**June 6th Issue of The JMRD Market Observer**

June 6, 2014

**June 6th Issue of The JMRD Market Observer**

In This Week’s Market Observer…

  2014 London Majors Tickets Available

  •  NBF Asset Allocation Strategy: Bonds away!    
  • JMRD Basket Corner
  • Retirement Corner
  • Week at a Glance
  • Reads of the week
  • Economic Calendar
  • Earnings Reports

 

2014 LONDON MAJORS TICKETS AVAILABLE!

 The JMRD Wealth Management team has once again sponsored the London Majors baseball team for the 2014 season.We have a number of tickets available on a first-come, first-serve basis to any of our clients who are interested.   These tickets can be used for any home game through the season. Please contact Nicole Dell for tickets.

More information regarding the London Majors and their schedule can be found here:

http://londonmajors.pointstreaksites.com/view/londonmajors

NBF Asset Allocation Strategy: Bonds away!

NBF’s Asset Allocation and Investment Strategist Margin Lefebvre provides an update on equity and bond markets and current Asset Allocation thoughts

Market review

The month of May was pretty good for bonds… as well as for stocks! While the former rallied strongly, with yields on U.S. Treasury notes going from a month-high of 2.67% to a low of 2.45%, the S&P 500 managed to shrug off bad news with a gain of 1.9%, which boosted the index to a record high of 1925 points. The TSX followed a seesaw pattern, finishing the month slightly below April’s close. Currencies were mixed – the Canadian dollar recouped some of its earlier losses while the euro fell below 1.36 for the first time since February. The price of gold plummeted by $50/oz in the last week of May, dropping below US$1,250/oz for the first time since January.

Asset allocation strategy

  •  Fixed income: The more bond yields fall, the less you want to own them. Yields on U.S. 10-year notes bounced off their technical support level of 2.40% on the prospect that economic growth would accelerate after contracting by 1% in Q1 2014.
  •  Equities: Stocks continue to offer the best expected returns over both the short and longer-term horizons. We still favour developed markets over emerging markets. IT stocks still have potential, but late cyclical sectors such as energy and materials could be limited by the appreciation of the USD. Therefore, now is not a good time to increase the weighting of the TSX in portfolios.
  • Currencies: The Canadian dollar got a break from weaker growth in the United States, but the path of least resistance for the loonie remains downward, particularly now that the European Central Bank looks set to announce further easing of its monetary policy at its June meeting.
  • Commodities: Raw materials continue to suffer as a result of slower demand from emerging markets. Technically, the price of gold bullion is due for a rebound, but it will most likely continue on its downward path towards US$1,200 on the prospect of rising interest rates and strengthening USD.

Asset Allocation Strategy

JMRD Basket Corner

 DIG Basket

CI Financial (CIX) – CI reported record asset levels of $98.2B and total assets of $126.9 billion. May net sales were at one of the highest monthly levels in CI’s history. The shares have had a good rebound since the announced share sale by Bank of Nova Scotia. CIX traded higher by 3% this week

All-Cap Basket

AutoCanada (ACQ) – AutoCanada provided an update on their acquisition guidance and is now guiding to acquiring an additional 8-10 dealerships over the next 12 months. This is in addition to the 3 GM dealerships completed so far in 2014 and also on top of the 8 purchase agreements that were recently announced. In addition, it is expected that AutoCanada will be added to the S&P/TSX Index next week when the Index announces its quarterly rebalancing

 Boyd Group (BYD.un) – Boyd announced that it has signed a definitive agreement to acquire Collex Collision Experts Inc. and Collex Collision Experts of Florida Inc. (“Collex”), which own and operate 16 collision repair centres in Michigan and Florida. The total purchase price is approximately $45.0 million, subject to post closing adjustments and will be funded through a combination of sellerfinancing and use of Boyd’s revolving credit facility. 

Magna (MG): How Magna International quietly became a Powerhouse in China: http://www.canadianbusiness.com/lists-and-rankings/best-stocks/investor-500-magna-china/

Methanex (MX) – The world’s biggest methanol producer, will decide by the end of the year whether to place its U.S. assets into a tax-advantaged partnership that would be spun off to shareholders: http://bloom.bg/1n9sW3U

U.S. Basket

Manitowoc (MTW) – Credit Suisse published a note on MTW following a management meeting. They retireated Manitowc as their top Small-Mid-Cap pick. In the analyst’s view, MTW is one of the best positioned companies levered to the crane cycle along with opportunities to improve its Foodservice margins more in line with competitors. In addition, operational initiatives which are expected to produce $80M in gross savings for 2014 remain intact. MTW traded higher by 6% this week.

Walgreen (WAG) – Walgreen said its sales, excluding newly opened or closed stores, rose 4.4% in May, helped by increases in pharmacy prescriptions and basket size, though traffic declined slightly in the front of the store. The growth matched the estimate of analysts polled by Thomson Reuters and moved the shares higher by 4% on the week to a new 52-week high

ETF Basket

 Canadian ETF Industry – 2014 and Beyond

 Canadian ETF Industry

 Retirement Corner

1)     “Canada’s RRIF withdrawal rules forces seniors to outlive their savings, C.D. Howe study finds” (Financial Post)

2)     “Six key issues to consider when transferring the cottage to your kid” (The Globe and Mail)

Week at a Glance

 Week At A Glance

 Reads of the Week

“Expectations Management” It’s less important to focus on what the markets are going to do in the near-term, as no one knows what is going to happen. More important to have a risk management framework and one option is to diversify globally

“Technarians at the Gate: How Google Could Become Your Next Power Company” (Bloomberg)

“Unstoppable $100 Trillion Bond Market Renders Models Useless” (Bloomberg)

“25 Books Billionaire Charlie Munger Thinks Everyone Should Read” (Business Insider)

“Days of cheap energy over, IEA figures show” (CBC) It’s costing twice as much to get oil and gas out of the ground 

 “Northern Gateway Plan B could see Enbridge shift end point for pipeline to B.C. port of Prince Rupert” (Financial Post)

“How two ‘hippies’ created Whole Foods” (Fortune)

“American sports teams: All worth more than you think” (Fortune)

Economic Calendar

Monday June 9th – Canadian Housing Starts

Tuesday June 10th – U.S. Wholesale Inventories

Wednesday June 11th – U.S. Monthly Budget Statement

Thursday June 12th – Canadian New Housing Price Index, U.S. Initial Jobless Claims

Friday June 13rd – Canadian Manufacturing Sales, U of Michigan Confidence Index

Earnings Reports

Monday June 9th – None

Tuesday June 10th – None

Wednesday June 11th – The North West Co

Thursday June 12th – BRP, Dollarama

Friday June 13rd – None

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