**March 13th Issue of The JMRD Market Observer**
In This Week’s Market Observer
- NBF Monthly Equity Monitor – March
- JMRD Basket Corner
- Retirement Corner
- Week at a Glance
- Reads of the week
- Economic Calendar
- Earnings Reports
NBF Monthly Equity Monitor – March
- Global equities as measured by the MSCI AC index rose a robust 5.4% in February to an all-time high. Interestingly, the gains have been broad-based at both the regional and industry level. This development is consistent with the view that a supply-induced oil-price decline is a net benefit for the global economy and corporate earnings.
- The P/E of the MSCI AC, at just about 16 times forward earnings, is the highest in about a decade and back in line with its average since 1988. Though further P/E expansion is still possible at this early stage in the global economic expansion, future equity gains will depend increasingly on earnings.
- S&P/TSX forward earnings have been slashed more than 16% in the last three months, the sharpest revision on record outside a recession. We think this view is pessimistic. In our view, profitability will be good even with lacklustre Canadian economic growth this year.
- We are modifying our asset allocation this month by adding to our global equity exposure. Our EAFE weighting is raised by 2% due to stronger growth prospects in the Eurozone coupled with limited downside on the currency. On the other hand, our exposure to Canadian bonds is reduced.
(See Attachment for more details)
JMRD Basket Corner
Crescent Point (CPG) – “Crescent Point ready to buy; adds $1 billion to credit line”
Pembina Pipeline (PPL) – Pembina held its Investor Day in Toronto to discuss its long-term strategy, financial position, capital program and major development projects. Attached is the full report on the key highlights from the company. (See Attachment)
All Cap Growth Basket
Constellation Software (CSU) – “Is high-flying Constellation Software still a buy?”
Stella Jones (SJ) – Stella-Jones announced Q4 results with sales of $289M beating estimates of $287M but a slight miss on EPS of $0.33 vs $0.36 expected. The company also increased the dividend by 14.3%. The company showed growth in sales from railway ties of 18.1% (excluding currency and acquisition effects) and 4% sales growth in utility poles (ex currency and acquisitions). The company mentioned thatlower oil prices will have a favourable effect on SJ due to lower raw material costs which will more than offset delays on other projects
Celgene (CELG) – “The Best Stock To Buy When Biotech Stocks Tumble”
Morgan Stanley (MS) – The Federal Reserve approved Morgan Stanley’s capital plan in the bank regulator’s annual “stress test” on Wednesday. MS will buy back as much as $3.1 billion in company stock between the second quarter and the end of the same period a year later. Morgan Stanley also plans to boost its quarterly dividend to 15 cents a share, up from 10 cents.
NXP Semiconductor (NXPI) – NXP announced today that they will acquire Athena SCS, a provider of solutions securing the rapidly expanding connected world. The acquisition will further strengthen NXP’s offering in providing secure solutions across a multitude of applications in the areas of Internet of Things (IoT), Industry 4.0, Automotive and Identification. NXP traded higher by 5% Friday, following the news, to a new high of $103.80
“Here’s a retirement plan – don’t” (Financial Post)
Week at a Glance
(See attached Week at a Glance report)
Reads of the Week
- “Five quick fixes for your investments” (Financial Post) Focus on dividend growth, low debt companies, selling your losers, reducing the number of holdings and adding US exposure:
- “How Canada Goose Parkas Migrated South” (Bloomberg)
- “How Ikea took over the world” (Fortune) In a stunning global expansion, the Swedish home furnishings giant has been quietly planting its blue and yellow flag in places you’d never expect. Pay attention, Wal-Mart: You could learn a few things.
- ARC Financial: The Nature of the oil beast
- “Guggenheim Macro View: This Too Shall Pass” Behavioral finance reminds us that ignoring daily volatility roiling the market is wise. Instead, investors should focus on the positive, fundamental outlook for equities and fixed income.
- “Onex Beats P-E Peers Focusing on Capital Boost: Corporate Canada” (Bloomberg)
- “WHERE ARE THEY NOW? The 12 members of the 1896 Dow Jones Industrial Average” (Business Insider)
- “Battery Hackers Are Building the Future in the Garage” A day trader cannibalized a Tesla to go off the grid. That’s the spirit igniting a revolution in solar energy.
- “Michael Lewis Reflects on His Book Flash Boys, a Year After It Shook Wall Street to Its Core” (Vanity Fair)
Monday March 16th – US Industrial Production
Tuesday March 17th – Canada Manufacturing Sales; US Housing Starts
Wednesday March 18th – US FOMC Interest Rate Decision
Thursday March 19th – US Initial Jobless Claims, US Leading Indicators
Friday March 20th – Canada CPI, Canada Retail Sales
Monday March 16th – None
Tuesday March 17th – Alimentation Couche Tard, Oracle, Fed Ex
Wednesday March 18th – Power Corp, Silver Wheaton
Thursday March 19th – Alaris Royalty, AutoCanada, Nike
Friday March 20th – None
Follow JMRD Wealth Management on Twitter at: https://twitter.com/JMRDwealth or @JMRDwealth