In This Week’s JMRD Market Observer
- JMRD Strategy Comments
- Economic News – Canada: House prices up 1.5% in August
- JMRD Basket Corner
- Retirement Corner
- Reads of the Week
- Economic Calendar
- Earnings Report
JMRD Strategy Comments
Volatility returned to the markets recently with weakness starting last Friday and continuing this week. This comes after nearly 50 days in the S&P 500 stock index where there was never more than a 1% daily move. This is uncommon so it is not a surprise to see some added fluctuations with the US election gaining headlines, interest rate increases in focus and other global news items. We view this as part of normal market behaviour. We still believe that we are in a generally rising market driven by some global economic growth and historically low interest rates.
Economic News – Canada: House prices up 1.5% in August
OPINION: In August, the dichotomy in the Canadian home resale market continued, with large gains in the four metropolitan areas (Vancouver, Toronto, Victoria and Hamilton) that have been driving the national index recently. Apart from these four regions, prices have overall decreased over the last 12 months (top chart). That being said, for the first time in seven months, the monthly price increase in Vancouver was below 2%. Market conditions, although still tight, have eased in that city with the decrease in home sales since their peak last February. That sets the stage for a moderate price correction in Vancouver. In contrast, due to a combination of high sales and shrinking supply, market conditions are the tightest in Toronto since at least 14 years, with the number of dwellings listed for sale representing only 1.1 month of sales (middle chart). As a result, house prices growth in Toronto has accelerated to a monthly average of 3.1% over the last three months. On a year-over-year basis, price increases in these two metropolitan areas have accelerated for condos as well as for other types of dwellings (bottom chart). Economic News
JMRD Basket Corner
Brookfield Asset management and Canadian Natural Resources – Earlier this summer, two DIG Basket components Brookfield Asset Management (BAM.A) and Canadian Natural Resources (CNQ) both paid out a stock dividend. This entails spinning out publicly listed shares of companies in which they had a very small stake. Brookfield spun out a company called Brookfield Business Partners (BBU.UN) and Canadian Natural Resources spun out shares of PrairieSky Royalty (PSK). In most cases, DIG Basket holders received one or two shares of each company. We have sold these small stub positions in the market this week.
All-Cap Growth Basket
Savaria Corp (SIS) – On Thursday, Savaria announced a 30% increase to the Company’s quarterly dividend, raising it from $0.05 per share to $0.065 per share, resulting in an annual dividend of $0.26 per common share. The company’s performance in the current year, along with their recent acquisition of the automotive division of Shoppers Home Health Care and the forthcoming introduction of a new ceiling lift, gave the company confidence to generate additional cash flow. On Friday, the shares were trading up 4.5% to a new year-high and are up just under 30% since being added to the basket in June.
Uni-Select (UNS) – NBF hosted a tour of Uni-Sélect’s largest distribution center based in Boucherville, QC and also had the opportunity to sit down with CEO Henry Buckley and CFO Eric Bussières for a corporate update. Attached is an update on the company. NBF analyst Leon Aghazarian believes that the cheap valuation of the shares and company outlook provide a compelling buying opportunity for investors. See full article attached. UNS
U.S. Growth Basket
- Broadcom (AVGO) – “Broadcom, Maxim can benefit from lean Apple, Samsung inventories, says Pacific Crest”
- United Health (UNH) – “UnitedHealth’s Optum Unit to Oversee Quest Diagnostics’ Billing Processes
- “RESPs 101: How they work and why parents should open one” (Globe and Mail)
Reads of the Week
- “Avoid Leveraged and Inverse ETFs” (Morningstar) They’re only meant to be a one-day holding, and during that period you’re just guessing.
- “Keep Calm And Carry On” (Forbes)
Monday September 19th – None
Tuesday September 20th – US Housing Starts
Wednesday September 21st – US FOMC Interest Rate Decision
Thursday September 22nd – US Chicago Fed Index, US Initial Jobless Claims, US Manufacturing PMI, US Leading Indicators, US Existing Home Sales
Friday September 23rd – Canada Inflation, Canada Retail Sales
Monday September 19th – None
Tuesday September 20th – FedEx
Wednesday September 21st – None
Thursday September 22nd – None
Friday September 23rd – None
Have a good weekend!