JMRD Market Observer for August 22nd, 2014 – Canada’s Big Six Banks Earnings Preview Q3

August 25, 2014

**August 22nd Issue of The JMRD Market Observer**

In This Week’s Market Observer…

  • Canada’s Big Six Banks Earnings Preview Q3 f2014
  • NBF 5-minute Market Review
  • Thackray Market Letter – August 2014
  • JMRD Basket Corner
  • Retirement Corner
  • Week at a Glance
  • Reads of the week
  • Economic Calendar
  • Earnings Reports

 Canada’s Big Six Banks Earnings Preview Q3 f2014: Capital Market Segments: Emerging From the Shadows

 On Friday, Royal Bank of Canada kicked of the Q3 f2014 reporting season for Canadian Banks. NBF Bank analyst Peter Routledge expects the tone for capital markets has improved rather materially over the past six months and this provides for a positive backdrop for this business. He forecasts a 12% year-over-year increase in net income for all the Big Six Canadian banks’ capital markets segments in aggregate. Moreover, he believes market conditions will remain accommodative and forecasts a reasonably steady increase in aggregate revenues over the next 18 months.As a result of increasing optimism toward the U.S. and Canadian economies, risk premia for the Big Six banks have fallen. Consequently, NBF increased price targets entering the quarter by 2% on average: TD to $59 from $57, RY to $82 from $80, BMO to $82 from $81, and CM to $102 from $100. Peter adds that “domestic banks with the most promising platforms for expansion outside Canada remain better long-term investments because they have more avenues for offsetting the headwinds that attend the highly leveraged Canadian household. Thus, our two favourite bank stocks are TD and BNS.” (both DIG Basket holdings)

 Canada Big Six Banks

More on Canadian Banks and Q3 earnings: 

Sustained rally expected to boost Big Six banks’ bottom lines

Canadian Banks: Splits Revisited – BMO, BNS, CM and RY on Deck

Credit Suiss looks at the stock split history of Canadian Banks and expects Bank of Montreal, Bank of Nova Scotia, CIBC and Royal Bank of Canada to announce stock splits over the next few quarters with Canadian bank stocks expected to continue to deliver superior shareholder returns

 Cdn Banks 082014 (2)

 

NBF 5-minute market review 

Last week’s market review from Martin Lefebvre, NBF’s Asset Allocation and Investment Strategist.

 

Thackray Market Letter 2014 August

August update from Horizons Seasonal Rotation ETF (HAC), an ETF Basket holding. The objective of HAC is long-term capital appreciation in all market cycles by tactically allocating its exposure amongst equities, fixed income, commodities and currencies during periods that have historically demonstrated seasonal trends. The Thackray Market Letter is for educational purposes and is meant to demonstrate the advantages of seasonal investing by describing many of the trades and strategies in HAC.Since November 19, 2009 inception date, HAC has returned 45.6% vs the TSX Composite return of 32.2% and S&P 500 return of 76.3%. with lower volatility than equity markets. This month’s update includes a discussion of current holdings and seasonal trades in Gold, Energy, Government Bonds, Utilities and Short trades in the market.

  Thackray Letter August

 

JMRD Basket Corner

 DIG Basket

Whitecap Resources (WCP) – WCP announced a $267M acquisition, increase to guidance and 12% increase to its dividend beginning in 2015. The shares traded higher by 7% to $18.40 and a new year high following the announcement. “Whitecap consolidates Elnora pool for $267M” 

All-Cap Basket

Alimentation Couche-Tard (ATD.b) – Following this story, ATD said it has “no plans to invest ‘at this time’. NBF’s Consumer Products analyst Vishal Shreedhar said a deal is unlikely as it does not align with prior management comments. Canada’s Couche-Tard makes short-list in $16B Sinopec unit sale: sources” 

Bellatrix (BXE) – We do not expect significant changes as a result of an activist U.S. hedge fund announcing they had built a 5% position in the company. However, BXE shares were up 8% following the news. Activist Orange Capital Seeks Board Changes at Bellatrix” 

Magna (MG)“Magna Chief Primed for Deals After Founder Stronach Exit” 

 

Retirement Corner

1)     “Ignore averages: Your money has to last for 30 years after retiring” (Globe and Mail)

2)     Why your TFSA is just what your over-taxed RRIF needs” (Financial Post)

 Week at a Glance

Week At A Glance

Reads of the Week

 Economic Reports

Monday August 25th – US New Home Sales, US Markit PMI Index

Tuesday August 26th – Us Durable Goods Orders

Wednesday August 27th – None

Thursday August 28th – US GDP, US Jobless Claims, US Pending Home Sales

Friday August 29th – Canada GDP; US Personal Income, U. of Michigan Consumer Confidence

Earnings Reports

Monday August 25th – None

Tuesday August 26th – National Bank, BMO, Bank of Nova Scotia,Best Buy

Wednesday August 27th – Canadian Western Bank

Thursday August 28th – CIBC, TD Bank, Laurentian Bank

Friday August 29th – None

Categorised in: