**July 2nd Issue of The JMRD Market Observer**
In This Week’s JMRD Market Observer
- JMRD wins Team of the Year Award and Paul Manders recognized for community involvement
- NBF Economics & Strategy: Q2 ends with uncertainty
- JMRD Basket Corner
- Retirement Corner
- Week at a Glance
- Reads of the week
- Economic Calendar
- Earnings Reports
JMRD wins Team of the Year Award and Paul Manders recognized for community involvement
Each year National Bank Financial recognizes exceptional Investment Advisors and their teams through the Recognition of Excellence Awards. This year, I am proud to announce that the JMRD Wealth Management Team has been selected as Team of the Year for the Southwestern Ontario Region. This is National Bank Financials newest award and this group has now won it for the second year in a row.
To win this, a Team must be a well-rounded performer posting superior results in asset growth and portfolio management, as well as a positive attitude and involvement both inside and outside the branch. The criteria for evaluation are: quality of investment management, total assets, asset growth, portfolio performance (Sharpe ratio), adherence to the Firm’s code of ethics and level of social commitment.
The JMRD Wealth Management Team continues to redefine the client experience and strive daily to improve their approach to wealth and practice management, while providing peace of mind for their clients. Well respected within the firm and the industry as a whole, JMRD’s commitment to being the very best is evidenced daily through their consistent and disciplined delivery of investment and financial advice for clients. The JMRD Wealth Management Team is well regarded within our firm and in our industry as a whole for their honesty and integrity and we are proud to have them represent National Bank Financial.
And there is more from the JMRD Team this year as Paul has been recognized for his hard work outside of the office with the regional social commitment award.
Social Commitment Award
Paul has been a supporter of many charities within the London and surrounding area. He has led the local United Way campaign for the London Branches for over 10 years and has volunteered his time and resources to a number of organizations and events. Specifically, The Children’s Hospital of Western Ontario, The London Community Foundation, St. Patrick’s School and Church, The Terry Fox Run and many more. He is passionate about the organizations that he supports and he is teaching his children about the benefits of giving back. Congratulations Paul and keep up all the great work.
I am proud to represent a firm who hosts a team of the calibre of JMRD Wealth Management. Year after year they set a new standard for other teams to strive for and for years now have maintained a reputation based on investment prudence and excellence. I am also proud to say they are my Investment Advisors!
Congratulations to the entire Team on their awards of Investment Advisors of the Year and Team of the Year!
NBF Economics & Strategy Morning Comment : Q2 ends with uncertainty
From Monday June 29, 2015:
Q2 2015 is coming to an end with serious uncertainty. Greece, U.S. monetary policy, China, and terror attacks in Arab countries are keeping investors on their toes. So far this month, the returns on investments have been negative for all major asset classes but cash. If the quarter was to end on that note, that would be the worst such showing since Q3 2008 and only the fifth such happening in 26 years.
Greece’s politicians surprised markets on Friday by calling a snap referendum for July 5. Though the government insists the referendum is only to decide on bailout proposals offered last Friday and not on euro-zone membership, it is extremely difficult to disentangle the two. With the European Central Bank (ECB) deciding Sunday against increasing emergency funding to Greece’s beleaguered commercial banks to accommodate surging withdrawals, the Greek financial system has become dysfunctional. Sensing a potential economic collapse, Athens announced that it would impose capital controls and shut its commercial banks and stock exchange until July 7. At this writing, it is very hard to assess the impact of a potential “Grexit”. Though the country is relatively small relative to the Eurozone (about 2% of its GDP) with most of its international debt owed by official institutional creditors (ECB, IMF, EU), the potential negative geopolitical fallout of such an event could still be serious. As recently argued by our colleague Angelo Katsoras “the demonstrated non-permanency of Euro Zone membership would mean that the next financial crisis would automatically be followed by speculation about whether another country would be forced to leave”. That is not something to be sniffed at when considering the critical role played by the Euro in global financial markets.
(Full report attached)
JMRD Basket Corner
Agrium (AGU) – “5 Reasons to Be Bullish on Agrium Inc.”
WSP Global (WSP) – WSP Global announced four small-mid sized acquisitions over the last week. WSP acquired Faveo, a leading project management firm focusing on infrastructure and energy based in Norway and Sweden with 400 employees. In addition, WSP closed the acquisitions of Sweden-based FLK (50 employees) and Vicicom (35 employees) as well as Western Canada-based Environmental service provider Levelton (215 employees). NBF’s analyst Greg Colman believes a 6x EBITDA multiple would be warranted for these small-mid sized transactions which results in an estimated transaction value of $100 million funded with cash on hand. (full report attached) WSP
All Cap Basket
Element Financial (EFN) – “GE Sells Vehicle-Fleet Assets to Element for $6.9 Billion”
Parkland Fuel (PKI) – On Thursday June 25, Parkland confirmed the ~$377M acquisition of Pioneer Energy closed, the almost 10-month delay from when first announced last September a result of the Competition Bureau’s concerns about the resulting combined concentration levels in certain rural communities. The situation is largely resolved, with the impact not overly material on the transaction’s attractiveness for PKI (expected to divest certain assets, but the large core retail footprint remains intact). With Pioneer now closed, PKI is better positioned to continue its strategy of consolidating North America’s fuel distributors. (full report attached) PKI
Sun Life Financial (SLF) – “Sun Life Financial buys U.S. money manager Prime Advisors” Canadian insurer expands its asset management business
U.S. Growth Basket
Sealed Air (SEE) – “Revamped Bubble Wrap Loses Its Pop” Sealed Air, maker of the iconic packaging material, is rolling out a new flat version to cut down on the high costs of shipping air
- “Minimum RRIF withdrawals are unfair to seniors and part of a flawed system” (Globe and Mail)
- “What if the kids never leave? Adult children can squeeze your retirement” (Globe and Mail)
Week at a Glance
(See attached Week at a Glance report)
Reads of the Week
- NBF Hot Charts – Canada: Leave the patient alone Mr. Poloz Explaining his controversial decision to cut interest rates last January, Bank of Canada (BoC) Governor Stephen Poloz said yesterday “if the doctor says you need surgery to avoid death, the side effects usually don’t deter you, you just go ahead and manage them somehow”. After four consecutive GDP declines in as many months, the question arises: should the BoC rush again into action and “reopen” the patient? We do not think so. For one, most of the weakness in April was confined to the goods sector because of extreme weakness in mining and oil & gas extraction – clearly, an extra BoC rate cut would not do much for this industry. For another, activity in services-producing industries (70% of the Canadian economy) is rebounding smartly in Q2 with the best gain in four months. With full-time jobs at a record high, we are not concerned about a relapse in the service industry, even more so when considering the incoming fiscal stimulus that will boost GDP growth in excess of 0.5% in July. And let’s not forget the boost to construction from the announced pick-up in government infrastructure spending. The Canadian economy may have been very weak in H1 2015, but “life-threatened” it is not. We think the BoC should leave the patient alone and let fiscal policy nurse the wounds. The results should be impressive as we expect the Canadian economy to expand 3% in Q3. (chart attached) Hot Charts
- Bruce Richards, CEO of Marathon Asset Management, believes the Greek people will vote ‘yes’ on the referendum to remain in the Euro. A very good discussion of the issues, opportunities and risks for Greece and global markets:
- “Letting Go of the Why” (A Wealth of Common Sense)
- “Home-improvement giant Rona is finally ready to build again” (Canadian Business) Only a few years ago, Rona’s retail network was a money-losing mess. Now a new CEO with a fresh focus is cleaning up shop
Monday July 6th – U.S. ISM Non-Manufacturing Composite
Tuesday July 7th – U.S. Trade Balance
Wednesday July 8th– Canadian Building Permits, U.S. Fed Releases Minutes from June 16-17 meeting, FOMC Meeting
Thursday July 9th– Canadian Housing Starts, U.S. Initial Jobless Claims
Friday July 10th – Canadian Unemployment Rate, Canadian Net Change in Employment, U.S. Wholesale Inventories, U.S. Wholesale Trade Sales
Monday July 6th – None
Tuesday July 7th – Jean Coutu Group, Alcoa Inc
Wednesday July 8th– None
Thursday July 9th– None
Friday July 10th – None
Have a good weekend!
 For more details, see the June 17 Geopolitical Briefing “Is the EU Underestimating the Potential Impact of a Greek Exit from the Euro Zone?”