JMRD Market Observer for August 14th, 2015 – Multiple Asset Class Basket: Monthly Review

August 14, 2015

**August 14th Issue of The JMRD Market Observer**

 

In This Week’s JMRD Market Observer

 

  • JMRD Strategy Comments
  • Multiple Asset Class (MAC) Basket: Monthly Review
  • JMRD Basket Corner
  • Retirement Corner
  • Week at a Glance
  • Reads of the week
  • Economic Calendar
  • Earnings Reports

 

JMRD Strategy Comments

 

Well we forecasted some volatility over the summer but we are getting a little tired of it.  Just as the markets seemed to move past the drama in Greece and the price of oil was improving, we have oil back to its recent lows, the Canadian dollar down with it and developments in China causing some turbulence in all financial markets.  These types of swings in the equity markets can be uncomfortable for investors but are not uncommon during the summer months.  However, with interest rates remaining low around the world and authorities everywhere doing what they can to spur economic growth, these are not normal times.  At JMRD, we suggest sticking to our general plan of owning quality securities which pay regular income and are diversified by geography, while holding a percentage in short term funds for emergencies or opportunities.  As investors and our clients, you have investment plans and portfolios that have been carefully developed to weather changing markets.  A positive sign is that many of the energy stocks in Canada may be plateauing even though the price of oil has remained weak.  The US holdings in portfolios and lower risk holdings are still relatively strong even if we have had some weakness in our Canadian holdings.  Overall, we continue to monitor the markets closely, making changes to our baskets when we feel it is needed and contacting our clients to revise portfolios when the circumstances arise.  Please contact the Team if you have any questions or concerns about your investment or financial plan.

 

Multiple Asset Class (MAC) Basket: Monthly Review

 

Attached is an update highlighting the strategy and performance of the Multiple Asset Class Basket for the month of July 2015.  As a refresher, the Multiple Asset Class (MAC) Basket is managed by FNB Capital Asset Management in Montreal.  The two principals of FNB are former NBF portfolio managers who decided to start their own firm.  The two originally started the MAC Basket at NBF in 2005, took a hiatus from managing the Basket for a period of two years and returned in January of this year, taking over from Fiera Capital.  The Team at FBN Capital uses a pension-like management approach with the MAC Basket with special attention paid to providing superior risk adjusted returns – striving to optimize returns with less volatility than the general equity markets.  The MAC basket is a tactically managed portfolio which uses Exchange Traded Funds (ETFS) of various asset classes (cash, fixed income and equities and alternative investments) and geographies. We have also included a recent switch made in the Basket that highlights the risk management strategies employed by FBN Capital.  See attachments for more details. MAC Basket August MAC Basket Monthly Review

 

JMRD Basket Corner

 

Diversified Income & Growth Basket

 

Whitecap Resources (WCP) – “Whitecap CEO Biding Time on Oil Deals With Asset Prices Too High”: Whitecap Resources Inc. has done more deals in the last three years than any other Canadian energy company and is primed to do more — if prices come down.

 

 

Metro (MRU) – “Loblaw and Metro upgraded as glory days for supermarkets expected to continue” 

 

All-Cap Growth Basket

 

Element Financial (EFN) – EFN reported Q2 2015 after-tax adjusted operating EPS of $0.23, in line with consensus, but below NBF’s estimate of $0.26. The shortfall relative to NBF’s estimate primarily reflects the timing and mix of originations in the quarter. EPS increased 10% q/q, driven by organic growth in earning assets of 6% q/q, as well as increased syndication and capital advisory activities, partially offset by higher corporate expenses. (Full report attached) Element Financial Corp.

 

Magna (MG) – Swamy Kotagiri steering Magna International into future of auto tech

 

U.S. Growth Basket

 

Apple (AAPL) – “What Apple Should Have Done With Its $130 Billion Instead of Buybacks”

 

Retirement Corner

 

 

Week at a Glance

 

(See attached Week at a Glance report)

Week at a Glance

 

Reads of the Week

 

  • NBF Economics & Strategy Morning Comment: Fed remains on track to hike this fall The U.S. July employment report remains supportive of a Fed rate hike this fall. Pay rolls reported were up in excess of 200,000 for the third consecutive month (and fifteenth time in seventeen months) and full-time employment surged more than 500,000. For most of the labour market variables monitored by the Federal Reserve, current readings actually exceed those observed at the peak of the 2007 economic cycle (char). With the current outlook still suggestive of further improvement (the leading indicator for GDP growth is strong, as is the ISM non-manufacturing which hit decade high in July) we believe the Fed will initiate its first tightening campaign since 2004 later this fall (September or October). (Full note attached) Morning Comment

 

  • “Need to use an RESP this fall? Back to School starts now” – The process to withdraw funds from a RESP can take a little time. Read an example of the steps involved. (Article attached) RESP Withdrawals

 

 

 

 

 

 

 

Economic Reports

 

Monday August 17th – US Empire Manufacturing Index

Tuesday August 18th – US Housing Starts and Building Permits.

Wednesday August 19th – US Inflation, US FED Minutes from July 28-29 Meeting

Thursday August 20th – US Initial Jobless Claims, US Existing Home Sales

Friday August 21st – Canada Retail Sales, Canada Inflation; US Markit Manufacturing Index

 

Earnings Reports

 

Monday August 17th – None

Tuesday August 18th – Home Depot, Walmart

Wednesday August 19th – Target, L Brands

Thursday August 20th – Hewlett Packard

Friday August 21st – Deere and Co.

 

Have a good weekend!

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