Bits and pieces of Thursday
The chase by Frances Horodelski:
Bits
and pieces. Where are Americans spending their money? Increasingly on
healthcare services. According to recent studies, healthcare spending as
a percent of personal consumption expenditures (PCE) is now running at
20.6%, up from 15.6% in early 2000 and the highest on record. On another
note, those aging boomers are pretty bullish right now with various
sentiment indicators near highs including the Investors Intelligence
bull/bear ratio currently at 4.22 – the ninth reading above 4 since
December 2013 (according to Yardeni Research, the last time this
occurred was early in 1987). The bullish figure now stands at 59.5% (the
highest since July 2014). Combine that with the CNN fear/greed index
which is nudging up against 80 (extreme greed) one wonders how much
longer we can run higher.Having said that, new highs all around including the MSCI World Index which is up almost 160% from the March 2009 lows. And this morning, the bulls continue to run with most of the major markets in the green and many making new highs – again. U.S. and Canadian futures are both green. Oil was slightly weaker but surprisingly resilient in the face of the continuing massive build-up in inventories. Brent has recently popped higher though on some bullish demand comments from Saudi Arabia. Gold back firmly above $1200. The U.S. dollar continues to trade in the range as it did in November before it broke out in mid-December and rose almost 8% in two months.
The calendar is full of earnings including Loblaw (beat), TD (in line with dividend hike), Canadian Tire (miss but revenue better), CIBC (beat and dividend hike), Catamaran (beat with revenue above estimates), Stantec (miss although revenue better). It also has an IBM analyst day, a speech from Dennis Lockhart (Atlanta Fed President on monetary policy and more dovish than hawkish) and the UN Security Council holding talks on North Korean sanctions. Tomorrow we get another revision on U.S. GDP.
On a less upbeat note, not everything is in new high territory. In the past week, these companies made new lows on the TSX and the S&P 500 – SNC-Lavalin, Bombardier, Genworth, Garmin, Baxter International, Assurant and Fossil – is there a homework stock or two in here? And there are a number of companies down significantly from their highs and down over the past year (energy of course but names like Google stand out as weak links). Globally, names like Diageo and Glaxo also are well off their highs.