto plant shutdowns and the strong Canadian dollar causing havoc in May and June.
The markets
Quarter ends on a high note
The TSX rally that started in early March continues to slow, nevertheless Canadian and U.S. markets chalked up their best quarterly gain since 1990. Markets got a quarter-end boost as bank stocks rallied on Monday and oil prices jumped more than 2% to $73 a barrel on Tuesday on reports of rebel attacks on an oil facility in Nigeria – prices have since retreated to the $66 per barrel range. It was a year ago today (July 3, 2008) that oil prices settled at a record high of $145.29 per barrel.
In the auto industry, the U.S. government gave GM a deadline of July 10 to get approval to sell its assets. The #1 U.S. automaker filed for bankruptcy protection on June 1. Porsche is considering an offer from the gulf state of Qatar, which could solve its debt problems, particularly after Germany rejected the carmaker’s €1.75-billion loan application on Tuesday. In other news, Elan’s shares soared Thursday after Johnson & Johnson said it would pay US$1 billion to the Irish drug maker to gain access to Alzheimer’s disease treatments. Starbucks has lowered costs and introduced new, healthier menu options to help bolster declining sales – quarterly sales fell 8% in the U.S. in April, while the number of customer transactions fell 5%.
Our recommendation
Rising yields make shorter-maturity bonds more attractive
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, believes the current rally is losing steam and at best may move sideways during a period of consolidation, or indeed give back part of recent gains. Investors may be motivated to take profits based on the conclusion that stocks have in fact moved too far too fast and have few pending catalysts to generate further gains until the Q2 earnings season commences over the next few weeks.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, highlights that with Scotia Economics recently changing their forecast, calling for rising yields across the entire maturity curve in 12 months time, active traders should remain in shorter-maturity bonds. Corporate spreads have narrowed significantly since the beginning of the year, due to investor risk appetite returning. As such, we see better relative value in municipal bonds where spreads have not declined to the same degree.
· Portfolio strategy. With significant volatility still a factor in the markets, it’s important to review the impact on your portfolio allocations and ensure that your holdings remain appropriate for your goals and risk tolerance.
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.
Mid Year Report
July is here, and 2009 is half over. The first six months of 2009 have been memorable, Heading into the second half, there are a lot of challenging questions at hand. Will the market continue to surge, or struggle to hold on to its gains? Will we see more volatility? Will we see economic recovery? Where will the Canadian dollar go? Where are commodity prices going? What will happen to home prices? Tune in tomorrow at 9:30, as I provide my mid year report card, and give you some strategies for the second half of 2009.
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
Do you want to discuss your alternatives?
Have you outgrown your mutual funds?
For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260. This program is for information purposes only. Fees, management fees and commissions may be associated with mutual fund investing. Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital, member CIPF
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