The week is a quirky one
The chase by Frances Horodelski:
Today is the 181st day of the year. There are 184 days left in 2014 – make the best of it.
The week is a quirky one with the Canadian markets closed tomorrow and U.S. markets closedon Friday (with an early close on Thursday). Trading will likely be quiet however there are two big events – the ECB and U.S. jobs reports both on Thursday. Today we have Canadian April GDP as well as a number of U.S. data points including Chicago Purchasing Managers index and pending home sales.
My weekend reading brought the word ‘recession’ to mind. There were a couple of reasons. First, there is a table floating through the internet that ranks the worst quarterly U.S. GDPprints in history and notes that every last one of them were associated with a recession. The first quarter of 2014 is the 17th worst in that history. Second, Zacks Research highlights thatnegative growth doesn’t necessarily mean negative stock market moves. Third, when the first look at the Q1 GDP came out in April, I remember hearing the bulls says “yea, it was weak, but look at consumer spending, it was strong as Americans spent on energy and healthcare…..” Well, in the most recent quarterly numbers, healthcare went from a contributor to GDP to a drop of more than 6%. What! Finally, right now using Google trends, I note that the word recession is hardly spoken at all (the word stagflation is at the bottom too). Be careful out there.
On this quasi-Canadian holiday, things of note include: 1) A Reuters story highlighting M&A running at a seven-year high. The analysis shows $1.7 trillion in deals globally on a year to date basis (Bloomberg calculation puts it at $1.58 trillion). 2) The Globe & Mail is reporting that media companies disagree with each other “over consumer choice and support for local programming” as the CRTC is gathering information and views under its “Let’s Talk TV” initiative. Hearings are scheduled for September. For reference, based on 2013 results, media represents 11.5%, 13.3% and 21.1%, respectively for BCE, Rogers and Shaw Communications. 3) As Scotland winds down into the September vote on independence, there is a report that Scotland has 80.3 trillion cubic feet of gas and 6 billion barrels of oil. Right now, polls show those in favour of independence are running at 37%, undecided 12%. 4) A technical comment from a recent bear (Richard Ross at Auerbach Grayson) notes that the Dow’s 1.7% year to date performance is in sharp contrast to +10.47% and 16.5%, respectively for the transports and utilities.
In other items, U.S. Steel is being removed from the S&P 500, effective July 1, to be replaced by Martin Marietta. Quarterly expectations for second quarter earnings (and the second quarter starts tomorrow) are being reduced at the slowest pace since Q1 2011. Analysts have cut expectations by only 1.5% on average – are they more realistic or too optimistic? We’ll see when things begin on July 8th when Alcoa releases results. Corporate preannouncements are also running at lower levels with the Q2 ratio of negative to positive outlooks currently running at 4.17 versus 6.88 in Q1 and 6.13 in Q2 2013.
Finally, in the news is GM Toronto dealers suing General Motors for lack of financial help from the car dealer; Kenneth Feinberg will be laying out compensation details for victims of the faulty ignition switch at 10 am ET. On BNN we’ll be looking at M&A, oil, second half opportunities, high flying with consumer drones, anti-spam and our regular update on the C-suite survey.
Enjoy.
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