JMRD Market Observer for November 18th, 2016 – JMRD attends Evidence-Based Investment Conference in NY

In This Week’s JMRD Market Observer Market



  • Information Management Network (IMN) Evidence-Based Investment Conference
  • Economics and Strategy Morning Comment
  • JMRD Basket Corner
  • Retirement Corner
  • Reads of the Week
  • Economic Calendar
  • Earnings Reports



IMN Evidence-Based Investment Conference


This past week, Paul and Zach travelled to New York to attend the inaugural Evidence-Based Investing Conference. Evidence-Based Investing (EBI) is a disciplined approach to asset management that combines the data we have from the past and present with honesty about the unknowable future. Where others would use forecasts, relationships or emotions to guide their decisions, practitioners of EBI would substitute facts, logic and reason. The conference included institutional investors, financial advisors, asset managers, index providers, ETF issuers, technology experts and industry thought leaders. As the recent U.S. elections highlighted, there is a lot of ‘noise’ these days which presents a challenge for investors when trying to figure out who to trust, what to invest in, how to allocate their assets and how to reach their goals. The goal of the event was to cut through the hype and focus exclusively on evidence-based investing to give investment decision-makers a better understanding of how to view the financial markets and the various investment strategies at their disposal. For JMRD, this was a very informal and insightful conference to help with the decision making. Unlike, most investment conferences which involve a ‘pitch’ or sales, this was panel-style discussion format which was a terrific way to hear about behavioural investing.



Economics and Strategy Morning Comment


Regime change

U.S. Treasuries continue to sell-off in the aftermath of the U.S. election. The yield on the 10-year Treasury is now back to 2.25%, the level that prevailed at the start of the year. Growth and inflation expectations are being revised up after President-elect Trump pledges to stimulate growth through a combination of tax cuts and infrastructure spending – this is quite the regime change considering that monetary policy was the only game in town to stimulate growth in recent years. Meanwhile, Federal Reserve Vice Chairman Stanley Fischer said Sunday that the central bank has almost reached its goals for maximum employment and price stability, strengthening the case for raising interest rates. “In my view, the Fed appears reasonably close to achieving both the inflation and employment components of its mandate.” A fed rate hike in December appears to be a done deal.


See attached for more details.


Morning Comment



JMRD Basket Corner


DIG Basket


Whitecap (WCP) – Whitecap released its 2017 budget and three-year outlook. The $300 million 2017 budget is in line with our forecast, with average production at 57.0 mboe/d, driving 25% growth year-over-year and FCF of $140 million. The $300 million 2017 budget was in line with the preliminary outlook (disclosed in September), with production set to average 57.0 mboe/d. However, the company’s sustainable three-year outlook is compelling under a bull/bear case which is detailed in the attached report.  See attachment for more details.




All-Cap Growth Basket


Spartan (SPE) – Spartan snaps up Saskatchewan assets from ARC Resources for $700 million


U.S. Growth Basket


Applied Materials (AMAT) – Applied Materials reported F4Q results on Friday. Credit Suisse noted that “From 1997 to 2012, AMAT did not have more than two years of consecutive revenue growth as the industry cyclicality remained dominant. AMAT’s CY16 revenues are up 21% y/y, marking the fourth consecutive year of revenue growth, and CY17E/CY18E appear to be growth years as well. It reminds us of the 90s when AMAT had 10 years of straight growth, new countries were spending on Semiconductor manufacturing, and Semis were growing faster than the GDP – not surprisingly, back then AMAT traded at a significant premium to S&P and Semis. While bears are likely to call it a peak, every year is a peak for a growth company. We expect AMAT along with other front end equipment companies to be able to grow revenues at a >5% CAGR through 2020 (versus historical LT CAGR of 3%-4%), and due to margin leverage, grow earnings at a faster rate. We are increasing Rev/EPS estimates for CY16 and CY17 from $11.5bn/$2.00 to $11.8bn/$2.16 and from $12.3bn/$2.29 to $12.6bn/$2.38 (versus Street at $12.4bn/$2.31). Raising TP to $36 (from $34), representing ~15x CY17E EPS.” After initially selling off by 6% in after-hours trading, the stock recovered and traded at a new year-high on Friday.


Home Depot (HD) – Home Depot beats on earnings, sales; raises full-year EPS guidance



Retirement Corner




Reads of the Week








Economic Reports


Monday November 21st – US Chicago Fed Index

Tuesday November 22nd – Canada Retail Sales; US Existing Home Sales

Wednesday November 23rd – US Durable Goods, US Initial Jobless Claims, US Consumer Sentiment, US New Home Sales

Thursday November 24th – US Thanksgiving – US Markets Closed

Friday November 25th – US Markets open until 1:00 pm EST



Earnings Reports


Monday November 21st – None

Tuesday November 22nd – George Weston, Syncordia

Wednesday November 23rd – Urbana Corp.

Thursday November 24th – None; US Thanksgiving – US Markets Closed

Friday November 25th – None; US Markets open until 1:00 pm EST



Have a good weekend.

By | 2016-11-18T21:24:47+00:00 November 18th, 2016|JMRD Updates|0 Comments

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