After a massive three month recovery in the global stock market, the debate between bulls and bears continues. Are things improving, or still deteriorating? In fact, most economic indicators remain dreadful, but the market has rallied in response to things getting worse at a slower pace. That may sound confusing, but this apparently irrational thinking is how the market works. Investing can be complicated, and it is a compelling reason to work with a professional. Are you looking for a partner to help you navigate difficult markets?
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, June 10, 2009
Monday, June 8, 2009
Turn Your Retirement Thinking On It's Head
Many investors have seen dramatic losses in their mutual fund portfolios over the last few years. Many global markets, including Canada and the US, appear likely to end the first decade of this millenium with either minimal gains or losses. Moving forward, it really will be necessary to turn retirement thinking on it's head, based on the lessons of this decade. The emergence of retirement savings vehicles with guaranteed income for life, without the restrictions of traditional annuities, may be one of the positive outcomes of a pretty negative decade. Is it time for you to take a fresh look at your retirement planning?
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, June 5, 2009
Wareham Weekly Insights
Market Watch
The big picture
Central banks leave rates unchanged
The Bank of Canada (BoC), Bank of England, and European Central Bank all left their benchmark lending rates unchanged this week. The BoC indicated that financial conditions and business confidence have significantly improved, while cautioning that economic recovery will likely be “more muted” over the near term. BoC Governor Mark Carney also warned that if the recent unprecedented rise in the Canadian dollar persists, it could threaten to derail the recovery.
Prime Minister Stephen Harper said this week that, although Canada’s latest gross domestic product (GDP) figures are bad, they are better than expected and show the economy is over the worst of the crisis. Meanwhile, the GDP of Australia actually showed growth in the first quarter of 2009, making it the only major western nation to avoid recession altogether.
In Congressional testimony, Federal Reserve Chairman Ben Bernanke warned that the labour market "tends to lag" the business cycle, "and so even as the economy begins to recover, unemployment can still remain high." The U.S. unemployment rate increased 0.5 percentage point to 9.4% in May, the highest level since August 1983. However, job losses softened markedly last month, sending one of the strongest signals yet that the severe recession may be transitioning towards recovery. Last month's drop was the smallest since September 2008, when the recession intensified in the wake of the collapse of Lehman Brothers.
The markets
Stock markets continue to rise
The TSX index is now up approximately 40% since its low of March 9th, with Financial and Energy shares leading the market. Higher energy and commodity prices and a steady trickle of positive economic data have helped fuel the rise, along with increasing optimism about the future of corporate earnings, which remain the ultimate driver of stock prices.
General Motors made its long-awaited filing for bankruptcy protection this week. The company’s restructuring is now underway with several parties coming to the table—including the Canadian governments’ pledge of $9.5 billion in bailout funds, and news that Chinese concern Sichuan Tengzhong Heavy Industrial Machinery Co. has tentatively agreed to purchase the Hummer brand. In other auto news, a U.S. Court of Appeals agreed on Tuesday to hear a challenge to Chrysler LLC’s sale of most of its assets to a group led by Italian automaker Fiat, in a move that could potentially delay the deal.
Our recommendation
Corporate bonds still offer attractive yield premium
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, believes the current strength in equities is overdone and that the market is vulnerable to a correction. We continue to advocate that investors take profits in long trading positions or overvalued cyclical positions that do not represent long-term core holdings. In the event of an inevitable pull-back, return to selectively accumulating equities in anticipation of the next bull market for stocks.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, says high-quality corporate bonds, such as Canadian banks and insurance companies, continue to offer attractive yields relative to government issues. Although credit spreads have tightened significantly, they still remain wide, and we recommend investors following the laddered portfolio process add exposure to these sectors when rolling maturities at this time.
· 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
May: The return of optimism
May saw commodities, energy, the Canadian dollar, and equities all heading to new highs for the year. Although some sobering economic statistics were released this month, investors appeared to be paying more attention to the positive indicators, such as rising consumer sentiment, a more optimistic corporate earnings outlook, and signs of strength in the housing sector.
Signs of recovery
There were a number of signs of pending economic recovery this month. Canadian sales of new motor vehicles rose 6.3% in March, the largest monthly gain since January 2008. A Department of Commerce report showed an increase in U.S. construction spending and a 3.2% rise in pending home sales. In addition, the U.S. Conference Board said consumer confidence leapt to its highest level in eight months this month. ADP Employer Services also released a report noting a decline in private-sector job losses.
Not all good news
All the good news in May was tempered by some less-than-optimistic data. For example, the S&P/Case-Shiller national home-price index fell 19.1% in the first quarter versus a year earlier—the steepest decline in its 21-year history. In addition, the number of Canadians receiving jobless benefits surged 10.6% in March from the previous month, the biggest increase since the labour market started to weaken last October. Statistics Canada said the nation’s employment rate is running at an 11-year high in May as the worst recession since World War Two led to massive lay-offs in Ontario’s manufacturing sector.
Markets hit highs
The TSX briefly hit a seven-month high on the first day of June, capping a month in which it continued to show impressive upward momentum. The gains in Canadian equities went hand-in-hand with surging oil prices. Crude hit a new high for the year—over US$63—in the last week of the month. U.S. markets were also buoyant in May, with the Dow Jones Industrial Average coming within striking distance of its high point in January 2009.
Canadian dollar heading for parity?
The Canadian dollar gained a remarkable 9.4% in May, crossing the threshold of U.S.$0.90 cents. The strength of the loonie is, in part, a by-product of U.S. dollar weakness compared to most other world currencies. A falling U.S. dollar tends to contribute to higher commodity prices, which some economists see as creating continued gains for the Canadian dollar and, eventually, a return to parity with the U.S. dollar.
Auto restructuring
Investors were on the edge of their seats throughout May as the restructuring of General Motors hit a number of roadblocks. With a month-end, government-imposed deadline looming, there was a major setback as bondholders rejected an offer to exchange U.S.$27 billion in unsecured debt for 10% of the company’s stock. However, the month wound up with GM hammering out a deal that will see Canadian and U.S. governments digging deeper deficits in order to provide additional funding to the ailing company in exchange for ownership positions.
Privacy Policy and Legal DisclaimerTM Trademarks used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPFThis 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
Central banks leave rates unchanged
The Bank of Canada (BoC), Bank of England, and European Central Bank all left their benchmark lending rates unchanged this week. The BoC indicated that financial conditions and business confidence have significantly improved, while cautioning that economic recovery will likely be “more muted” over the near term. BoC Governor Mark Carney also warned that if the recent unprecedented rise in the Canadian dollar persists, it could threaten to derail the recovery.
Prime Minister Stephen Harper said this week that, although Canada’s latest gross domestic product (GDP) figures are bad, they are better than expected and show the economy is over the worst of the crisis. Meanwhile, the GDP of Australia actually showed growth in the first quarter of 2009, making it the only major western nation to avoid recession altogether.
In Congressional testimony, Federal Reserve Chairman Ben Bernanke warned that the labour market "tends to lag" the business cycle, "and so even as the economy begins to recover, unemployment can still remain high." The U.S. unemployment rate increased 0.5 percentage point to 9.4% in May, the highest level since August 1983. However, job losses softened markedly last month, sending one of the strongest signals yet that the severe recession may be transitioning towards recovery. Last month's drop was the smallest since September 2008, when the recession intensified in the wake of the collapse of Lehman Brothers.
The markets
Stock markets continue to rise
The TSX index is now up approximately 40% since its low of March 9th, with Financial and Energy shares leading the market. Higher energy and commodity prices and a steady trickle of positive economic data have helped fuel the rise, along with increasing optimism about the future of corporate earnings, which remain the ultimate driver of stock prices.
General Motors made its long-awaited filing for bankruptcy protection this week. The company’s restructuring is now underway with several parties coming to the table—including the Canadian governments’ pledge of $9.5 billion in bailout funds, and news that Chinese concern Sichuan Tengzhong Heavy Industrial Machinery Co. has tentatively agreed to purchase the Hummer brand. In other auto news, a U.S. Court of Appeals agreed on Tuesday to hear a challenge to Chrysler LLC’s sale of most of its assets to a group led by Italian automaker Fiat, in a move that could potentially delay the deal.
Our recommendation
Corporate bonds still offer attractive yield premium
· Equities. Stephen Uzielli, Portfolio Manager, Portfolio Advisory Group, believes the current strength in equities is overdone and that the market is vulnerable to a correction. We continue to advocate that investors take profits in long trading positions or overvalued cyclical positions that do not represent long-term core holdings. In the event of an inevitable pull-back, return to selectively accumulating equities in anticipation of the next bull market for stocks.
· Fixed income. Chris Kennedy, Associate Director, Portfolio Advisory Group, says high-quality corporate bonds, such as Canadian banks and insurance companies, continue to offer attractive yields relative to government issues. Although credit spreads have tightened significantly, they still remain wide, and we recommend investors following the laddered portfolio process add exposure to these sectors when rolling maturities at this time.
· 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
May: The return of optimism
May saw commodities, energy, the Canadian dollar, and equities all heading to new highs for the year. Although some sobering economic statistics were released this month, investors appeared to be paying more attention to the positive indicators, such as rising consumer sentiment, a more optimistic corporate earnings outlook, and signs of strength in the housing sector.
Signs of recovery
There were a number of signs of pending economic recovery this month. Canadian sales of new motor vehicles rose 6.3% in March, the largest monthly gain since January 2008. A Department of Commerce report showed an increase in U.S. construction spending and a 3.2% rise in pending home sales. In addition, the U.S. Conference Board said consumer confidence leapt to its highest level in eight months this month. ADP Employer Services also released a report noting a decline in private-sector job losses.
Not all good news
All the good news in May was tempered by some less-than-optimistic data. For example, the S&P/Case-Shiller national home-price index fell 19.1% in the first quarter versus a year earlier—the steepest decline in its 21-year history. In addition, the number of Canadians receiving jobless benefits surged 10.6% in March from the previous month, the biggest increase since the labour market started to weaken last October. Statistics Canada said the nation’s employment rate is running at an 11-year high in May as the worst recession since World War Two led to massive lay-offs in Ontario’s manufacturing sector.
Markets hit highs
The TSX briefly hit a seven-month high on the first day of June, capping a month in which it continued to show impressive upward momentum. The gains in Canadian equities went hand-in-hand with surging oil prices. Crude hit a new high for the year—over US$63—in the last week of the month. U.S. markets were also buoyant in May, with the Dow Jones Industrial Average coming within striking distance of its high point in January 2009.
Canadian dollar heading for parity?
The Canadian dollar gained a remarkable 9.4% in May, crossing the threshold of U.S.$0.90 cents. The strength of the loonie is, in part, a by-product of U.S. dollar weakness compared to most other world currencies. A falling U.S. dollar tends to contribute to higher commodity prices, which some economists see as creating continued gains for the Canadian dollar and, eventually, a return to parity with the U.S. dollar.
Auto restructuring
Investors were on the edge of their seats throughout May as the restructuring of General Motors hit a number of roadblocks. With a month-end, government-imposed deadline looming, there was a major setback as bondholders rejected an offer to exchange U.S.$27 billion in unsecured debt for 10% of the company’s stock. However, the month wound up with GM hammering out a deal that will see Canadian and U.S. governments digging deeper deficits in order to provide additional funding to the ailing company in exchange for ownership positions.
Privacy Policy and Legal DisclaimerTM Trademarks used under authorization and control of The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member CIPFThis 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.
.
Are You Prepared for Whatever Comes Next?
In the past three months, we have seen one of the most dramatic
rallies in stock market history. We are still a long way from the
market peak before the massive bear market of 2008-2009, but it is
definitely time to be looking at your portfolio, and ensuring that you
are prepared for whatever comes next. Is it time to make changes?
Tune in tomorrow at 8:30 AM, to Beyond Funds Market Weekly, and I will
discuss ways to prepare your portfolio for what is likely to come
next.
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
rallies in stock market history. We are still a long way from the
market peak before the massive bear market of 2008-2009, but it is
definitely time to be looking at your portfolio, and ensuring that you
are prepared for whatever comes next. Is it time to make changes?
Tune in tomorrow at 8:30 AM, to Beyond Funds Market Weekly, and I will
discuss ways to prepare your portfolio for what is likely to come
next.
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, June 3, 2009
rebalance your portfolio to suit your investment goals
Global markets continued to surge overnight, and most global markets are now in or approaching positive territory for the year. You may be thinking about sticking your toe back in the market, or simply sighing with relief when you open your statements, but I believe the real opportunity is to rebalance your portfolio to suit your investment goals. This market recovery may not last over the summer, so it is likely a good time to sell your losers, and ensure you own investments that you believe in. Are you looking for a fresh approach to your 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
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, June 1, 2009
Icon GM scheduled to file for bankruptcy
It looks like a dramatic day on the markets, as American Icon GM is scheduled to file for bankruptcy this morning. A few months ago, this might have seemed unthinkable, and markets would likely have plunged. This morning, markets around the world have surged, and North America appears set to follow. Chrysler and GM in bankruptcy are evidence of how much the market has changed in the past few months, and your investment strategy likely needs to change with the new realities of the global market. Are you looking for a second opinion on the state of your investment portfolio? 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
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
Financial Longevity
On Monday, I discussed the risk to your finacial security presented by long term care costs. Another risk is longevity. Many retirees still have living parents, and are likely to live for twenty five or thirty years in retirement. At the same time, fewer and fewer people will see the benefit of a guaranteed pension. Fortunately, there are a number of options emerging to ensure you will not run out of money. With the guiding hand of an advisor, you may secure your retirement income for life.
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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