Brexit - UK Funds have frozen trading combined value 20 Billion

BNN’s Daily Chase: U.K. property funds hit with investors’ Brexit fears
The chase by Noah Zivitz:

U.K. property fund suspensions rekindles crisis-era liquidity fears

If there’s a sign of fear stemming from the Brexit vote, it’s the flood of redemption requests hitting U.K. property funds. At least seven of those funds with more than $20 billion in combined assets have frozen trading in the wake of the United Kingdom’s vote to separate from the European Union. There are Canadian connections: one of the funds is operated by a unit of Great-West Lifeco – and, separately, a fund run by BMO shaved its valuation.

A conversation with Canada’s top bank regulator

Jeremy Rudin, Superintendent of Financial Institutions, will speak to BNN on The Close at 4:30 p.m. ET today. We'll discuss OSFI's strategy to make sure Canada's banking system is ready to absorb shocks -- be they from Brexit, a housing downturn, fallout from the oil crash, or who knows what else.

Seven Generation’s $1.3-billion ‘counter-cyclical’ takeover

The motives in yesterday afternoon's big Montney deal seem clear. Seven Generations views the $1.3-billion purchase as an opportunity to consolidate and derive "operational and investment synergies," while Paramount Resources cleans up its balance sheet by offloading $584 million in debt and retains some skin in the game by picking up 33.5 million VII shares. BNN will analyze this and weigh whether other dance partners will emerge with a similar deal strategy. Seven Generations, it should be pointed out, could very well be Canada’s most-loved energy stock: Fifteen buys, no holds, no sells. Its stock has soared 60.4 per cent in the last year, compared with a 3.6 per cent drop for the TSX energy group.

Canada Post pushes back lockout threat

The union representing some 50,000 postal workers says it's rejecting a proposal to undergo binding arbitration in its labour dispute with Canada Post. This comes after Canada Post announced it will push back the 72-hour lockout deadline to Monday at 12:01 a.m. ET. There’s no guarantee of a quick resolution: Canada Post noted last night that the two sides “remain far apart on key issues” and the union filed a complaint with the Canada Industrial Relations Board, alleging Canada Post hasn’t demonstrated good faith. Even if a deal is struck immediately, how quickly will customers who deserted Canada Post return?

B.C. to unlock some real estate data

Who knows what the details will be, but British Columbia Finance Minister Mike de Jong is holding a news conference today to “release data related to real estate transactions.” What will de Jong have to say, today at 1:30 p.m. ET? It’s worth noting that on Monday, he vowed to release specific data on foreign buyers “very soon.”

Blaming regulations for holding back housing supply

The Fraser Institute says abundant regulations are limiting the supply of new homes in Canada and driving up prices in the process. According to the think tank, long wait times to get projects approved "are particularly detrimental." BNN will run through the report's findings and how they should factor into ongoing talks about taming Canada's hottest markets.

Tallying the cost of the Alberta wildfires

The Insurance Bureau of Canada will provide the first estimate of total insured damage caused by the Alberta wildfires at 12:00 p.m. ET.

$2.08 trillion Brexit meltdown was markets’ biggest loss ever, worse than Lehman Bros and Black Monday

$2.08 trillion Brexit meltdown was markets’ biggest loss ever, worse than Lehman Bros and Black Monday NEW YORK — The $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987, according to Standard & Poor’s Dow Jones Indices. Global markets skidded following the unexpected result from Thursday’s referendum, in which Britons voted to withdraw from the EU by a 52 per cent to 48 per cent margin. Markets in mainland Europe were hit the worst, with Milan and Madrid each down more than 12 per cent for their biggest losses ever. Britain’s benchmark FTSE 100 was down nearly 9 per cent at one point on Friday, but rallied to close down 3.15 per cent.

Source

Extreme Greed Vs Fear What Is The Markets Status Today?

Is this a bull market?

The chase by Frances Horodelski:

When doves cry and musicians die. According to theconversation.com, in a study of 11,054 musician deaths since 1950, 2.3% died at 56. Mathematically, not surprisingly, the average age of death of musicians has been rising (as it has been in the general population) from 50ish in the 50s, to late-50s/60s in this decade – 20 years below the average age of death in the general population. 12.2% (more than 2x the general population) die from an accident, 4.6% from suicide and 4.9% from homicide - the latter stat more than 5x the average population. Finally, hip-hop, metal, punk and rap musicians on average die earlier (the more recent nature of the genre likely a factor here) at around the 30-year mark, while blues, jazz, country, gospel musicians are more clustered around 60 years of age.

Overnight news

Yen drops on negative rates discussion, Nikkei bounces big on the same discussion, markets are tepidly higher in New York, higher in Asia and mixed in Europe (PMI data in line to weaker). Oil softish, gold up. Canadian dollar will focus on today’s economics calendar including retail sales and CPI. Note that the economic surprise index, which had soared from -90 (an increasingly negative number indicates economic data coming in at levels below expectations) to a recent high of 64.90 and more recently 39 – suggesting expectations had come up closer to actual fact. A disappointment or two could take the bloom off the Canadian rose.

Loving Canada?

“But we’re more upbeat on the great white north than we’ve been in a while”. (Steadyhand); “Therefore the TSX has the potential to be one of the best equity markets in the world come 2017.” (Bill Strazzullo, Bell Curve Trading.); Appreciation potential to S&P 500 target for 2016=0%. Potential for TSX to 15,300 target=10%. (Brian Belski, BMO Capital)

Is this a bull market?

Not by mutual fund statistics. According to the latest data from ICI.org, U.S. domestic equity flows have been negative every month since March 2015 with total withdrawals of $217.3 billion. Where has the money been going? International equities mostly (and ETFs too), but there has been a net draw down in total equity and in total bonds in the mutual fund space. Hmmm.

Earnings

Last night had a trifecta of misses – Starbucks, Microsoft and Google with the shares down 3.8%, 4.5% and 5.3%, respectively. This morning we’ve had some beats (Honeywell and General Electric). So far this earnings season, the blended earnings growth rate is -7.2% (according to Thomson Reuters) with 77% reporting above earnings estimates but only 57% have a beat on the revenue line. It is still very early on the Canadian earnings calendar, but according to a National Bank report the earnings set-up is for the TSX profits to fall 10.5% in the quarter versus the first quarter of 2015. However, excluding financials, the reports will show a 28.4% decline (depicting how important financials are to the TSX both in weight and profit) and excluding financials and energy, the index profits would be up 6.7%.

Concordia

Some might say “that’s convenient”. One week before the annual general meeting where the company is asking for approval from shareholders to create a new form of “blank cheque” preferreds and the fourth largest holder of the company has come out against the company’s executive compensation as well as a skyrocketing short position (which is now at the extreme of its ability to borrow according to Markit data), Concordia issues a statement about a Special Committee being formed to review options and rumours swirl about a possible Blackstone bid. BNN confirmed that the company has held discussions, but “there can be no assurance that any transaction will occur”. The stock soared yesterday closing 25% higher and another 5% in the pre-market. The company has $3.3 billion in debt, $3.96 billion in intangible assets, $1.15 billion in equity, revenue of $990 million and ebitda of $600 million. Relevant metrics include debt:ebitda 5x and ev/ebidta 7.8x.

Analysts Actions

Lots of interesting items. CIBC initiates coverage on big miners with Cameco, Teck and First Quantum getting the outperform nod ($22, $16, $10, respectively as targets). A company I made a lot of money on about a decade or more ago, Rigel Pharmaceuticals is a new buy at JP Morgan with a $5 target. It is still, it seems, a clinical stage development company with late stage products for immune thrombocytopenia and amenia. UBS upgrades Norfolk Southern to buy while Advanced Micro is a new buy at MKM Partners.

There is much more to say – but that’s why you want to join us all day long at BNN. Have a good weekend.