The old story, the “elevator don’t go down until it’s full” could be an appropriate adage for the bulls these day. International political watchers are maybe a little confused as to who is trying to control the airport in Crimea (a militia that appears Russian but isn’t officially so). Economic data out of Europe remains mixed with inflation picking up slightly (but still a disinflationary +0.8%) while unemployment in Italy moved up to another record level at 12.9%. Jos. A. Banks rejects Men’s Wearhouse’s offer of $63.50 but agrees to talk about a sweeter deal.
Strategists are getting more bullish. Yesterday, we heard from Wells Fargo Advisors that they are raising their 2014 target with the high end at 2025. Today, CanaccordGenuity’s strategist Tony Dwyer raised his target on the index to 2185 based on $115 in earnings and a 19x multiple.
The big items today economically in North America include GDP both in Canada (Q4 estimate 2.6%) and the U.S. (which is a second look at a number originally released at 3.2% but expected to be 2.5% now). Also in the U.S. we will get some confidence numbers and pending home sales. Yesterday’s CMHC announcement was postponed until today at 11 am(again watch the publicly traded mortgage insurance company Genworth but also the Canadian banks as any higher costs associated with mortgage insurance could factor into mortgage growth).
I read a lot, and sometimes neat little tidbits show up. Here’s one from a JP Morgan trading note yesterday: “INTC - heading into 2014 this was one of the most popular stocks in all of tech although the Q4 earnings report underwhelmed. The last few days has seen people begin to return to INTC once again (for the first time since early Jan).”
Apple’s annual general meeting is today (will Carl Icahn be there). In the past year, the percentage of analysts rating Apple a buy has dropped from 86% to 66%.
Other traders are focused on the Chinese yuan and its weakness. While this is a potentially good thing for retailers in North America that sell stuff sourced from China (can you say Walmart) the worry surrounds the disruption that the upsetting of the carrying traders, that have been excessively long the Chinese currency, could have for regional currency and financial markets. Has the People’s Bank of China lost control?
What will the global authorities think of this weakness? Indeed, there is a report released by a Washington-based think tank yesterday that said among other things: “Eliminating currency manipulation by 20 countries, of which China is by far the largest, would reduce the U.S. trade deficit by between $200 billion and $500 billion in three years.” “This would increase annual U.S. GDP by between $288 billion and $720 billion and create 2.3 million to 5.8 million jobs. About 40 percent of the jobs gained would be in manufacturing.”
The month is ending. In the big markets around the world, the TSX Composite is the best performing market (in local currency) with the Nikkei and the Mexican IPC neck-in-neck for last (down 8.9 and 8.93%, respectively). On the month, Detour Gold put in the best performance (+36%) and Air Canada the worst (-23%). Within the S&P 500, Forest Labs was the best performer +50% while Kansas City Southern lagged (down almost 12%). Sector-wise, materials led the way in both indices and keeping the synchronicity, telecom underperformed on the month in both of these major indices. Natural gas is now down on the month, oil up about 5% and gold and silver up 7% and 11.5%, respectively. Best performing commodity of the majors – coffee up 41%.
www.bnn.ca
Posts
