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The Canadian insider blog discusses news and insight found among insider and significant shareholder filings in Canada.
 
Ted Dixon is co-founder and CEO of INK Research. He is the creator of the INK Canadian Insider Index, and is the editor of the daily Morning INK and weekly Market INK reports. He is a regular contributor to the Globe and Mail's Globe Investor pages and has also worked as a part-time lecturer in corporate finance at the British Columbia Institute of Technology. Before starting INK, he worked at the Connor, Clark & Lunn Financial Group where his responsibilities included portfolio strategy and product development. He has also been an analyst at the Fraser Institute and a treasury specialist at the TD Bank. He is a Chartered Financial Analyst and member of CFA Vancouver. He holds an MBA in Financial Management from the University of Chicago, and a Bachelor of Commerce from UBC. Listen to his weekly economic commentary on Vancouver's Roundhouse Radio FM 98.3.
 
Victor Wong is a business and client development associate at Canadian Insider and an avid market watcher.
 
Nicholas Winton contributes technical commentaries on the INK Canadian Insider Index. Nicholas also writes the High on the Hog blog.

 

 

Post Jackson Hole uncertainty to eventually support gold stocks

 

An excerpt from the Market INK distributed to Canadian Insider Club members and INK Research subscribers August 29th.

Uncertainty is the clear standout image from Yellen's Friday speech as depicted in the megaphone-like chart (Figure 1) she provided showing the confidence range of policymaker Fed Funds forecasts over the next two years. The range appears to span from 0.125% to 4.5%, with 0.125% being the lower bound cut-off (editor's note: the Fed picked the yellow colour for the chart). While the Fed chair did not hand out diagrams for other forecasts such as inflation, one can only assume similar blow-out ranges would also be the story.

Sound bites: US banking insider sentiment crumbles ahead of key Yellen speech

There are more warning signs for a US market that spent has spent the summer hitting new all-time highs. Over the past few weeks we have been watching broad insider sentiment sink as stocks have moved higher. Banking insiders were the one group that offered some comfort to the bulls with our Banking Indicator remaining above the 100% mark, meaning there were more stocks in the group with key insider buying than there were with selling. However, in advance of Janet Yellen's Friday speech at the Kansas City Federal Reserve's end-of-summer symposium at Jackson Hole, the banking insider comfort zone is crumbling.

Sound Bites: US insiders flee as Fed officials feud over rates

According to FactSet, for the second quarter the blended earnings decline for the S&P 500 is -3.5% with 91% of the index companies reporting as of August 12th. That marks the first time the index has recorded five consecutive quarters of year-over-year earnings declines since the third quarter of 2009. Nevertheless, as earnings season winds down, investors are pushing broad US benchmarks to new all-time highs. Investors it seems are buying into the narrative that earnings will only get better from here.

Sound Bites: Value stocks in short supply on the TSX

August 10, 2016 - The long anticipated correction, or at least consolidation, in metals stocks appears to have started with the S&P/TSX Composite Gold down 0.5% in the week ended August 5th, and down 4.5% for the previous 30 days as of Friday. We started reporting to subscribers in May that insiders were positioning for a pullback noting that insiders had picked up their selling as we headed into summer which is a traditionally weak period for gold. Indeed, according to Equityclock.com, June and August tend to be the roughest months for the gold price before entering into a seasonally strong fall.

Sound Bites: Oil enters a bear market after a mixed verdict on Japanese stimulus (Update)

Updates number of mining stocks to 30 from 31 in third paragraph, adds that they are in the Basic Materials sector.

Japanese bonds and oil are shaky, should we worry? On Friday, Business Insider noted that oil had slipped into a bear market after falling 20% from its recent peak of just over US$51 per barrel. The move happened on the same day the Bank of Japan decided not to increase its bond purchases which dampened hopes for helicopter easing. While the two developments may not be directly related, falling oil and Japanese policy maneuvers both have implications for investors.

Sound Bites: What's next for global stock and Vancouver real estate markets?

July 27, 2016 - Yesterday the Federal Reserve released a non-controversial policy statement essentially saying that risks were not as high as last meeting (which took place right before Brexit) and that the labour market was showing some signs of strength. Essentially, it left itself enough wiggle room for the rest of the year to either raise rates, do nothing, or backtrack should the data turn south.

Sound Bites: Is the stimulus bullet train coming?

July 21, 2016 - Since the beginning of the month, gold stocks have been more or less flat on the back of better expected US growth. Another factor driving investors into riskier assets is the hope that Japan will deliver a double dose of monetary and fiscal policy stimulus following the triumph of the Liberal Democratic Party in recent elections. While we remain skeptical about the narrative surrounding a US recovery that will allow the Fed to hike rates sooner than expected, the moves in Japan could be meaningful.

Sound bites: Will stocks slip on sliding oil prices?

With key US benchmarks making new all-time highs and the INK Canadian Insider Index making another 52-week high on Wednesday, the key question is whether or not the momentum can be sustained. A key positive development for market bulls over the past week has been the participation and leadership of the Financials, with the Thomson Reuters Financials Index jumping 4.16% compared to a 3.04% gain for the S&P 500 as of Tuesday. A good amount of the gains took place early in the week as long bond yields rose on the back of renewed hopes for aggressive global monetary easing. There was plenty of chatter that the Bank of Japan (BoJ) would be considering either a form of targeted lending to effectively assist the central government in financing a large infrastructure plan or "helicopter easing" which we would dub as HE. Under HE, the central bank would send cash payments or loans directly to households, bypassing the credit markets.

Sound bites: What is next for central bankers and markets?

In light of post Brexit global growth concerns, as we wrote in our June 27th Canadian market commentary, we are just not sure what exactly central bankers could do that is not "more of the same." So what is more of the same?

  • zero or near zero rates
  • negative rates
  • asset purchases (QE)

Investors now seem to be dismissing the ability of "more of the same" to work. Consequently, it raises the ante for further central bank action. If they do decide to act, they will try something even more dramatic than more of the same. Two of the most talked about weapons in the arsenal that could be used as a "final assault" on low inflation would be

Sound bites Draghi: monetary policy has inevitably created destabilising spillovers

On Tuesday, European Central Bank President Mario Draghi gave a previously scheduled speech at the ECB Forum on Central Banking at  Sintra, Portugal. No doubt, the text was tweaked to adapt to the world post Brexit. In fact, it appears more than tweaked. It may be the closest you can get to a speech where a power central banker admits that some of the measures central bankers have taken since the financial crisis may have negative consequences. The ECB chief went as far as to say, "monetary policy has inevitably created destabilising spillovers."

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