Insights: Climbing the great wall of growth worries

Ad blocking detected

Thank you for visiting CanadianInsider.com. We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following if you want an ad-free experience.

Canadian Insider Club
$299/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads
JOIN THE CLUB

* Price is subject to applicable taxes.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

May 6th, 2019

Our concerns about the outlook for stocks as we discussed last week remain unchanged. The mid-cap oriented INK Canadian Insider Index fell 2.3% last week, underperforming the large-cap oriented S&P/TSX 60 Index which dropped 0.5%. As we have explained in past reports, when investors have concerns about global growth, they tend to prefer the perceived relative safety of large-cap stocks over smaller names.

Meanwhile, our INK Sentiment Indicator, which measures insider sentiment by tracking the number of stocks on the TSX with key insider buying versus those with selling, remains flat. A flat indicator tends to coincide with a consolidating market or one that is set to move into a correction mode.

The case for global growth received some instant gratification on Friday with the US jobs report. The US Labor Department served up a fabulous headline number of 263,000 new jobs created in April, but the report details were not quite as impressive, particularly given that the household survey released at the same time showed a drop in jobs for the month. In any event, just as the sagging purchasing manager's index from Wednesday was forgotten by Friday, the jobs report will be forgotten this week as day traders fret over the late night Sunday Trump tweet threatening more tariffs on China. On that front, we expect that the tweet, like low US inflation, will be deemed transitory. It remains to be seen whether counter-tweets and sure-to-emerge bullish chatter will be enough for a buy-the-dip function to kick in and remain in place.

While a meaningful trade deal or truce could perhaps provide a catalyst for a change in our view, we remain cautious. On the bright side, while most global indices fell Monday, the INK CIN Index finished positive, helped by some good earnings news from Air Canada and Bausch Health (BHC). Investors may also have been cheered on by the People's Bank of China's cut to the required reserve ratio for certain banks. We will have to see if investors start to place more bets on a strong China growth rebound in the days ahead. At this point, let's just say that we believe it is one great wall facing investors.

Last week, the three big INK CIN Index gainers in Canada were consumer-oriented stocks ahead of earnings due this week, while the top three laggards were from the resource area. Calfrac Well Services and North American Construction both fell after releasing earnings. Teranga Gold fell for the week but rallied 3.0% on Friday after earnings.


Top 3 Gainers Last Week

Company NameStock Symbol1 Week %
goeasyGSY10.2
Air CanadaAC5.7
Canadian TireCTC4.0

Top 3 Losers Last Week

Company NameStock Symbol1 Week %
Calfrac Well ServicesCFW-14.4
North American ConstructionNOA-10.7
Teranga GoldTGZ-10.3

Returns are as of the last trading day of the previous week.

Featured Broadcast

Insider of the Week

ECN Capital CEO Steven Kenneth Hudson

Steven Hudson has led ECN Capital (ECN) in a transition over the past two from a company that was balance-sheet heavy to one more focused on providing services and originations in the US consumer credit area. He has led a culture of insider commitment at the firm, spending $7.2 million buying company shares via options exercises over the past two years. During that period, he has not sold a single share in the public market.

On Wednesday, May 8th, the ECN CEO delivers Q1 results. He will be facing off against short-sellers who have recently upped their bearish bets against his firm.

INK Canadian Insider Index

1 Year Total Return Performance


Historical Performance

Annualized Total Return as of May 6, 2019 04:49 pm
1 Year -12.15%
3 Years 4.57%
5 Years 2.37%
10 Years 11.13%

5 Year Total Return Performance


The INK Canadian Insider Index is used by the Horizons Cdn Insider Index ETF (HII), a 2017 and 2018 Fundata Fundgrade A+ ® award winner.

To learn more about th ETF please visit:
https://www.horizonsetfs.com/ETF/HII

To learn more about the Index please visit
https://index.inkresearch.com
To start receiving a PDF version of this newsletter by email select it in your alert settings. If you do not have an account, join us here.

Comment On!

140
Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to CanadianInsider.com (via Easy Blurb).