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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.

 

 

Insiders signal a simmering summer

As we kick off summer trading, insiders are suggesting it could be a hot one. While spring went out like a lamb with the INK Canadian Insider (CIN) Index falling 1.3% last week, it held a key support level at 1,071. For the year, the INK CIN Index remains up 3.8%, ahead of the S&P/TSX Composite which is essentially flat (+0.1%).

Looking ahead, the changing of the guard message we heard from insiders during the INK CIN Index's semi-annual rebalancing remains in place. Defensive strategies have been replaced by tilting towards stocks that would benefit most from a general rise in the price level and higher long-term rates.

Number Cruncher: Eight telecom and utility stocks

What are we looking for?
 
Looking at all the stocks on the TSX, we want to screen for the highest-ranking telecom and utilities names, two popular sectors for dividend-hungry investors. Rankings are determined by the INK Edge V.I.P. criteria (valuations, insider commitment and price momentum). This is the same approach we apply across the broad market to determine membership for the INK Canadian insider index, which is used by the Horizons Canadian Insider Index ETF (HII).

Insiders continue to favour a reflating global economy

As we expected, we have seen a modest bounce in the Utilities SPDR ETF (XLU*US) which has advanced about 0.7% since our report last week. Concerns about Greece and slowing industrial production helped the long-bond sensitive group to move off its recent lows. As has often been the case throughout the economic recovery, the data has provided investors with a mixed picture. Industrial production numbers disappointed on Monday, but retail sales generally came in better than expected last Thursday. 

The persistence of some data that surprises on the downside will likely encourage the Federal Reserve to take a go-slow approach on interest rate increases.

American insiders confirming the Canadian reflation bias

Every week we provide an American insider overview for our subscribers at INKResearch.com and TD Direct investing. Below I have incorporated the commentary from this morning's INK Research American insider article which appeared before the open. Today's commentary is particularly relevant for investors in the Canadian market as insiders south of the border appear to be confirming the tilt towards growth-oriented stocks we are seeing in Canada.

Will a FOMC rate rise have to wait for a greenback correction?

Last week, we summarized the case made by Richmond Fed President Jeffrey Lacker for a June rate rise. His key assumption was that inflation was heading back to 2% which is widely viewed as the Fed's objective. Yesterday, we heard what amounted to a counter argument from newbie Federal Reserve Governor Lael Brainard. According to a Reuters article, the governor indicated that headwinds still confront the economy. Those headwinds include the recent rally in the U.S. dollar.
 
The Fed governor's comments are noteworthy because she is a permanent member of the Fed's Open Market Committee which decides the direction of monetary policy.

Our BNN pro-cyclical theme holding up despite a disappointing data day

Earlier this week we wrote "Here comes the changing of the guard" reflecting our sense that insiders are favouring cyclical over defensive names. That theme is being put to the test in light of today's negative GDP numbers in both Canada and the U.S. As of mid-day, cyclical and reflation-oriented stocks are holding up rather well. On a combined basis, the Materials Select Sector SPDR (XLB*US) and Energy Select Sector SPDR (XLE*US) ETFs are outperforming the broad market SPDR S&P 500 Trust (SPY*US) ETF.

Number Cruncher: Canadian REIT stocks outlook: Clouds on the horizon

What are we looking for?

Looking at all the stocks on the TSX, we want to screen for the highest ranking REITs. Rankings are determined by the INK Edge V.I.P. criteria (valuations, insider commitment and price momentum). This is the same approach we apply across the broad market to determine membership for the INK Canadian insider index, which is used by the Horizons Canadian Insider Index ETF (HII-TSX).

Here comes the changing of the guard

As we head towards summer, tourists to Ottawa can look forward to the daily red coat changing of the guard ceremony on Parliament Hill. For Canadians, it is a must see. We give our nation's capital a nod this morning, not to recognize the pre-election vote-buying in Parliament by both the government (seniors-focused giveaways) and the opposition (millennial-focused giveaways). Instead, we would be remiss not to acknowledge another milestone achieved by Ottawa-based entrepreneurs, this time at Shopify (SH).

Will consumer spending sizzle this summer?

It never ceases to amaze us how much attention is given to consumer sentiment surveys south of the border. On Friday, a widely followed sentiment survey was released that indicated American consumer sentiment had dropped. Only a month ago that same survey indicated that consumer confidence was soaring, hitting its second highest point since 2007 according to Business Insider. More remarkably, this same survey hit an 11-year high in January of this year according to Thomson Reuters.

Diamonds glitter as Canadian insiders tilt to a rate rally

Move over real estate, insiders appear to be setting up for a long-rate rebound. REITs and other defensive stocks such as utilities lost ground in the semi-annual rebalancing of the 50-stock INK Canadian Insider (CIN) Index. Taking their place is a mix of resource and economically-sensitive industrial stocks.

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