AM 1150 Kelowna - Radio Rallies & Reversals

So much for the scourge of September, historically the worst month for equities. Strength is pretty much across the board helping most indexes turn in a strong third quarter. Technology has been the star this month, jumping up 13%. While consumers are continuing to delever and rebuild their savings (they have no equity to borrow against), and governments are looking to do the same, corporations are taking advantage of the low interest rate environment to lever up.

Now the news today was the contraction in Canadian GDP for the month of July. While the number matched expectations of minus 0.1%, it lends support that growth is slowing. Monetary policy will remain very stimulative for the forseeable future and perhaps so too will fiscal policy. Look for the Bank of Canada to pause at the next meeting.

So where are there potential opportunities? With ten year Canada's and Treasuries yielding 2.75% and 2.53%, respectively, dividend paying stocks are about as attractive as they have ever been, and there is value to be found. Also, emerging market bonds may not be as risky as you think.

GB
GB

Da Bears, Da Bulls continued ...

Continuing yesterday's discussion and finishing off the main points from Vincent Delisle's Strategic Edge Weekly: "Secular bull markets average 14 years versus 12 years for secular bears. From start to finish, the average price change during bear periods is negative 35% versus positive 546% in upward cycles. On average, earnings increase 191% in secular bull markets (start to end) and P/Es double towards the 20 times level. In secular bear cycles, earnings initially fall, but actually end at higher levels when Da Bear is officially over. P/E compression appears to be an important drag in the latter stages of secular bear markets, and unlike earnings, P/Es tend to contract throughout the entire bear market."

Bottom line according to Vincent and his team: "The earnings turn out to be somewhat equity friendly heading into the final stretch of bear markets, but P/Es are not. A new secular bull market is unlikely to unfold until P/E multiples can expand. On a 12 twelve month trailing basis, the S&P500 P/E currently stands at 14 times, versus a bear market trough average of 11 times."

GB

Da Bear, Da Bulls - Vincent Delisle's Strategic Edge Weekly

I thought I'd share some of Vincent Delisle's thoughts from this weeks Strategic Edge which is hot off the press. The objective of this week's report is to highlight commonalities between other long-term cycles in the context of positioning the current US equity bear market. Since 1871, there have been five other secular US equity bear markets and five secular bull cylces. Currently, the S&P500's ten-year annualized performance (price only) is a negative 3.6% versus a positive 4.5% historical average,and a positive16.8% back in August 2000.

Extreme deviations in both P/E levels and annualized returns typically earmark imminent US equity secular changes. Vincent and his team currently see extreme deviation in annualized returns, but not in terms of valuations. The current bear market which started in August 2000 with an S&P500 trailing P/E at 29 times and ten-year compound annual growth rate of 16.8%, appears to be in the latter stages; however, bear market conditionscould still prevail in the near term. Vincent and his team expect the volatile trading environment to linger through 2011, favouring tactical trading strategies. onger term, however, the US equity risk/reward outlook is the most appealing in decades

GB

Gold keeps shining

Big Picture
New taxes hurt retail; jobs rebound

Retail sales took a pounding in July as three provinces increased their sales tax. Statistics Canada reported that retail sales fell 0.1%, while economists expected a 0.6% gain, as Canadians spent less on furniture, home furnishings, electronics and appliances in Ontario, British Columbia and Nova Scotia. Jobless claims dropped 4.5% in July versus June, and are down 20% since peaking a year ago. Employment gains have now offset nearly half of the jobs lost during the recession.

The U.S. economy is stuck in a “painfully slow recovery,” according to the National Bureau of Economic Research. The panel of prominent U.S. economists reported the recession officially ended in June 2009 after shaving 4.1% off U.S. economic activity, but warned that despite $1-trillion in economic stimulus, expansion could take years to reach pre-recession levels. Ireland posted a surprise decline in second-quarter gross domestic product, fuelling concerns over its ability to repay its debts and cut the budget deficit to 3% of GDP by 2014.

Markets
Rally steams, then stalls

The September rally picked up steam on Monday, sending North American indexes to four-month highs, amid hopes the Federal Reserve would announce measures to stimulate the economy. But the rally stalled as the Fed deferred any new steps and left key interest rates unchanged. Microsoft announced it will raise its quarterly dividend by 23%. With $37-billion of cash on its balance sheet, Microsoft will share the wealth with shareholders frustrated by stagnant share prices – prices are at the same level as eight years ago. Adobe shares plunged 19% as several Wall Street analysts cut their ratings on the stock after a disappointing forecast for its fourth fiscal quarter.

Netflix went live in Canada, offering unlimited access to 7,000 movies and television shows over the Internet for $7.99 per month. At the same time, Blockbuster in the U.S. filed for bankruptcy, hoping to stage a turnaround after slashing US$900-million of debt. General Mills profit rose 12% despite steep discounting and higher costs for raw materials such as wheat. Cotton prices reached a 15-year high as flooding in Pakistan devastated crops. The supply shock triggered panic buying by clothing manufacturers, especially in China, the world’s largest consumer of cotton. CP Rail reported shipments were up 14% so far in 2010 thanks to a recovery in potash exports and an unexpected leap in shipments on Canada’s west coast.

Sector Plays
Gold Shines again

Last time I wrote about gold was in May and the price had reached an all time high of $1248.95. Last week gold shone through $1300, another all time high. IShares Comex Gold Trust (IGT) seeks to correspond with the day-to-day movement of the price of gold bullion. From a technical perspective gold prices have momentum behind them. The current price has been trading above the 50 and 100 day moving average for over a month now and relative strength and MACD (moving average convergence divergence) both appear positive as the trend goes upward. According to research done by Brooke Thackray, Gold tends to do well in September prior to the fall festival and wedding season in India. He also points out that its shine can dull as we enter into October. “In the past this has largely been the result of the European Central Banks, at this time of year, allocating the amount of gold each country can sell throughout the year. Historically, this has caused the gold price to fall as the banks were eager to sell.” With the sovereign debt crisis and the slow economic recovery one has to question whether that will be the case this year. Frank Holmes, CEO and CIO US Global Investors argues, another factor that could be driving the price of gold is “competitive currency devaluation”. The US, Japan and the European Union are all dealing with little or no economic growth at home….Keeping their currencies down is an important part of turning hope into reality.” The basic view is that devaluations make gold more attractive as a safe haven investment.

AM 1150 Kelowna - Radio Rallies & Reversals

So the big news last week which propelled stocks and long bonds higher was the FED speak on Tuesday. The main take away is that the economic recovery is on shaky ground and the FED will continue to keep it's policy rate at the low end of it's target range, and at the very least maintain it's balance sheet with further quantitative easing as a carrot. Global stock indexes were positive for the week and back at levels not seen since May, with some even meeting or surpassing their April highs, respectively. Long Canada's and US Treasuries rallied hard with the 10yr Canada at 2.8% and the 10yr Treasury at 2.5%. Potential market moving economic news this week: Consumer confidence and the Case-Shiller Home Price Index in the US tomorrow; and on Thursday, US and Canadian GDP numbers.

Where are stock prices heading? Technically, the trend is up, but stock indexes are in overbought territory. Seasonally, the time to buy is towards the end of October, so there's time for a correction. Despite some weakening economic data, stocks are still anticipating future earnings growth, and the FED's announcement last week is probably welcome news for the bulls. A potential earnings headwind for S&P500 companies is underfunded pension plans which may not be reflected in the market's expectations.

GB

Friday Radio Investment Advice

Rallying -North American stocks are on the rise, driven by better-than-expected U.S. retail sales and acknowledgement from a key Federal Reserve official that the economy needs more stimulus. The Dow is up to 10,850. The S&P 500 is up to 1150. Both indexes closed on Thursday with their best September performances since 1939. In Canada, the TSX is in the 12,450 range, putting it on track to close at a two-year high. Commodity producers are leading the way higher. Crude oil rose to over $81 a barrel. At the same time, gold rose to $1317 an ounce.

Reversing -US $ is lower


Trading opportunity - Credit Suisse just upgraded the US telecom sector last week. They believe this sector will outperform the S&P 500 because lower growth for the US economy will translate into lower growth for the S&P 500 over the next 3-5 years. Given great yields and cash flows this sector should do well for investors. If you have any questions call me at 868-5525 or visit yourlifeyourplan.ca.

Thursday Radio Investment Advice

Rallying - Stocks rose at the start of trading today, driven by a better-than-expected reading on the economy and job front in the US. The S&P 500 is on track to post over an 8% gain for September. One of the best Septembers in history.

Reversing - I don't want to make your head spin but the markets have now turned negative in both the US and Canada. Down in the 1/2% range at this point. Despite optimism over US numbers, I think we are in for some volatility today as portfolio managers take profits and make adjustments before month end.

Trading Opportunity - The Canadian banking sector tends to do well the last quarter of the year. An exception to that was in 2008 and 2009 when we had the financial crisis. A note of caution is that alot of banks have recently brushed up against their year high and consensus analysts target prices. It is worth using some technical analysis to identify your entry points. If you have any questions call me at 868-5525 or visit yourlifeyourplan.ca.

Wednesday Radio Investment Advice

Rallying - The TSX is up 1/4%. Oil is on the rise and Gold prices are rallying to record highs again today on fears over sluggish growth. RIM rose 1.3%. It will launch the PlayBook as a response to Apple Inc. iPad.

Reversing - US stocks are lower. There is little news out today and I think investors are taking profits after such a strong month.

Trading Opportunity - Technology tends to do well from mid October to mid January. Technically, the technology sector in Canada looks to have peaked in early march this year and has fallen ever since unable to break any resistance at the 50 day moving average. In terms of momentum of technology is on the uptake and has broken through resistance. Since there are very few names in Canada, you may want to consider looking for US names in this sector. If you have any questions call me at 868-5525 or visit yourlifeyourplan.ca.

Tuesday Radio Investment Advice

Rallying - North American markets are up about 1/4% at this point. Energy and materials are driving it.

Reversing - Stock markets were lower at the open today. Consumer confidence fell more than expected in the US and North American markets were down more than 1/2%. One company with news is Research In Motion Ltd. They announced a couple of big changes - including the unveiling of a tablet computer to compete against Apple Inc.'s iPad. RIM is down almost 3%.

Trading Opportunity -Technically gold has alot of momentum in it's price reaching historical highs of late. Gold tends to run until late September and into early October. The reason being the upcoming festival and wedding season in India and European Central Bank controlling sales of gold throughout the year. Another issue that could be driving gold this year is competitive currency devaluation. Despite it's technical strength golds shine may come off. This is a trade you want to watch. If you have any questions call me at 868-5525 or visit yourlifeyouplan.ca.

Monday Radio Investment Advice

Rallying -The TSX is up at this point on stronger commodity prices. The US dollar is also higher.

Reversing -US & International Stocks fell this morning after four weeks of gains for Wall Street. More worries about euro zone debt offset optimism about market values after a flurry of M&A activity. Incidently, if it can hold it's gains, the Dow is on track for it's best month in over a year and it's best September since 1939.

Trading Opportunity - This week I am going to feature some sector plays coming up in October. Generally speaking October gets a bad rap in Investors minds. Historically the crash in 1929 occurred in October and the crash that occured in 1987 happened in October. In terms of actual performance it falls in the middle of the pack of all months, however it is the most volatile month of the year. You may want to consider some strategies to reduce your volatility. If you have any questions call me at 868-5525 or visit yourlifeyourplan.ca.

Thursday Noon Radio Investment Advice

Rallying - On the rise today are financials and healthcare stocks. The Canadian dollar is up slightly too. In terms of breadth, 113 stocks are up, 116 are down, and 6 are unchanged.
Reversing - Stocks have reversed course a couple of times today. They opened lower this morning following weaker than expected U.S. Initial Jobless Claims data. As the morning progressed markets improved after the release of Existing Home Sales for the month of August increased and Leading Indicators rose. They are currently in the red with Energy, Materials, and Industrials leading sectors losses .
Opportunity - Credit Suisse believes the U.S. telecommunications sector is poised to "outperform" the broader S&P 500 Index. The basic premise of their investment case is lower growth for the U.S. economy that will lead to lower earnings growth for the S&P 500 over the next three to five years. Telecommunications is uniquely positioned to deliver superior relative returns in this environment. If you have any questions call me at 868-5525 or visit yourlifeyourplan.ca.

AM 1150 Kelowna - Radio Rallies & Reversals

MBA Mortgage Applications last week were down again, and that's despite record low interest rates; On top of that, the US Home Price Index for July was down for the second straight month, and June's number was revised even lower. This may explain why North American stock indexes are all in the red today.

Yesterday's FOMC announcement could be interpreted as having an easing bias, which according to Credit Suisse, could play out in the FED expanding its balance sheet by purchasing more treasuries and driving interest rates lower. The FED's outlook on inflation and employment will be key to any further quantitative easing (also known as printing money).

Another interesting bit of news from Credit Suisse is their thoughts on corporate pension plans in the US. They believe the underfunded pension status of S&P500 companies worsened in 2009. One solution to bridge the gap would be to borrow money given low interest rates, but that's just swapping debt. Bottom line - some of that cash sitting on corporate balance sheets may flow into pension plans, which would have an impact on earnings, and economic growth.

GB

AM 1150 Kelowna - Radio Rallies & Reversals

I thought I'd share with you some US equity strategy insights from Bank Credit Analyst. They've got an overweight recommendation on software stocks based on: 1. Relative to the S&P500, the share price ratio has been on an upward sloping trend for the past three decades but is currently trading one standard deviation below the long-term trend; 2. The conditions to drive it to trend and above, are developing; 3. Increased M&A has helped industry pricing power; and 4. the impending economic slowdown bodes well for a rebound in relative business outlays on software. If you're interested in some names, give us a call at 250-868-5525 or visit yourlifeyourplan.ca.

North American stock indexes have been trading in the red in advance of the FOMC rate announcement. On the news, US stock indexes have moved into the green, while the TSX Composite isn't far behind. As expected, there is no change to the Fed Funds Rate at 25 basis points. I'll try to have more commentary on the commentary tomorrow.

GB

Herding Stocks in the Range

Big Picture
OECD: No global double-dip recession

There were bright spots in the U.S. economic data this week, as wholesale prices rose slightly more than expected in August, and new jobless claims dropped to the lowest level in two months, down 11% in the past four weeks. Retail sales rose in August by the largest amount in five months, despite a big decline in autos. The U.S. trade deficit widened on surging imports, resulting in the biggest gap since the end of 2008. Treasury Secretary Mr. Geithner blames the trade deficit on the yuan exchange rate and said the U.S. is considering ways to urge China to let the currency rise faster.
France passed a retirement reform package that increases retirement age to 62 from 60. Spain raised nearly €4-billion in a bond sale, the latest sign that it is earning back investors’ confidence. Turkey’s economy grew 10.3% year-over-year in the second quarter, expanding 3.7%, after a contraction of nearly 5% last year. India raised interest rates for the fifth time, in a bid to tame inflation, which hit double digits earlier this year. There is no prospect of a double-dip recession in the rich world, excluding Japan, according to the OECD, but the recovery remains fragile with 50-million unemployed in OECD countries. Japan sold yen in the market for the first time since 2004 to prevent the currency’s rise from hurting exports.

Markets
Gold hits record; markets range bound

U.S. stocks rose to five-week highs, but mixed economic data and a cautious forecast from economic bellwether FedEx kept the S&P locked in its recent trading range. On Thursday, gold hit another record high, topping US$1,270 an ounce, after surging more than 2% on Tuesday, its biggest one-day gain in four months. As investors sought safety outside the U.S. dollar, billionaire financier George Soros called gold the “ultimate bubble,” warning that prices won’t keep rising forever. Oil prices took a rollercoaster ride after a pipeline leak halted up to a third of Canada’s crude exports to the U.S.
Kinross will pay $7.1-billion for Red Back with its promising new gold mine in West Africa, as mergers and acquisitions continue throughout the mining industry. Hewlett-Packard will buy security software provider ArcSight for $1.5-billion. Cisco will begin paying a dividend in 2011, answering calls from shareholders to share the wealth – the company has about $40-billion in cash and investments. The iPad was launched in China this week at its two Apple stores. Apple plans to open 25 new stores next year in China.

Analysis
Range bound market requires tactical approach

The first half of September has rewarded investors with positive returns on the stock markets, however, historically September has been an unfavourable month in the stock market. With markets continuing to rise, data and analysts are mixed about what we should be looking at in terms of market direction and what strategies are likely to work in this confusing environment. David Rosenberg , Chief Market Economist, Gluskin Sheff published an article on September 14th, 2010 called ”Income Theme Intact, and earnings Revisions as Tried, Tested, True Market Indicators”. He argues that safety and income at a reasonable price are a favourable strategy, especially in a deflationary environment. He points to “the most compelling risk-return attributes lie in the BB sliver of the bond market-the best of the investment-grade space where the yield is juicy at an average 6.7% and provides a very nice 300 basis point premium over A-rated bonds.” In addition, he argues a reliable indicator of when markets turn more optimistic on equities is when revisions to analysts estimates project the bottom. At this time revisions to analysts estimates are falling from their peak in April and continue to fall. Admittedly it is hard to pick a bottom but while we wait, a successful strategy is to seek out income from yield on stocks and bonds and tactically trade your stocks as their price fluctuates within a range even if the prices go down.

AM 1150 Kelowna - Radio Rallies & Reversals

I thought I'd re-iterate a couple of points my partner David Allard mentioned earlier this morning, points that were based on Tom Bradley's column in the Globe & Mail this weekend. Investment pros, asked if they could implant an idea in investors minds, responded as follows: First, make judgments based on longer-term information. Investors have become very short-term focused, yet short-term price moves are totally random; Second, the stock market doesn't equal the economy. Bottom line - invest in good companies; and third, stop running with the herd. The crowed is chasing past performance.

Potential market moving news this week: In the US look for housing start, building permits and the FOMC rate announcement tomorrow, existing home sales and leading indicators on Thursday, and durable goods orders and new home sales on Friday; in Canada look for CPI tomorrow, and retail sales and leading indicators on Wednesday.

GB

Friday Investment Advice on the Radio

Rallying - Worldwide markets rose this morning. German business sentiment and US durable goods orders came in better than expected indicating cash flush US companies are beginning to spend. US markets are up almost 2% while the TSX is up closer to 3/4%. Gold set another record hitting $1300 per ounce. The Canadian dollar is up to almost 97 1/2 cents.
Reversing- Consequently bonds are lower and the US is lower with the Canadian dollar rallying.
Opportunity- From a technical perspective the S&P 500 appears to have formed a reverse head and shoulder pattern. The S&P 500 has been in a trading range for the summer. This week it reached the highs of both June and August and so far is unable to break through resistance and hold its claim. With todays news will this be a catalyst for momentum to drive the market higher or As I had pointed out earlier September is not a good month for markets and the last 2 weeks usually take the brunt of it. Good time to take profits in some of your stocks. If you have questions you can reach me at 868-5525 or visit yourlifeyourplan.ca.

Thursday Investment Advice on the Radio

Prices are up in the US. CNNMoney.com reported prices are rising. They note resold NFL tickets are up 64%, movie tickets are up 5%, and a 30 pack of Bud light is up 3.7%.

North American stocks started the morning off in the red, following a rise in U.S. jobless claims and economic turmoil in Ireland is raising concerns about their ability to pay their debt. They have now reversed back to the green after home sales came in better than expected.

Trading Opportunity - From a seasonal standpoint technology tends to do well from mid October to mid January. As mentioned earlier, Bank Credit Analyst has an overweight on computer software. They believe the conditions to drive software stocks to their long term trend and above are developing. If you have any questions call me at 868-5525 or visit yourlifeyourplan.ca.

Wednesday Investment Advice on the Radio

Rallying -Gold is the big story after prices shot up by $22 (U.S.) an ounce to a new record high of $1296. The move follows the monetary policy statement from the U.S. Federal Reserve yesturday. They warned inflation is falling and suggested that more economic stimulus could be in the works.

Reversing -European & US stocks are lower over worries about the pace of the global economic recovery following the Fed statement.

Trading Opportunities -Bank Credit Analyst have an overweight recommendation on software stocks. They believe the conditions to drive software stocks to their long term trend and above are developing. Increased M&A has helped industry pricing power and the impending economic slowdown bodes well for a rebound in relative business outlays on software. If you have any questions, give me a call at 250-868-5525 or visit yourlifeyourplan.ca.

Tuesday Investment Advice on the Radio

Stocks closed at their highest level since mid May yesterday after the National Bureau of economic research called an official end to the recession. Despite a strong reading on US housing starts in August, North American are lower at the start of trading today. Investors are hesitant to place any bets ahead of any statements from the U.S. Federal Reserve. US markets are flat at this point and the TSX is down by about 1/2%.

The risk of another recession is unlikely according to CNNMoney.com survey of leading economists. They gave it a 25% chance which is up from 15% six months ago. While the risk is rising it is only 1 in 4. As I said yesterday, famed economist Paul Samuelson said that the stock market predicted the last 9 of 4 recessions. The point being, in the short term the markets are always trying to predict what the economy is going to do and the two aren't always in sync. The key is to buy good companies. To invest in good companies call me at 868-5525 or visit yourlifeyourplan.ca.

Monday Investment Advice on the Radio

Alot of green to start the week off in the markets. The possibility of more stimulus from the Federal Reserve, positive earnings reports and home builder data out of the US is helping markets. Gold is in season and keeps hitting new record highs. North American markets are up in the 1% range at this point. The Fed Reserve is meeting tomorrow, a raft of housing data is out this week in the US and CPI and retail sales number are out in Canada.

All this being said I read a good article by Tom Bradley in the Globe and Mail this weekend pointing out the market and the economy don't always align with each other. In the short term the markets are random, however they are always looking forward and usually they have absorbed the current news already. Renouned economist Paul Samuelson said "the stock market predicted 9 of the last 4 recessions." The point being the disconnect confuses investors and you should just buy good companies. To invest in good companies call me at 868-5525 or visit yourlifeyourplan.ca.

Friday Noon Radio Spot

With little momentous news to speak of, the markets are little changed. The S&P/TSX composite is flat with six of ten sectors on the rise. Gold stocks and Research In Motion are pushing the index higher as investors transition to safe havens and RIM reported better than expected earnings. The Financial and Energy sectors are limiting gains. In terms of breadth, 126 stocks are up, 104 are down, and 10 are unchanged.

David Rosenberg argues one indicator to identify when markets will bottom and when to turn optimistic on equities is revisions to analysts earnings projections. This data is out monthly and can be very accurate given that earnings revisions bottomed in March 2009 and it peaked in October 2007 and look what happened in both cases. In the past year markets have been range bound. September has been rewarding to investors so far this year. So the question is will markets break out of the range? For a tactical approach to investing in range bound markets call me at 868-5525 or visit yourlifeyourplan.ca.

AM 1150 Kelowna - Radio Rallies & Reversals

You may have heard this yesterday already, but I think it's worth repeating: according to the Canadian Payroll Association, 59% of Canadians are living paycheque-to-paycheque, and would be in trouble if their paycheque was delayed by one week. This is the same number reported same time last year when the economy was in a recession. According to Statistics Canada, the recession in this country started in Q3 of 2008 and ended in Q3 of 2009, but why doesn't it feel like it for 60% of Canadians.

Yesterday's release of the National Balance Sheets accounts showed that household debt-to-GDP now stands at 94.2%, and debt-to-personal disposable income is at 146% (which is 20% higher than in the US). The OECD points out that most of this debt is mortgage debt, and that their models show Canadian home prices to be 10-20% overvalued, based on price-to-rent and price-to-income. Other estimates are as high as 40% for markets like Vancouver. There are signs now of growing inventories, a precursor to a bubble bursting, and like in Australia, it's harder for Canadians to 'walk away'.

GB

AM 1150 Kelowna - Radio Rallies & Reversals

Much has been recently about the issue of more regulation versus less regulation. There was an interesting article in the New York Times back on July 12, 2009 by Robert Frank titled: "The Invisible Hand, Trumped by Darwin?" Now the 'invisible hand' theory was by that economist guy Adam Smith, while Charles Darwin was that 'evolution' guy.

Adam Smith's 'invisible hand' theory essentially says that when greedy people are left to pursue their own self interest, they will (as if guided by an invisible hand) pursue that which is to the good of all. Now Darwin and his evolutionary theory would say that is perhaps the exception and that evolutionary theory is will of evidence to the contrary. I don't think we have to go far to recall some recent examples - In the pursuit of profits, society as a whole has had to endure three recessions and two bear markets, thanks to the greed of a few individuals.

It is for this reason that regulation is needed to provide some boundaries within which individuals, in the pursuit of their own self-interest, must operate and be held accountable. The debate on how much, is on going. Perhaps in the pursuit of self-interest, we'll keep that in mind.

GB

AM 1150 Kelowna - Radio Rallies & Reversals

The recovery in the US labor market has been frustratingly slow. While GDP and spending have clawed back much of their losses from the 2008 recession, there as been no recovery in the job market. The bleak job-creation picture has not only cast doubt on the sustainability of the economic recovery, it has become a political problem for the current administration and the Democrats; So what are the secular and cyclical prospects for the US job market?

According to Bank Credit Analyst: "There are no grounds to say that the US economic recovery cannot be sustained because there has been no job creation; however, on the one hand, employment growth should pick up soon, and if so would be a much needed catalyst that could compel equity prices higher; On the other hand slower growth, downward pressure on wages and an elevated unemployment rate may not necessarily be a bad combination for equity prices. The markets don't care about high unemployment. The market only cares about profits. So long as companies can expand profits in a modest growth environment, stocks usually do well."

GB

AM 1150 Kelowna - Weekly Market Report

A flat week for markets last week, except for Asian and North American small cap stocks; The EAFE and NIKKEI indexes were up .9% and 1.4%, respectively, while the Russell 2000 was down 1.1%. The TSX Composite was down 0.4%, the Dow up 0.1%, the S&P 500 up 0.5%, and the NASDAQ was up 0.4%. In Canada: health care, utilities, and financials were the only positive sectors.

Market moving news last week in Canada was the Bank of Canada's overnight rate increase to 1%, and the Canada jobs report which on the surface was better than expected, but digging a little deeper revealed a weaker number. Potential market making news this week: On Tuesday we have US retail sales and business inventories, while in Canada we have capacity utilization and productivity numbers; On Wednesday, we have capacity utilization and production numbers in the US, along with the Empire State Manufacturing index, while in Canada we have manufacturing shipment data; and finally on Friday we have US CPI and consumer sentiment data.

GB

Friday Morning Radio Spot

North American stocks rose 1/2% at the start of trading today, following upbeat results from key technology companies yesterday. Oracle rose 5.7 per cent and RIM rose 3.5 per cent. Gold hit another record, rising above $1280 (U.S.) an ounce. Markets are still positive but have pulled back after disappointing consumer sentiment numbers came out this morning in the US. Another important driver today may be "quadruple witching". This occurs when several derivatives contracts expire at the same time and can lead to alot of trading activity.

In terms of seasonal trades, so far September has been good to investors. However, historically September has been an unfavourable month in the stock market, especially the last 1/2 of the month. From a technical perspective 12,300 on the TSX is the next point of resistance and we are approaching 12,200 today. So if you are concerned call me at 868-5525 or visit yourlifeyourplan.ca.

Thursday Morning Radio Spot

North American stocks fell slightly at the start of trading today, after mixed data. There was a small improvement last week in the number of Americans filing for jobless claims and a slightly higher than expected PPI number which shows inflation at the manufacturing level. Both are still sluggish so keeping US investors tentative. In addition, FedEx reported strong earnings but delivered a quarterly forecast that was below expectations. In Canada markets are flat at this point held up by gold, gold nudged up to $1275 an ounce. Later today, all eyes will be on RIM. Short interest has climbed with their recent struggles to compete with Apple and after hours they come out with their numbers.

In terms of seasonal trading opportunities, based on a comparison of the Russell 2000 growth vs Russell 2000 value index, small cap growth stocks tend to outperform during the last 4 months of the year. To invest in stocks with growth potential call me 868-5525 or visit yourlifeyourplan.ca.

Wednesday Morning Radio Spot

North American stocks are flat in the US and lower by over 1/2% at this point in Canada. Japan’s move to drive down the value of the yen pushed the U.S. dollar higher and manufacturing activity slowed more than expected. Manufacturing has been a bright spot up until now expanding 13 straight months. In Canada, gold continues to shine but a higher US$ is causing a retreat in oil to the $75 range. Commodities are also under pressure over worries on Chinese demand.

In terms of seasonal trading opportunities,natural gas tends to outperform the last 5 months of the year. Since the tail end of hurricaine season is in the autumn and distributors accumulate natural gas for the winter heating season, the price tends to rise during this period. For some great natural gas investment ideas call me at 868-5525 or visit yourlifeyourplan.ca.

Tuesday Morning Radio Spot

North American stocks opened relatively flat this morning, with financials cancelling out gains by U.S. retailers. A better-than-expected reading on U.S. retail sales in August helped drive consumer stocks higher. However, financials are slipping -- a day after the Basel III agreement on new international banking rules helped lift most of the names in the sector. In Canada, gold stocks moved higher and helped drive the TSX into positive territory after the price of gold surged above $1260 (U.S.) an ounce, up $13.50.

In terms of seasonal trades, agriculture moooves for the last 5 months of the year starting in August. This is the result of the major summer growing season in the northern hemisphere producing cash for farmers and increasing sales of farm supplies. Given poor crops in other parts of the world, this might be a good bet this year. For great agriculture stocks with growth potential call me at 868-5525 or visit yourlifeyourplan.ca.

Monday Morning Radio Spot

Markets are higher to start the week off. 27 countries agreed on new capital requirements banks and China's industrial output surged. Financial stocks are leading the charge along with rising oil prices. Economic news that might drive the markets this week. Tomorrow, retail sales and business inventories in the US and productivety numbers are out in Canada. Later this week manufacturing, consumer sentiment and inflation numbers are out in the US.


Advisor analyst featured 9 bullish arguments for gold this morning. Seasonally, gold tends to shine in September as buying increases prior to the start of the fall wedding and festival season in India. On Friday gold stocks rallied because the Bangladesh Central bank bought 10 tons of gold. Gold has also performed well when markets haven't and the stock markets have historically underperformed in September. However, so far that doesn't appear to be the case this year but for gold bugs looking for stocks with great return potential call me at 868-5525 or visit yourlifeyourplan.ca.

Friday Noon Radio Spot

Stocks in Canada were marginally higher after Chinese Imports for August rose 35.2 percent ahead of economist expectations of a 27.5% gain. Due to a lack of U.S. economic data today, markets are making anemic gains. The S&P/TSX composite has increased approximately 36 points or 1/3% with six of ten sectors on the rise led by Materials, Energy and Consumer Discretionaries. Health Care and Information Technology sectors are the biggest laggards. In terms of breadth, 123 stocks are advancing, 96 are declining, and 9 are unchanged.

Gold stocks rallied today after the International Monetary Fund announced that the Bangledesh Central Bank bought 10 tons of gold. Seasonally, gold tends to shine in September partly because buying increases prior to the start of the fall festival and wedding season in India and secondly, the stock markets have historically underperformed in September. For some ideas on gold stocks with good return potential call me at 868-5525 or visit yourlifeyourplan.ca.

AM 1150 Kelowna - Radio Rallies & Reversals

US indexes are slightly positive, thanks to a better weekly initial jobless claims number in the US; Only 451,000 initial jobless claims last week versus and estimated 470,000. I'm really not sure where the good news between the lines here is. In Canada, housing starts came in a little lite versus expectations, but the big eyebrow raiser was the record Canadian trade deficit for the month of July, as exports to the US, (still Canada's largest trading partner) dropped for the second straight month. For tomorrow, the markets will be looking to Canada's jobs number.

Now earlier this week, the Bank of Canada raised its overnight policy rate to 1% with a bias perhaps of another hike at the next meeting. Since then, the CDN$ is up and barking at 97 cents. For snowbirds preparing to head south for the winter and looking to stock up on US$'s, the charts suggest there is a little more room to run.

GB

AM 1150 Kelowna - Radio Rallies & Reversals

Markets got a boost this morning from successful bond auctions in Europe; An auction of Portuguese bonds due 2021 attracted bids for 2.6 times the amount offered, and an auction of Polish bonds also attracted greater demand. It was renewed concern over sovereign debt that ended the positive stock run to start the week.

The big news in Canada this morning was the Bank of Canada's decision to raise the overnight rate again by 25 basis points to 1%. While this was largely baked into the cake already, it was the accompanying message that the market was waiting for. The message could perhaps be interpreted as being more dovish, but the bias seems to be towards another rate hike at the next meeting.

GB

Evidence mounts of slowing recovery

Canada felt the effect of slowing growth in the U.S. and Europe as export demand from its key trading partners softened. Canada’s trade deficit widened to $1.1-billion in June, from $695-million a month earlier, as exports to the U.S. declined 1% and exports to Europe fell 20%. In the U.S., exports fell 1.3% while imports grew 3%, resulting in the largest trade deficit since October 2008. U.S. markets followed a downward trajectory in August, dogged by negative economic reports, and slowing growth in China fuelled concerns that the global recovery would be derailed.

• Consumer confidence lags in west
  

Except in Australia and Canada where consumer confidence hovered around 70%, an opinion poll revealed consumer confidence in developed countries lags behind developing nations – 85% of consumers in India, 77% in China and 65% in Brazil see their country’s economic situation as good, compared to only 18% in the U.S., 13% in the U.K. and 5% in Spain.

• Canadians save less

In the current environment, U.S. consumers remain cautious and would rather save than spend. U.S. personal savings rose to 6.4% in June versus less than 3% in Canada through the first quarter of 2010. Canadians are now saving significantly less than Americans for the first time since the early 1970s.

• Europe battles back

Global ratings agencies affirmed France’s top-notch triple-A credit rating as President Sarkozy set out tough austerity measures. The French economy grew by 0.6% in the second quarter, stronger than most economists had expected. Despite the fastest economic growth in 20 years, Germany’s deficit doubled in the first half of 2010, as the government assumed €900-million of bad debt for a state-owned bank.

• Mergers and acquisitions

BHP, the world’s largest mining company, is still trying to woo Potash Corp. shareholders after its hostile takeover bid of US$39-billion was rebuffed. Meanwhile, China, which buys 7% of Potash’s output, may be looking for ways to derail a takeover on fears that BHP may jeopardize supplies. Intel will buy security software maker McAfee for $7.7-billion, as security becomes vital to Internet-connected devices.

• Teachers make slick investment

Ontario Teachers Pension Fund (OTPF) bet on a comeback by Transocean, the oil rig contractor involved in the Gulf disaster. Taking advantage of share prices that collapsed 40% after the April 20th accident, OTPF now owns a 1.7% equity stake.

• IPOs – something old, something new

Internet-based phone service Skype filed for its initial public offering, expecting to raise $100-million. Video website Hulu, owned by three U.S. broadcast networks, plans an IPO that may value the company at more than $2-billion. GM filed for a potential $20-billion public offering that will ask investors to look past declining market share and an ailing European division.

• Smartphone wars continue

The highly anticipated launch of the Torch, Research In Motion’s answer to the iPhone, was overshadowed as Saudi Arabia announced a ban on the BlackBerry, and India and Indonesia threatened to do the same, causing RIM stock to tumble $2.7-billion in two days. Google’s Android phone overtook the BlackBerry as America’s top selling smartphone, with 33% market share versus RIM at 28% and Apple at 22%.

• Record drought affects global wheat market
  

Russia’s summer drought will lower economic growth by nearly 1%, as a heat wave destroyed one-fifth of crops. Global wheat prices soared as Russia announced a four-month ban on wheat exports. Profit rose 47% at John Deere, as U.S. farmers benefited from high crop prices and rushed to buy tractors before emission standards, and prices, rise next year.

• Markets appear range bound

Markets appear to have found a range to trade in over the last year. If we look at the iShares S&P/TSX 60 Index Fund (XIU) which measures the top 60 stocks (by market capitalization) performance on the TSX, we can see that XIU established support at around $16.30. In the past year XIU has traded as low as $16.32 three times. Conversely, XIU has traded as high as $18.08 and it appears that may be the level of resistance. From a technical perspective the rise from March of 2009 to September 2009 appears to have flattened out over the last year and the S&P/TSX 60 measured by XIU looks to have entered a trading range.

AM 1150 Kelowna - Radio Rallies & Reversals

Global stock markets had a strong week last week, as better than expected reports on employment, manufacturing, retail sales, and home sales, eased concern that the economic recovery is faltering. For the week, the TSX Composite index was up 2.2%, the S&P 500 was up 3.7%, the Russell 2000 was up 4.3%, and the EAFE index was up 4%. Year-to-date however, global stock indexes are down, with the exception of the TSX Composite and the DAX. Now despite the recent gains, volumes have been light, so it will be interesting to see how markets behave now that summer holidays are over and market players are coming back to work.

For this week, watch for the Beige Book report in the US tomorrow, and the Bank of Canada rate announcement tomorrow as well. On Thursday, watch for housing starts, new home price index, and merchandise trade balance numbers in Canada, followed by employment data on Friday.

GB

Friday Morning Radio Advice

North American markets opened higher this morning. Investors worries eased a little after the positive jobs and trade data out of the US this week. European shares are flat pressured by banks and Asian shares finished higher after Japan announced a 10.9 billion stimulus package. For you coffee drinkers out there, expect an increase in coffee prices. Coffee futures are at 13 year highs.


Value investing often requires a contrarian view and for that reason the preferred method of investing in value plays involves progressively buying a position over an extended period as opposed to establishing a full position all at once. This requires having a buy discipline with trigger points. To establish your trigger points call me at 868-5525 or visit yourlifeyourplan.ca.

Thursday Morning Radio Advice

North American stocks moved higher at the start of trading today, boosted by recent upward momentum and a better-than-expected reading on U.S. initial jobless claims. US markets are up closer to 3/4% at this point while the TSX is struggling to stay positive. Trade data came in lower than expected suggesting lower exports could slow our economic growth which overshadowing the rise in oil, which is up almost a dollar trading over $75 a barell and the loonie which is also higher over a cent after the Bank of Canada rose rates yesturday. It's trading at almost 97 cents.

Intrinsic value is often a highly subjective process that involves numerous assumptions about the economy, industry, and the actual company. This can lead to underperformance. For an objective approach that reduces the risk of underperformance call me at 868-5525 or visit yourlifeyourplan.ca.

Wednesday Morning Radio Advice

North American & European markets opened higher this morning. The Bank of Canada raised its overnight lending rate by 1/4% this morning. However that doesn't appear to be what is driving markets today. The TSX is up about 1/4% while US and European markets are up closer to 1%. President Obama's speech on bolstering jobs and the economic news out of the Beige Book report are getting investors attention.

Keep in mind that the move to raise interest rates in Canada is a move to normalize interest rates and keep inflation at about 2%. That said Banks may take this opportunity to raise borrowing costs. For investors 10 year government bond yields have been falling and are below 3%. This limits their options and many are looking to higher dividend yielding companies for income. For a high income generating investment strategy call me at 868-5525 or visit yourlifeyourplan.ca.

Tuesday Morning Radio

Markets are lower this morning on renewed concerns over the European banking sector. The TSX is down nearly 1/2%, the Dow is down about 3/4% so far and most European markets are down over 1%. Driving markets this week, look for the Beige Book report in the US and the Bank of Canada rate announcement tomorrow. On Thursday, housing data and merchandise trade balance in Canada and on Friday emloyment data.

Value investing involves buying securities whose shares appear underpriced by some form of fundamental analysis. The goal is to identify stocks that are trading below their intrinsic value. This can be viewed as a way to manage risk as the difference between intrinsic value and share price theoretically is a buffer for investors. To identify stocks that are trading below their intrinsic value call me at 868-5525 or visit yourlifeyourplan.ca.

Jobs Jobs Jobs

Only one thing mattered this morning and that was jobs, jobs, jobs. As it turned out, the US economy did not lose as many jobs as economists expected. The private sector created 67,000 jobs last month while the prior month was revised upward to 107,000 from 71,000. Overall 54,000 jobs, including the public sector, were lost versus expectations of 100,000. On the news, European and Asian markets finished the week on a strong note, while North American stock indexes look to do the same. Another piece of positive economic news is shipments are rising again at US trucking companies, signaling the economic recovery remains intact. The 'Cass Shipments Index' rose 8.3% in August from the prior month, the second highest reading in two years.

On the other side of the economic fence was a disappointing ISM Non-Manufacturing report, showing the US service economy growing at a slower pace; The number came in at 51.5 versus expectations of 53.5. The August number is the lowest since January, but still indicates growth. The index bottomed at 37.2 in November 2008. While the news initially took some of the steam out of stocks, North American indexes look to keep their winning streak alive.
GB

AM 1150 Kelowna - Radio Rallies & Reversals

With the TSX working on its 7th straight day of gains, one economic report seems to have come and gone without much notice. This past Tuesday, Statistics Canada reported that Canada's economy grew at an annual rate of 2% in the second quarter. That's down from a 5.8% pace in the first quarter, and well below even the most pessimistic estimates. Like our neighbors to the south, the economic numbers are rolling over as households rebuild savings, and governments retrench after showering their economies with billions in stimulus money.

Looking ahead, we can expect less import demand from the US and less government stimulus. Investment in housing, a key factor behind Canada's initial rebound as record low interest rates and government incentives encouraged a wave of home buying and renovation projects, increased 0.3% - the slowest in five quarters. On the bright side, companies are picking up some of the slack by spending on durable goods and technology, and there's still quite-a-bit of cash on corporate balance sheets.

Next week, the Bank of Canada will announce it's next rate decision; Bottom line - don't lock-in long-term yet, and expect more M&A activitiy on the horizon as companies look to buy growth in a slower growth envir0nment.

AM 1150 Kelowna - Radio Rallies & Reversals

Despite September being arguably the worst month for stock market performance, markets are kicking-off this month with a bang. Markets are looking to the positive PMI number out of China and the ISM number out of the US for inspiration to move higher. North American stock indexes have been in the green all day and as we approach the last hour of trading: The TSX Composite index is working on it's 6th straight positive day, closing in on 12,000; while US indexes are all up well over 2%.

Strength is broad based with all sectors up, with the exception of gold. As a cautionary note, the ADP employment report in the US was worse than expected as the private sector shed 10,000 jobs in August, and July's gain was revised downward. Markets will be looking to the more widely followed Non-Farm Payrolls report on Friday for further direction. This report will include the public sector, and overall job cuts are estimated to be 100,000.

GB