Market Commentary Archives
- February 18, 2020:PDF
The Globe & Mail reported that Bill Morneau is warning that the coronavirus outbreak will have a significant impact on the Canadian economy, hitting the tourism and petroleum industries particularly hard. The Finance Minister said he expects the economic fallout from the outbreak, which has killed more than 1,000 people and infected tens of thousands, will be a major topic as he attends meetings in the coming weeks with Group of 20 finance ministers and central bank governors.
- February 10, 2020:PDF
American companies kicked off the year in high style, cranking out 225,000 net new jobs in January 2020. This fits with a spate of other indicators (ISMs, auto sales, consumer confidence) that suggest resilience in the economy.
- February 3, 2020:PDF
Housing markets across the world, from the U.K. to China, are losing steam, holding back prospects for the global economy that last year grew at its slowest rate since the financial crisis. Across 23 countries, an index of inflation-adjusted home prices compiled by the Federal Reserve Bank of Dallas grew 1.8 per cent in the third quarter of 2019 from a year earlier, down from a recent peak of 4.3 per cent in 2016, according to an Oxford Economics analysis.
- January 27, 2020:PDF
Stocks sharply declined early on Monday after more cases of the coronavirus were confirmed over the weekend. This has increased fear over the effect this will have on the global economy and its growth.
- January 17, 2020:PDF
The world economy expanded by just 2.3% last year, its slowest pace in a decade, and could grow by 2.5% in 2020 if downside risks are kept at bay. People in a number of countries, mostly in Latin America and sub-Saharan Africa, will see their incomes stagnate or decline this year, the UN stated. “For this year there is a hope of a pick-up, but downside risks and vulnerabilities remain very significant,” said Richard Kozul-Wright, head of globalization and development strategies at the UN Conference on Trade and Development and co-author of the report.
- January 13, 2020:PDF
The Globe & Mail reported that Canada’s banks are under intense pressure to prove to nervous shareholders that banks are adequately prepared to absorb loan losses when the next economic downturn arrives, according to Bank of Nova Scotia’s chief executive officer.
- January 6, 2020:PDF
Despite this being the year 2020, don’t expect a significant improvement in your vision when it comes to forecasting the economy and financial markets against renewed geopolitical stress. Nonetheless, geopolitical uncertainty is not a sufficient condition to write off risk assets. 2019 was a case in point. Global equity markets had their best performance in a decade in 2019 with the MSCI ACWI Index returning 26.9%.
- December 23, 2019:PDF
A group of global banks, including Barclays, UBS, Citi, JP Morgan and BNP Paribas, were ordered to pay a total of $337 million to settle antitrust claims around the alleged rigging of the $550 billion market for bonds backed by Fannie Mae & Freddie Mac.
- December 13, 2019:PDF
Equifax Canada reported that the average Canadian consumer owed $72,500 in debt at the end of September 2019, an increase of 2.1% compared to the same time last year.
- December 9, 2019:PDF
The Bank of Canada (BoC) left the overnight rate unchanged at 1.75%, and the accompanying communiqué had an optimistic tone. The domestic economy was described in broadly positive terms, and the global economy was seen as stabilizing despite ongoing trade tensions.
- December 2, 2019:PDF
U.S. consumer confidence unexpectedly fell for the fourth consecutive month in November, down 0.6 pts to a 5-month low of 125.5. Despite record highs on Wall Street and still-low rates, the view of the present situation dimmed for the second time in three months
- November 25, 2019:PDF
Google will stop giving advertisers the ability to target election ads using data such as public voter records and general political affiliations. The move coincides with pressure on social media platforms over their handling of political advertising ahead of the U.S. presidential election in 2020.
- November 7, 2019:PDF
Bank of England left rates unchanged at 0.75% but the markets were a little surprised that two members dissented (Michael Saunders and Jonathan Haskel) and voted for a cut. Both cited heightened global risks, Brexit and the soft labour market. GDP forecasts for 2020 were down to 1.2% and 2021 growth forecasts fell to 1.8% from 2.3%.
- November 4, 2019:PDF
EU member states have agreed to grant Britain a three-month flexible delay on its departure from the European Union, European Council President Donald Tusk has tweeted. Envoys representing the 27 remaining European Union members states agreed to the request, which will see the UK leave on January 31, 2020, EU Council President Tusk said on Twitter.
- October 28, 2019:PDF
Bloomberg reported today that Royal Bank of Canada set a goal nine years ago to become a Top 10 investment bank in the U.S. -- but cracking Wall Street’s upper echelons for advising on takeovers had proved elusive.
- October 21, 2019:PDF
BHE Canada, a unit of billionaire Warren Buffet’s Berkshire Hathaway Energy, will start construction on a $200 million wind farm in southeast Alberta next year.
- October 15, 2019:PDF
Linamar Corporation estimated a profit impact of up to $1 million per day due to a fall in orders from its customer General Motors Co. GM workers have been on a two-week long strike, forcing the number one U.S. automaker to halt production at its pickup and transmission plant in Mexico and crippling its operations across North America.
- October 7, 2019:PDF
A random market indicator which has worked amazingly well is the Super Bowl Indicator that says that the stock market’s performance in a given year can be predicted based on the outcome of the Super Bowl of that year. It was “discovered” by Leonard Koppett in the ‘70s when he realized that it had never been wrong, until that point.
- September 30, 2019:PDF
Cruise operator Carnival cut its 2019 profit forecast for the third time as it expects to take a hit from higher fuel prices.
- September 23, 2019:PDF
U.S. housing starts jumped 12.3% in the month, bringing to an end three straight declines, and the largest increase since October 2016 (and that particular surge was a rebound from a few soggy/windy months). The current level of 1.364 million units is the highest since June 2007.
- September 16, 2019:PDF
U.K. wages are rising at their fastest rate in more than a decade and the unemployment rate has fallen to a record low. Latest figures from the Office for National Statistics (ONS) show earnings excluding bonuses growing at an annual pace of 3.8% year/year in the May to July period, down slightly from the previous reading of 3.9% year/year.
- September 9, 2019:PDF
Bank of Canada left the overnight rate unchanged at 1.75% last week. The BoC acknowledged Q2 2019 Canadian GDP growth was better than expected, but thought that some of the strength was temporary, e.g. rebound in energy output and exports. The central bank bemoaned weakness in business investment and consumption and expects economic activity to slow in the second half of the year.
- September 3, 2019:PDF
Canadian economy expanded ahead of the expectations, at an annualized rate of 3.7% in the second quarter, thanks to a jump in goods exports. Exports of goods jumped 3.7% in the second quarter, on higher exports of energy, farm and fishing products, and non-metallic minerals.
- August 26, 2019:PDF
U.S. new home sales plunged 12.8% in July to 635,000 units, annualized, a 2-month low. But note that June was revised up big time, and are now up 20.9% to 728,000 units (was 646,000 units), the highest since July 2007.
- August 19, 2019:PDF
Last week, the Washington Post reported that Denmark’s Jyske Bank has started offering home buyers 10-year mortgages at an interest rate of -0.5 per cent.
- August 12, 2019:PDF
U.K. Employment - The July index of 49.7 (where 50 signals expansion) means permanent placements have now fallen for five months in a row – the sixth time in seven months. The rate of decline was however modest and a slight improvement from June’s 48.7 and May’s 48.5, with Brexit continuing to weigh on hiring decisions.
- August 2, 2019:PDF
U.S. trade deficit shrank less than expected in June and only slightly to $55.2 billion, with both exports and imports retracing prior month gains. The deficit with China remained large but has narrowed this year.
- July 29, 2019:PDF
The International Monetary Fund (IMF) has cut its growth forecasts for the global economy for this year and next. It predicts growth of 3.2% in 2019, down from its April forecast of 3.3%. Growth next year is set to pick up to 3.5% next year, although that is below its earlier forecast of 3.6%.
- July 22, 2019:PDF
BlackRock, Inc., the world’s largest asset manager, took in less cash last quarter as investors moved into lower-cost bond funds and it made less money lending out stocks.
- July 15, 2019:PDF
China’s exports (USD-terms) was slightly better-than-expected at -1.3% year/year in June while the contraction in imports came in at a larger -7.3% year/year. Trade surplus widened to US$50.98 billion from US$41.66 billion in May.
- July 5, 2019:PDF
Canada’s goods trade registers a surplus of C$760 million for May from a revised deficit of C$1.08 billion. The trade surplus with the U.S. registered a surprising C$5.95 billion print. Nominal exports up 4.6% (against imports of 1%) and in real terms, exports were up 4% (against 1.2% gain in imports).
- June 28, 2019:PDF
U.S. new home sales unexpectedly fell for the second month in a row, down 7.8% in May to 626,000, the lowest since December. Revisions to the prior 2 months were, on net, lower.
- June 24, 2019:PDF
Oracle Corporation forecast current-quarter profit above estimates, as the business software maker benefited from demand for its on-premise IT, cloud services and license support businesses. The company said, assuming currency headwind, it expected first-quarter adjusted profit to be between 80 cents and 82 cents per share.
- June 17, 2019:PDF
U.S. retail sales jumped 0.5% in May, meeting expectations. But perhaps the better news came from the significant revisions for the past couple of months. March’s already strong 1.7% rise was revised to 1.8%, and April’s decline was erased to reflect a 0.3% increase. This once again shows how one should never get too comfortable with any economic data release as revisions can change the picture a great deal.
- June 10, 2019:PDF
The global economy is weakening, according to a new assessment from the World Bank. The Bank said it now expects growth of 2.6% for 2019 edging up to 2.7% the following year. The slowdown is widespread, according to the Bank’s economists, affecting many countries.
- June 3, 2019:PDF
The Canadian economy advanced by 0.4% in the first quarter, a modest pace of improvement, falling short of the already low expectations for a 0.7% increase, with March being the stronger of the three months surveyed. A strong quarter in the consumer sector and business activity was offset by weakness in residential construction and a drop in net exports.
- May 27, 2019:PDF
U.K. inflation jumped above the Bank of England’s target of 2% in April, fueled by rising prices for air fares, gasoline and household electricity and gas. Consumer prices were 2.1% year/year higher than a year ago, as well as higher than March’s reading of 1.9% year/year.
- May 21, 2019:PDF
Google LLC announced an expansion of its advertising real estate to boost revenue from mobile shoppers. It will feature ads on the homepage of its smartphone app worldwide, show more ads in Maps and place ads with image galleries in search results.
- May 13, 2019:PDF
After weeks of negotiations with Beijing and indications that a trade deal was in the making, President Trump suddenly decreed a tariff hike to 25% from 10% on $200 billion of Chinese imports, effective May 10.
- May 6, 2019:PDF
Stock Markets fell on Monday on the U.S. President Donald Trump’s trade tweets over the weekend. Trump threatened to raise tariffs from 10% to 25% on $200 billion of China’s exports to the U.S. The U.S. is still unhappy that China demands a very broad and immediate rollback of Special 301 tariffs without offering more concessions on enforcement, or China’s own tariffs.
- April 29, 2019:PDF
AT&T Inc. reported first quarter results, which included total revenue for the quarter up nearly 18% to $44.83 billion, just shy of the expectations for $45.11 billion. AT&T lost a net 544,000 premium TV subscribers, a category that includes DirecTV satellite and U-verse television customers.
- April 22, 2019:PDF
U.K. Wage growth at decade high - According to the latest Office for National Statistics, labour conditions within the jobs market remained tight with employment growing by 179,000 in the three months to February.
- April 15, 2019:PDF
The global economy is at what the International Monetary Fund (IMF)’s chief economist calls a “delicate moment”. Gita Gopinath says that while she does not predict a global recession, “there are many downside risks”.
- April 8, 2019:PDF
The Globe & Mail reported on April 7, 2019 that Canada’s commercial real estate market is defying expectations, as investors buy skyscrapers in Vancouver, Toronto and Montreal to capitalize on surging demand by tenants for prime urban space.
- April 1, 2019:PDF
U.S. housing starts fell 8.7% to a 2-month low of 1.162 million units in February 2019. Easing some of that sting were the upward revisions to the prior two months, and the fact that February was a terrible month for weather.
- March 25, 2019:PDF
The EU granted an extension to April 12th but by then the U.K. Parliament has to decide if it wants to go with Prime Minister May’s deal and exit on May 22, 2019 or come up with other alternatives that may include, no-deal Brexit, re-negotiate a more detailed exit plan with a longer delay, another Brexit vote or cancelling Article 50 altogether.
- March 18, 2019:PDF
Greece has entered a period of economic growth that puts it “among the best performers in the eurozone”. That rather striking judgement comes from the International Monetary Fund (IMF) in a new report on the Greek economy. A senior IMF official said there were a lot of positive developments to point to.
- March 11, 2019:PDF
The outlook for the U.S. economy has softened and there may be a more persistent slowdown on the cards overseas, bolstering the need for a period of “watchful waiting” on interest rates, a senior Federal Reserve policymaker said.
- March 4, 2019:PDF
China Economy - The Caixin Purchasing Manufacturers’ Index (PMI) jumped to 49.9 last month — close to the 50 mark that divides expansion and contraction — and soundly beating the consensus of 48.5. Similar to recent signals in the official PMI data, the forward-looking new orders showed a strong rebound, Bloomberg Economics said.
- February 25, 2019:PDF
U.S. Business activity remains robust in the U.S., with durable goods orders advancing by 1.2% in December, just shy of the expectations for a 1.5% improvement.
- February 19, 2019:PDF
Germany’s economy just about avoided falling into recession during the final three months of last year. The German economy registered zero growth during the fourth quarter of 2018, the country’s Federal Statistics Office said.
- February 11, 2019:PDF
The Bank of England expects growth this year to be the slowest since 2009 when the economy was in recession. It is forecasting growth of 1.2% this year, down from its previous forecast of 1.7% made in November.
- February 4, 2019:PDF
U.K. Brexit Update - The Brexit train rolled on last week with the U.K. parliament conducting a debate and series of votes on possible deal options.
- January 28, 2019:PDF
Sales of previously owned homes in the US fell more than expected last month to the lowest level since November 2015, data on Friday showed.
- January 21, 2019:PDF
Royal Bank of Canada (RBC) has become the first of the major banks to lower its posted interest rate for five-year fixed-term mortgages, a move that has been widely anticipated amid tumbling bond yields.
- January 14, 2019:PDF
The World Bank cut its forecast for the global economy as slowing growth in trade and investment and rising interest rates sapped momentum, especially in emerging markets, according to the development lender’s semi-annual update to its global outlook.
- January 7, 2019:PDF
Toronto, Vancouver Housing Sales Plummet to Decade-Lows in 2018 after new data was released from the Toronto Real Estate Board, Bloomberg highlighted that higher borrowing costs and stricter mortgage rules dampened real estate sales.
- December 17, 2018:PDF
U.S. industrial production jumped 0.6% in November, tripling expectations and the biggest gain in three months.
- December 10, 2018:PDF
Statistics Canada outlined that Canada created 94,100 jobs on stronger full-time hiring and said the jobless rate had fallen to 5.6%. Analysts in a Reuters poll had forecast 11,000 new positions.
- December 3, 2018:PDF
Alberta Premier Rachel Notley announced that the Western Canadian province would mandate temporary oil production cuts to deal with a pipeline bottleneck that has led to a glut of crude in storage and driven down Canadian crude prices.
- November 26, 2018:PDF
Retail sales in Canada advanced slightly ahead of the expectations for the month of September, up 0.2%, driven chiefly by a strong month of auto sales.
- November 19, 2018:PDF
U.K. business, having breathed a huge sigh of relief on Wednesday after the cabinet approved the draft Brexit withdrawal agreement, expressed horror on Thursday as political turmoil threatened to derail it, and the spectre of a “no deal” Brexit rose once more.
- November 12, 2018:PDF
European financial regulators are discussing whether to supervise big technology companies more closely in response to recent moves into financial services by groups such as Amazon.com Inc. and Google (Alphabet Inc.), according to one of Europe’s most senior central bankers.
- November 5, 2018:PDF
Friday’s (November 2) October U.S. labor market report exceeded expectations as job creation (as indicated by the non-farm payrolls or NFP) came in strongly at 250,000 (well above Bloomberg’s median forecast of 200,000).
- October 24, 2018:PDF
The Bank of Canada raised rates to 1.75% as was widely expected, but removed the reference to a gradual pace of rate hikes (though they are holding on to their mantra for data dependence). Currently we look for the next Bank of Canada rise in January, with follow up increases in July and October 2019.
- October 22, 2018:PDF
We were delighted last week to receive three awards at the 2018 Canadian Hedge Fund Awards, the highest honour in Canada’s hedge fund industry.* The Annual Canadian Hedge Fund Awards celebrate the talent and accomplishments of Canada’s hedge fund industry and help investors identify the most exceptional hedge funds, recognizing winners in five categories.
- October 15, 2018:PDF
The Globe & Mail reported last week that notoriously indebted Canadian households are finally addressing their financial health, but while this is a positive for the economy’s long-term outlook, it will not be without economic pain that is already visible in cratering auto-sales data.
- October 9, 2018:PDF
Canadian employment surged 63K in September according to the Labour Force Survey, above consensus which was looking for a 25K print. The participation rate rose to 65.4% (from 63.4%) but that didn’t prevent the unemployment rate from dropping to 5.9%, courtesy of the large job gains.
- October 1, 2018:PDF
U.S.-Mexico-Canada - After 13 months we have an agreement to replace NAFTA. Talks nearly went down to last night’s deadline for submitting an in-writing deal to Congress, but the U.S. and Canada have agreed in principle on a new deal, which both leaders have endorsed.
- September 24, 2018:PDF
Barrick Gold Corporation (ABX) and Randgold Resources Ltd. (GOLD) Merger - $18.3 billion All-Stock, No Premium Mega-Merger: Barrick Gold and Randgold Resources have reached an agreement on terms of a recommended share-for-share merger (a “no premium merger of equals”), whereby each GOLD Shareholder will receive 6.1280 New Barrick Shares for each Randgold Share.
- September 17, 2018:PDF
ING Groep N.V., the Dutch bank, will start assessing its $600 billion lending portfolio based on climate impact, a first step in shifting the entire portfolio to align with the emissions reductions required by the Paris climate agreement. The policy, the first of its kind for a big bank, will include putting pressure on clients whose businesses do not conform with the climate goals of the agreement.
- September 10, 2018:PDF
Facebook Inc. said it will invest more than $1 billion to build its first data centre in Asia in Singapore, slated to open in 2022. Facebook’s facility will be located in the west of the island, near where Google (Alphabet Inc.) is expanding its Singapore data centres in an $850 million investment as mobile growth, e-commerce and cloud computing demand rise across the region.
- September 4, 2018:PDF
Canada’s GDP expanded at an annualized pace of 2.9% in the second quarter of 2018. Trade contributed to growth for the first time in a year thanks to surging exports. Domestic demand was also well supported courtesy of a healthy contribution from consumption spending, as well as gains for residential investment, government expenditures and business investment.
- August 27, 2018:PDF
U.S. stocks have now achieved the longest-ever bull run, making the post-financial crisis rally the longest stretch of rising prices without a 20% drop, the level typically associated with a bear market. The rally has continued despite rising global tensions, protectionist policies and the Federal Reserve raising interest rates.
- August 20, 2018:PDF
Venezuela performed one of the greatest currency devaluations in history over the weekend with a 95% devaluation of the Bolivar. The official rate will go from 285,000 per dollar to 6 million per dollar. The government is redenominating the currency as well by lopping off five zeros and introducing a new name for the currency.
- August 14, 2018:PDF
Turkey President Erdogan failed to smooth markets over the weekend and said that the U.S. is seeking to “stab it in the back” after the U.S. imposed sanctions last week when Turkey failed to extradite a U.S. Preacher imprisoned in the country.
- August 7, 2018:PDF
U.K. Consumer spending grew +5.0% year/year in July 2018, according to the latest Barclaycard data. This is the third consecutive month with spending growth over +5.0%, which is the strongest consistent growth in our data history.
- July 23, 2018:PDF
Canadian retail sales rose 2.0% in May, more than erasing the prior month’s decline. Sales were up in 8 of the 11 subsectors, including a 3.7% jump for autos/parts dealers.
- July 16, 2018:PDF
U.S.A. vs. China - Following China’s tit-for-tat response to U.S. trade tariffs of 25% on USD $34 billion worth of Chinese imports which took effect Friday July 6, U.S. President Trump returned the serve by instructing the U.S. Trade Representative to release a new round of 10% tariffs on new list of Chinese goods valued at USD $200 billion.
- July 9, 2018:PDF
Canada’s labour force expanded by 75,600 in June, the biggest one-month increase in six years, Statistics Canada reported. With less than half of new job seekers finding work, the labour force increase boosted the unemployment rate to an eight-month high of 6%.
- July 3, 2018:PDF
S&P Global Ratings raised long-term debt rating on Greece as it sees reduction in debt risks due to creation of cash buffers and extension of maturity on its debts. The rating agency raised its long-term foreign and local currency sovereign credit ratings on Greece to ‘B+’ from ‘B’.
- June 25, 2018:PDF
U.S. housing starts rebounded 5% in May to an 11-year high of 1.35 million units annualized, well above the consensus call for a 1.9% increase. And, the increase was supported by a 2nd gain in a row for singles.
- June 18, 2018:PDF
U.S. Retail sales increased 0.8% in May, doubling market expectations and rising the most in six months, following an upwardly-revised 0.4% advance in the prior month. The gains were spread among 10 of 13 major categories, led by increases in clothing, restaurants and even beleaguered department store items.
- June 11, 2018:PDF
U.S. trade deficit narrowed more than expected and for the second straight month in April, albeit from multi-year highs in February. The deficit fell by a billion dollars to $46.2 billion, putting it just below the past-year mean.
- June 4, 2018:PDF
Bank of Canada left the overnight rate unchanged at 1.25% last week. The central bank acknowledged Q1 Canadian GDP growth was probably higher than the 1.3% it had forecasted back in April thanks to more robust exports and investment. The Bank of Canada also said that because of rising gasoline prices, it now expects inflation to be a bit higher in the near term than what was forecasted back in April.
- May 28, 2018:PDF
U.S. durable goods orders were down 1.7% in April, exceeding the expected 1.4% pull-back. The drop was chiefly driven by the notoriously bulky orders in aircraft production. The core figure, which excludes orders in the defence industry as well as orders in the transportation sector, was actually up 1.0%, ahead of the expectations for a 0.7% advance.
- May 22, 2018:PDF
Canada homes resales fall in April, lowest in over five years: Last week, Reuters highlighted a report from the Canadian Real Estate Association (CREA) showing resales of Canadian homes fell 2.9% in April, to the lowest level in more than five years.
- May 14, 2018:PDF
Private sector employment rose by the biggest amount since November of last year. The tilt towards full-time jobs is also encouraging and largely explains the uptrend in wage inflation. On a 12-month average basis, total employment creation is running at a healthy 23,000 jobs/month, with more than half of that tally coming from the private sector.
- May 7, 2018:PDF
Canada’s real GDP rose 0.4% in February, more than making up for January’s contraction and topping consensus which was expecting a +0.3% print. That’s the biggest monthly increase since May last year. Services-producing industries saw a 0.1% increase in output courtesy of solid contributions from retail, finance/insurance which offset declines in wholesale and real estate.
- April 30, 2018:PDF
Bloomberg reported last week that new mortgage rules are pushing more home buyers to alternative lenders... Alternative lenders are playing a growing role in Canada’s real estate market as the industry searches for new sources of financing, risk-averse banks become more picky, and investors look for yield.
- April 23, 2018:PDF
A hotel in British Columbia has officially lifted its ban on a former customer who caused a notorious incident 17 years ago involving a suitcase full of warm pepperoni and a flock of seagulls.
- April 16, 2018:PDF
U.S. retail sales rose 0.6% in March, beating expectations which were looking for 0.4%. Sales of motor vehicles and parts rose for the first time in five months, climbing 2.0% on a monthly basis.
- April 9, 2018:PDF
Oracle Corporation as reported by Bloomberg, Oracle Corp. chief executive Safra Catz criticized the bidding process for a huge Pentagon cloud computing contract in a private dinner with President Donald Trump, complaining that it seemed designed for Amazon.com, Inc., to win.
- April 2, 2018:PDF
The Wall Street Journal reported that Walmart is in preliminary talks to buy Humana Inc. Humana is among the top 5 largest health insurers in the country and its Pharmacy Benefits Manager – Humana Pharmacy Solutions - is also among the largest – filling an estimated 439 million prescriptions in 2017 (per Humana April 2017 Investor Day).
- March 26, 2018:PDF
U.S. existing home sales bounced back 3.0% in February, beating expectations for about a 0.5% rise and the first increase in three months. The 5.54 million level (annualized) is only a 2-month high but the upward trend remains intact. Sales of single-family homes were snapped up (+4.2%).
- March 12, 2018:PDF
The European Union has proposed making it a formal requirement for asset managers to consider “sustainability” when picking investments. The E.U. wants more money going into sustainable and “green” projects that help cut greenhouse gas emissions, as part of a wider “capital markets union” project to expand funding from financial markets for companies and growth.
- March 5, 2018:PDF
We attended the EnTrustPermal’s 10th Annual Investment Summit last week. We were pleased to hear most of the investment themes we have been espousing for years at Portland being reinforced as top of mind for some of the world’s most renowned (mostly activist) investors.
- February 26, 2018:PDF
Berkshire Hathaway Inc. posted a record $44.94 billion annual profit, though $29.1 billion stemmed from the slashing of the U.S. corporate tax rate, which reduced the Omaha, Nebraska-based conglomerate’s deferred tax liabilities.
- February 20, 2018:PDF
U.S. housing starts beat expectations with a 9.7% jump to 1.326 million units annualized in January, the 2nd highest level in 10½ years (or, more specifically, August 2007).
- February 12, 2018:PDF
U.S. energy companies added 26 oil rigs this week, boosting the count to 791, its highest since April 2015. The U.S. Energy Information Administration in February projected U.S. production would rise to a record high annual average of 10.6 million barrels per day (bpd) in 2018 and 11.2 million bpd in 2019, up from 9.3 million bpd in 2017.
- February 5, 2018:PDF
The Eurozone’s economy grew at its fastest pace for a decade in 2017, according to official figures. The economy of the 19-nation bloc grew by 2.5% last year, according to Eurostat, the strongest growth since the 3% rate seen in 2007.
- January 29, 2018:PDF
Core retail sales, which excludes sales of vehicles and parts, jumped by 1.6%, ahead of the expectations for a 0.8% advance. Sales of electronics led in the month, supported by clothing, sporting goods and general merchandising.
- January 22, 2018:PDF
U.S. government shutdown will cause the release of any data compiled by the federal government to be postponed. Data from the Federal Reserve Board or the regional Federal Reserve banks will not be impacted, nor will private sector releases.
- January 15, 2018:PDF
Canada’s mortgage-rate trendsetter, Royal Bank of Canada, hiked its posted five-year fixed mortgage rate Thursday. Government regulations now force most Canadians to prove they can afford much higher rates before getting approved for a mortgage called ‘stress testing’.
- January 8, 2018:PDF
Employment in Canada surprisingly expanded by 78,600 positions in December, as the expectations were only factoring in about 1,000 jobs added in the month.
- December 18, 2017:PDF
Japan exports continued to grow at double-digit pace at 16.2% year/year in November (up from 14% in October). This was the 12th consecutive month of export expansion since November 2016.
- December 11, 2017:PDF
Canada housing starts in Canada jumped to 252,200 units annualized in the month of November, from 222,800 units annualized in October and against the expectations for a pull-back to a 215,000 units annualized read. The starts growth was driven by the multi-units segment, in particular in Ontario.
- December 4, 2017:PDF
Canadian economy added 79,500 jobs in November, significantly outpacing the expectations for 10,000 job gains and October’s 35,300 positions. The job gains were driven by retail, manufacturing, education and construction.
- November 27, 2017:PDF
Paris has won a battle to host the European Banking Authority (EBA), which will relocate from London after the UK leaves the European Union.
- November 20, 2017:PDF
Venezuela has suffered what is expected to be the first in a cascade of defaults on more than US$60 billion in international bonds after missing several interest payments.
- November 13, 2017:PDF
Brookfield Property Partners L.P. (BPY): Bidding U$23/share for the 66% of GGP Inc. it does not own for a Transaction Value of U$14.8 Billion.
- November 6, 2017:PDF
Canadian rig count increased by 2 rigs week/week, and is up 26% from the level this time last year.
- October 26, 2017:PDF
U.S. durable goods orders, a key indicator of U.S. business activity, advanced 2.2% in September, well ahead of the expected 1.0% improvement and building on August’s robust 2.0% growth.
- October 16, 2017:PDF
Alphabet Inc. – Lyft Inc. has raised $1 billion in fresh financing in a round led by one of Alphabet’s investment funds, further complicating the convoluted world of ride-hailing alliances and dealing a blow to rival Uber Technologies Inc.
- October 16, 2017:PDF
Bank Of Canada Governor Poloz says there is “comfort” that the global economy continues to improve and that Canada has led the Group of Seven in growth.
- October 10, 2017:PDF
Canadian rig count is up 28% from this time last year.
- September 29, 2017:PDF
Dufry AG will open a new downtown retail store at Genting Highlands, which is an entertainment and shopping resort close to Kuala Lumpur. The 1,146m2 store represents 3.7% of the total retail space in Asia/Middle East and is the first store in Malaysia.
- September 25, 2017:PDF
Carnival Corporation – Fincantieri, leader in cruise ship design and construction, and Carnival Corporation & plc, the world’s largest cruise company, announced the signing of a memorandum of agreement (MoA) for the construction of one next-generation cruise ship for the iconic luxury brand Cunard.
- September 18, 2017:PDF
Bitcoin “is a fraud” and will blow up, Jamie Dimon, chief executive of JPMorgan, said last Tuesday. Speaking at an investor conference in New York, Dimon said, “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.”
- September 11, 2017:PDF
Alphabet unit Google appealed against a record €2.4 billion EU antitrust fine, its chances of success boosted by Intel’s partial victory last week against an EU sanction.
- August 31, 2017:PDF
Warren Buffett celebrated his 87th birthday by going on record on CNBC on a number of topics related to recent developments and portfolio decisions.
- August 28, 2017:PDF
Oracle Corporation this year is hiring more than five-thousand new engineers, consultants, sales and support people into its rapidly growing cloud business. This injection of talent will help Oracle sustain the momentum in what is already the world’s fastest growing multi-billion dollar cloud business.
- August 21, 2017:PDF
U.S. industrial production, rose 0.2% in July, slightly below expectations and following an unrevised 0.4% gain in June. Manufacturing, the biggest component of overall production at approx. 75%, slipped 0.1% in the month, the first drop since May, held back by declines in machinery and autos.
- July 27, 2017:PDF
Alphabet Inc. reported a 21% jump in quarterly revenue, maintaining a growth rate that is rarely seen among companies its size. Alphabet, the owner of Google and YouTube, said it made $3.5 billion in net income on sales of $26 billion.
- July 24, 2017:PDF
The Globe & Mail reported last Monday that house sales fell in a majority of markets across Canada in June.
- July 17, 2017:PDF
The Bank of Canada raised interest rates last Wednesday, as expected, citing more confidence in its outlook and a need to look through soft inflation, but said future moves will depend on data amid uncertainty and financial system vulnerabilities.
- July 10, 2017:PDF
Canada Employment rose a hefty 45,300, lifting the 12-month gain to a significant 350,000 and trimming the jobless rate to match the cycle-low of 6.5%.
- June 30, 2017:PDF
Alphabet Inc. (GOOGL) – Not surprisingly, the largest EU regulatory fine has seen a lot of press. At its face value, a $2.7 billion cash fine is an impact of just over 40 basis points (bps) relative to GOOGL’s market capitalization.
- June 26, 2017:PDF
Canadian retail sales significantly outperformed expectations for a 0.20% advance for the month of April, growing by 0.8%, on top of March’s 0.50% strong showing.
- June 19, 2017:PDF
Eurozone governments threw Greece another 11th-hour credit lifeline on Thursday worth $9.5 billion and sketched new detail on possible debt relief as the IMF finally offered to help out after two years of hesitation.
- June 12, 2017:PDF
An anonymous fan of Warren Buffett agreed to pay $2,679,001 at an online charity auction to have lunch with the billionaire chairman of Berkshire Hathaway.
- June 5, 2017:PDF
Pattern Energy Group Inc. has inaugurated the 324MW Broadview Wind power unit and 35-mile, 345kV Western Interconnect transmission line in U.S. Broadview Wind unit in U.S. states of Texas and New Mexico is supplying clean energy to California though the Western Interconnect transmission line.
- May 29, 2017:PDF
Canadian oil rig count increased by 7 rigs, and is up 114% from the level this time last year.
- May 23, 2017:PDF
A Google artificial intelligence program defeated a Chinese grand master at the ancient board game Go, a major accomplishment for the firm’s AI ambitions as it looks to woo Beijing to gain re-entry into the country.
- May 15, 2017:PDF
Prime Minister, Justin Trudeau is setting up his new infrastructure bank in Toronto. The bank will “build more infrastructure for Canadians that will create growth and equip our communities for a more sustainable and productive future.”
- May 8, 2017:PDF
The French election Emmanuel Macron defeated Marine Le Pen by 66% to 34%. Macron who is 39 will be the youngest President in the 59-year history of France’s Fifth Republic.
- May 1, 2017:PDF
U.S. new home sales jumped 5.8% to 621,000 annualized in March, more than expected, to the second highest level in nearly a decade from a downwardly-revised tally in February.
- April 24, 2017:PDF
U.S. manufacturing production, which makes up 75% of total industrial production, unexpectedly fell 0.4% in March. Excluding motor vehicles & parts, production jumped 0.8%, the most in three years.
- April 18, 2017:PDF
The U.S. consumer sentiment, meanwhile, bounced back in April, against expectations for weakening during the month.
- April 10, 2017:PDF
Just released, the Canadian housing starts jumped in March, to a 253,700 units annualized level, from 214,300 units in February surprising the economists which were expecting a flat reading for the month. Growth in the units started has been broadly distributed geographically, with most of the increase being driven by condo starts.
- April 3, 2017:PDF
Canada January GDP Jumps by 0.6% on Widespread. According to Statistics Canada, the increase, the seventh in the past eight months, was greater than the 0.3% advance forecast by analysts in a Reuters poll.
- March 27, 2017:PDF
Royal Bank of Scotland says branch transactions are down 43% since 2010; online and mobile increased >400%.
- March 13, 2017:PDF
Canada’s foreign trade balance improved to a $0.81 billion surplus in January, from a $0.45 surplus in December.
- March 6, 2017:PDF
The U.S. 2 year/10 year treasury spread is now 1.18% and the U.K.’s 2 year/10 year treasury spread is 1.10% - meaning investment banks remain constrained from profiting from a steep yield curve and instead are seeking operational efficiencies.
- February 27, 2017:PDF
U.S. existing home sales exceeded expectations. Sales jumped 3.3% (biggest monthly increase in over a year) in January to a decade-high (or February 2007) 5.69 million units annualized.
- February 21, 2017:PDF
U.S. land rig count increased by 13 rigs week/week to 730 rigs, up 96 rigs in the last five weeks and is up 95% off the May 2016 trough.
- February 13, 2017:PDF
Canadian economy added 48,300 new jobs in January, surprising on the upside, as 15, 800 full-time and 32,400 part-time positions were added during the month.
- February 6, 2017:PDF
The Eurozone’s economy is showing signs of recovery after the latest data pointed to a fall in unemployment while growth and inflation picked up.
- January 30, 2017:PDF
Japan’s exports expanded more than expected at 5.4% year/year in December (from -0.4% in Nov, and above forecast of +1.1%), the first year/year expansion after a 14-month slump and best reading since July 2015 while imports retreated at a much slower pace of -2.6% year/year in December (from -8.8% in Nov.), the smallest contraction since the last positive number of +1.9% in December 2014.
- January 23, 2017:PDF
Retail sales in Canada fell short of expectations for the month of November, at 0.2% increase relative to 0.5% advance expected. Part of the weakness was also due to significant discounting in the month proceeding the holidays.
- January 16, 2017:PDF
U.S. retail sales grew 0.6% in December, not far from expectations while November was revised up slightly. Much of the gain stemmed from a 2.4% jump in autos (an industry which saw another year of record sales).
- January 9, 2017:PDF
U.S. Nonfarm payrolls rose 156,000 in December, extending the longest unbroken string of monthly advances since record-keeping began in 1939, While the headline figure fell short of expectations (around 175,000), a two-month upward revision of 19,000 suggests the report is a wash.
- December 22, 2016:PDF
Broadband internet access will be considered a basic service in Canada, the country’s telecom regulator ruled, paving the way for universal access to high-speed services in rural and isolated areas of the country.
- December 19, 2016:PDF
U.S. industrial production headline reduced by 0.4% mainly due to the volatile utilities sector. Remember, this was the second warmest November in nearly a century, and that held utilities back 4½% in the month.
- December 12, 2016:PDF
Reuters highlighted that in the Bank of Canada’s (BoC) rate decision to hold the overnight rate unchanged, the central bank pointed to a ‘significant’ amount of slack in the Canadian economy.
- December 5, 2016:PDF
Italian Prime Minister Matteo Renzi said he would resign after suffering a crushing defeat on Sunday in a referendum on constitutional reform, tipping the euro zone’s third-largest economy into political turmoil.
- November 28, 2016:PDF
Retail sales in Canada advanced by 0.6% in September, much as expected, driven chiefly by strong auto sales.
- November 21, 2016:PDF
The Bank of Japan (BOJ) announced its first operations to purchase an unlimited amount of Japanese government bond (JGB) in a bid to re-assert the central bank’s control of the yield curve.
- November 11, 2016:PDF
Donald Trump’s victory this week creates numerous opportunities and potentially risk for financial stocks but which remain unclear at this stage.
- November 7, 2016:PDF
Berkshire Hathaway Inc. reported third-quarter profit dropped 24% than the prior year, when it recorded a large one-time gain, but acquisitions helped boost operating profit at the conglomerate run by billionaire Warren Buffett.
- October 31, 2016:PDF
The U.S. economy rebounded smartly in the third quarter, which we think keeps the Federal Reserve on track for a year-end rate hike.
- October 24, 2016:PDF
Britain could slash corporation tax to 10% if the European Union refuses to agree a post-Brexit free trade deal or blocks UK-based banks from accessing its market.
- October 17, 2016:PDF
Bank of America Corporation reported earnings per share of $0.44, well above consensus. Investment Banking/trading results stood out in our view. Core trading (ex. Debt Value Add /Counterparty Value Add) increased 18% Year-on-Year, with Fixed income, currency and commodities up 39% and equities down 17%.
- October 6, 2016:PDF
Citigroup Inc. is investing another $1 billion in its Mexican bank and renaming it Citibanamex in the strongest signal from management that the business is worth keeping for the long run.
- September 30, 2016:PDF
OPEC lines-up production cut – Just when everyone least expected, OPEC (Organization of the Petroleum Exporting Countries) managed to reach an agreement, albeit preliminary, for a production target of 32.5 to 33 million boed (barrels of oil equivalent per day).
- September 26, 2016:PDF
Barclays Plc - Offers to buy back 8 bonds worth as many as $2.1 billion as part of program to shift debt to holding co. level as required by regulators. Deadline is 5 p.m. ET, Sept. 27. Repurchase offer includes issue of £455 million of 5.75%, Fixed Rate Subordinated Notes due 2026; and $414 million Undated Floating Rate Primary Capital Notes Series 2.
- September 19, 2016:PDF
Citigroup Inc. said its trading revenue is performing above expectations so far in the third quarter. CFO John Gerspach, speaking at a financial-services conference last Wednesday, said that trading revenue would be up by mid-single digits compared to a year ago, driven by strength in rates and currencies.
- September 12, 2016:PDF
Barclays PLC has struck a landmark deal with the Commonwealth Bank of Australia that will allow millions of its customers to send nearinstant payments across the world using a mobile phone number. Individuals will be able to transfer money between the UK and Australia through their mobile payment apps.
- September 6, 2016:PDF
Bank of Nova Scotia, Canada’s third-biggest lender, has pulled back on mortgage lending in its domestic market, potentially insulating itself if house prices fall in Vancouver and Toronto. Canada’s banks face heightened scrutiny of their mortgage underwriting practices as authorities try to tackle the potential threat of a housing bubble in the two cities, where prices have soared.
- August 26, 2016:PDF
Barclays PLC has announced that it completed the sale of Barclays Risk Analytics And Index Solutions Ltd. to Bloomberg L.P. for approximately £615 million. Pre-Tax gain recognised on completion of transaction is approximately £535 million.
- August 19, 2016:PDF
HSBC Holdings Plc bought back 1.45 million shares, repurchasing the London-listed shares at £5.42-£550 each, according to statement to London stock exchange Monday.
- August 12, 2016:PDF
Brookfield Asset Management Inc. (BAM) reported second quarter results which exceeded expectations in terms of funds from operations (FFO) generation. Bruce Flatt, CEO of Brookfield, stated, “Our diversified real asset strategies are performing well and we continue to see growing demand from investors, as evidenced by the closing on a record $27 billion of capital for our most recent series of flagship funds.
- August 8, 2016:PDF
Three of the U.K.’s biggest banks face extra charges of about £1.5 billion ($2 billion) after the Financial Conduct Authority (FCA) said it will probably delay a deadline on payment protection insurance complaints by a year.
- July 29, 2016:PDF
First National Finance Corporation reported Q2 2016 core EPS of $0.79 compared to consensus of $0.70. We believe stronger-than-expected mortgage servicing income from third-party underwriting and fulfillment processing services is the key takeaway from second quarter results.
- July 25, 2016:PDF
Citizens Financial Group Inc. reported Q2 Earnings Per Share (EPS) of $0.46, beating consensus at $0.43. Higher net interest and non-interest income was partially offset by higher expenses than expected (likely driven in part by revenue strength).
- July 18, 2016:PDF
Bank of America Corporation reported Earnings Per Share of $0.36, which adjusts to ~$0.40 (after negative adjustments for Financial Accounting Standards 91 and Debt Value Adjustments). Core Net Interest Income was down 1% Quarter-on-Quarter (Q-Q) as the Net Interest Margin dropped 7bp, but the balance sheet grew.
- July 11, 2016:PDF
Berkshire Hathaway Inc. – Brooks Sports Inc., the running brand owned by Warren Buffett’s Berkshire Hathaway, believes that the U.S. marathon boom has peaked and it is looking to broaden its appeal to a younger gym generation according with an interview with Jim Weber, the company’s chief executive, published by Reuters.
- July 4, 2016:PDF
Berkshire Hathaway Inc. is seeking permission from the Federal Reserve to increase its ownership stake in Wells Fargo & Company, after reaching the 10% level that could prompt increased regulatory scrutiny.
- June 24, 2016:PDF
UK decides to leave European Union: Firstly, I was wrong in thinking the undecided camp would be the swing vote (ie. Expats and younger voters being pro-EU but Brexit voters overall were much stronger than polls showed). Britain has voted to leave the EU, a stunning repudiation of the nation’s elites that deals the biggest blow to the European project of greater unity since World War Two.
- June 20, 2016:PDF
Brookfield Asset Management Inc. (BAM) today announced the completion of the spin-off of Brookfield Business Partners L.P. (BBU), the primary public vehicle through which Brookfield will own and operate the business services and industrial operations of its private equity group on a global basis.
- June 10, 2016:PDF
JPMorgan Chase & Co. Chairman and Chief Executive James Dimon warned that the bank could cut jobs in the U.K. and shift positions to elsewhere in Europe in the event of a vote to leave the European Union.
- June 6, 2016:PDF
Bank of America Corporation’s U.S. Trust business plans to add more than 100 financial advisers who cater to the super-rich as part of its strategy to grow wealth-management revenue, a U.S. Trust executive said last Tuesday.
- May 30, 2016:PDF
Bank of Canada left rates unchanged at 0.5% as expected. The Bank remains optimistic on a U.S. recovery and says the wildfires could knock off 1.25% from GDP growth.
- May 24, 2016:PDF
Sixteen of the world’s largest banks including JPMorgan Chase & Co. and Citigroup Inc. must face antitrust lawsuits accusing them of hurting investors who bought securities tied to Libor by rigging an interest-rate benchmark.
- May 16, 2016:PDF
U.S. retail sales beat expectations in April, surging 1.3% in the month, the biggest monthly advance since March 2015. Autos were the big contributor as unit sales hit a record high for that month.
- May 9, 2016:PDF
Last Friday, Reuters highlighted employment data from Statistics Canada that outlined that the Canadian labor market stalled in April, leaving the unemployment rate unchanged at 7.1%, while job losses in Alberta showed the province was continuing to struggle with the fallout of cheaper oil. Canada lost 2,100 jobs last month, Statistics Canada said on Friday, below economists’ forecasts that the labor force would be unchanged.
- May 2, 2016:PDF
Berkshire Hathaway Inc.’s annual meeting in summary: 1) Warren Buffett is open to additional (perhaps multiple) acquisitions in the $10-$30 approximately range.
- April 25, 2016:PDF
Influenced by the withdrawal of quantitative easing, the U.S. 30 year mortgage market rate has increased to 3.59% (was 3.31% end of November 2012, the lowest rate since the Federal Reserve began tracking rates in 1971).
- April 18, 2016:PDF
The new housing price index in Canada beat the expectations in February, improving 0.2% in the month, and building on January’s 0.1% advance.
- April 11, 2016:PDF
Oversea-Chinese Banking Corporation Limited (OCBC) has agreed to buy Barclays’ wealth management operations in Singapore and Hong Kong for $320 million, its second major private banking deal since 2009.
- April 4, 2016:PDF
Warren Buffett’s Berkshire Hathaway said it has increased its ownership stake in Wells Fargo & Company to 10%, a level that could mean increased federal scrutiny over the investment.
- March 28, 2016:PDF
The Goldman Sachs Group, Inc. is buying an online retirementsavings start-up that is barely a year old, as the Wall Street bank adjusts to the growing influence of technology in finance.
- March 14, 2016:PDF
Canadian economy lost 2,300 jobs in February, against expectations for a 9,000 jobs gain in the month, driven by a roughly 52,000 positions drop in full-time employment, mostly in the public sector, hospitality and other services, while job gains in construction and manufacturing helped offset the weakness.
- March 7, 2016:PDF
Greece’s creditors will attempt to bridge their differences at a meeting of eurozone finance ministers this Monday amidst mounting concerns Athens’ €86 billion third bailout is already headed for crisis, the Financial Times reports.
- February 29, 2016:PDF
U.S. offshore rig count increased by 2 units to 27 and is down 50% over the last 18 months.
- February 22, 2016:
Inflation accelerated in Canada, to a 2.0% rate of change from the prior year, exceeding the consensus expectations calling for a more muted 1.7% reading in the month.
- February 16, 2016:
Berkshire Hathaway Inc. – has bought an additional $1 billion of stock in The Phillips 66 Company this year, and now owns roughly 14.1% of the oil refiner. The conglomerate run by Warren Buffett has purchased about 12.98 million Phillips 66 shares this year, including nearly 2.18 million shares in February, according to regulatory filings.
- February 5, 2016:
UBS AG‘s prized wealth management division and its ‘new’ investment bank suffered big earnings falls in the fourth quarter. The Swiss bank has been Europe’s star performer since its 2012 decision to dramatically cut its investment bank and put wealth management, at the centre of the group.
- February 1, 2016:
US new home sales surged 10.8% in December to 544,000 units annualized. That was a lot more than expected, and is the highest level in nearly a year.
- January 25, 2016:
US headline inflation rate, as measured by the year on year change in the consumer price index (CPI), was 0.7% for the month of December, slightly below the consensus expectations and a couple of notches above November’s reading.
- January 18, 2016:
Canadian oil production – Oil companies reeling from the collapse in global crude prices have slammed the brakes on conventional crude production in Canada, with the Western Canadian active oil rig count halving from last year.
- January 11, 2016:
RBC set to raise mortgage rates: The Globe & Mail reported last Tuesday that Royal Bank of Canada is set to raise rates on several of its mortgages, the latest in a series of changes to the mortgage industry that could help cool the housing market this year.
- January 4, 2016:
Commerzbank ag has sued four banks in the United States, claiming that they failed to properly monitor billions of dollars in toxic mortgage-backed securities acquired by the German lender before the 2008 financial crisis.
- December 21, 2015:
This will be our last Newsletter in 2015. We wish you a very Merry Christmas with our best wishes for the New Year.
- December 14, 2015:
The Bank of Canada estimated last Tuesday it could, if needed, set its benchmark interest rate as low as minus 0.5 percent, but stressed that the economy was recovering as expected and the bank did not expect to use such unconventional monetary policy.
- December 7, 2015:
Bank of Montreal reported cash adjusted earnings per share of $1.90, well ahead of consensus of $1.74 but which benefitted from a net gain of ~$0.12 from: the closing of the sale of its US pension business; gains on the sale of its US pension business; gains on the sale of impaired real estate assets; favourable legal settlements; and recoveries in purchase credit impaired loans.
- November 30, 2015:
Barclays Plc has agreed to pay $14 million to settle litigation by holders of its American depositary shares that it conspired with rivals to rig the Libor benchmark interest rate, causing its share price to be inflated.
- November 23, 2015:
Barclays PLC bank announced it has reached a $150 million settlement with the New York State Department of Financial Services (NY DFS) in respect of its investigation into Barclays’ electronic trading of foreign exchange and FX electronic trading systems in the period 2009 to 2014.
- November 16, 2015:
JPMorgan Chase & Co. expects faster growth in transaction and private banking activities in Brazil following the exit of HSBC Holdings Plc, the bank’s top executive in the country said on Friday.
- November 9, 2015:
The US economy added jobs at a very impressive 271 thousand pace in December. This was a far stronger performance than the market consensus for a modest 185K gain and it marks the fastest pace of employment growth since December of last year.
- November 2, 2015:
Chevron Corporation – is cutting 10% of its workforce and sharply paring back its budget, with CEO John Watson giving a downbeat view of an industry beleaguered by low oil prices.
- October 23, 2015:
Barclays is selling a £650 million (US $1.01 billion) portfolio of middle market loans, banking sources said. Barclays is auctioning the portfolio, which consists of performing UK loans.
- October 19, 2015:
HSBC - Hundreds of employees of HSBC Holdings Plc’s investment banking arm in London had their pay cut by 10% and were told to take two weeks of unpaid leave, the Times of London reported.
- October 13, 2015:
Canadian election could derail some pipelines: The Liberal and NDP parties have indicated they would review and/or not permit some of the planned oil pipelines.
- October 5, 2015:
Canadian Oil Sands -Suncor Energy Inc. commenced an unsolicited offer to Canadian Oil Sands Limited (COS) shareholders to acquire all of the outstanding shares of COS for total consideration of near $4.3 billion.
- Sept 28, 2015:
Volkswagen - preliminary analysis indicates that total bank sector exposure could amount to a minimum of €8bn. However, the risk of default at the moment still appears to be small given VW's Credit Default spread of 236bps. A review on Dealogic syndicated loans data for Volkswagen AG and its subsidiaries identified a large bank loan of EUR5bn.
- Sept 21, 2015:
JPMorgan and other banks attended a Barclays conference. The takeaways are that JP Morgan continues to be optimistic that the next three years will be better, with more regulation - such as Total Loss Absorbing Capacity - being settled.
- Sept 14, 2015:
Bank of Montreal has agreed to buy General Electric Co.’s transportation finance business in the U.S. and Canada. The unit had net earning assets of about C$11.5 billion ($8.7 billion) as of June 30, BMO said in a statement that didn’t disclose terms.
- Sept 8, 2015:
North American auto sales – The U.S. auto industry powered ahead in August, topping sales estimates and shrugging off gyrating stock markets as consumers continued to show their penchant for pickup trucks and SUVs.
- Aug 31, 2015:
Total – French oil major has agreed to sell some of its gas pipeline assets in the UK’s North Sea to North Sea Midstream Partners, an affiliate of U.S.-based private equity firm ArcLight Capital, for £585 million.
- Aug 24, 2015:
On the housing front, a number of upbeats news provided some support for the otherwise battered equity markets.
- Aug 14, 2015:
Prudential reported strong results over H1 2015 with IFRS operating profit at £1,881m around 8% ahead of consensus with the beat mainly driven by UK (17% ahead), US (7% ahead) and Asset management (5% ahead) while Asia is broadly in line.
- Aug 10, 2015:
IGM Financial – reported operating earnings of $198.5 million or $0.80 per share for the second quarter compared to $203.9 million or $0.81 per share in 2014.
- Aug 3, 2015:
First National Finance Corporation - Operating results came in better than expected with slightly higher than forecast origination volumes. Stronger-than-anticipated earnings were largely driven by higherthan- estimated placement fees and lower-than-anticipated opex.
- July 20, 2015:
Bank of Nova Scotia announced its intention to acquire Citigroup Inc.’s personal & commercial banking businesses in Panama and Costa Rica.
- July 13, 2015:
Brookfield Property Partners LP – our updated ‘company profile’ on this company is now on our Portland website – under the ‘Resources’ tab.
- July 6, 2015:
Greece: Two possible options seem (i) debt write-down/default and stay in Euro; or (ii) leave Euro. Greek government appear to favour the former, with Tsipras declaring that he goes back to the negotiating table with Europe today.
- June 29, 2015:
China has ordered the fourth official interest rate cut in just seven months, as policymakers become increasingly concerned about the nation’s volatile equity markets and the prospect the country could miss its official growth target this year.
- June 22, 2015:
The most recent reading of the National Association of Home Builders (NAHB) housing market index exceeded expectations in June, at 59 index points, relative to 56 index points, and represented a 5 points jump from May’s 54 points reading, indicating a substantial shift in the homebuilders outlook.
- June 12, 2015:
Further to the strong retail sales numbers for May, the University of Michigan’s June reading of consumer sentiment was significantly higher than expected, at 94.6 index points, compared to the consensus of 91.5 and May’s 88.6 reading. Both the ‘current conditions’ and the ‘expectations’ components of this composite index contributed to the improvement.
- June 8, 2015:
Brookfield Property Partners – British-based holiday resort group Center Parcs has been bought by Brookfield Property Partners, after previous owner Blackstone opted to sell the company rather than float it.
- June 1, 2015:
Crescent Point Energy Inc, Canada’s No.4 independent oil and gas producer, agreed to acquire Legacy Oil + Gas Inc for shares and debt worth $1.53 billion, adding light oil production in its core regions in South East Saskatchewan and North Dakota.
- May 25, 2015:
JPMorgan announced its settlements with both the Dept Of Justice and the Fed relating to its foreign exchange trading business.
- May 18, 2015:
Hertz reported first quarter results, including updates on its U.S. fleet renewal program, cost reduction and financial restatement process. During the quarter, the company reported a 47% improvement in the number of vehicles at or below 30,000 miles in its U.S. fleet.
- May 11, 2015:
BHP Billiton shareholders have approved the demerger of South32, with the demerger resolution achieving 98.05% in favour. The simultaneous shareholder general meetings took place in Perth and London to approve the demerger of South32 from BHP Billiton.
- May 4, 2015:
Although much of the investment case for Shell is now driven by the potential for value creation from the proposed acquisition of BG Group it is reassuring that the underlying business is capable of providing relatively robust earnings and cash flow in a weak oil price environment given heavy maintenance.
- April 27, 2015:
Restaurant Brands International reported first-quarter revenue which was more than double compared with the fourth quarter of 2014, to $932 million from $416.3 million, helped by product launches and promotions. The company was formed by Burger King’s takeover of Canadian coffee and doughnut chain Tim Hortons last year. Restaurant Brands said comparable sales at Tim Hortons rose 5.3% in the first full quarter since the merger, compared with a 4.1% rise in the fourth quarter, driven mainly by continued daypart expansion and new menu items such as crispy chicken club sandwiches.
- April 20, 2015:
U.S. housing starts rose just 2.0% in March to a 2-month high of 926,000 units annualized, or 2.5% below a year ago.
- April 13, 2015:
UK house price growth rebounded in monthly terms during March but slowed further on an annual basis, according to a survey from mortgage lender Halifax on Thursday.
- April 6, 2015:
Bloomberg report HSBC is is falling short on its agreement with the U.S. to clean up operations after clients laundered drug money and did business with terrorist regimes, according to two people familiar with a report from the bank’s monitor.
- March 30, 2015:
Canadian Oil Sands/Suncor/Royal Dutch Shell – More than 10% of Canada’s synthetic crude supply is set to go offline during the second quarter of 2015 as oil sands producers in northern Alberta carry out planned maintenance at four major facilities that upgrade tar-like bitumen into crude.
- March 23, 2015:
ING - The Macquarie Group are interested in securing the remainder of ING’s unbranded mortgage portfolio, worth A$1B , the Business Spectator reports.
- March 16, 2015:
Citigroup Inc. is close to selling its Central America retail units to Banco Popular Espanol SA and is seeking $1.5 billion, people familiar with the matter said.
- March 9, 2015:
Aggreko - Full year numbers are in-line with consensus. Divisionally in 2014, Power Projects saw 10% underlying growth (6% in 2H, 2% in Q4) and 8% from Local Business (6% 2H, 9% in Q4).
- March 2, 2015:
Ares Capital reported 4Q14 results that beat consensus. Net investment income came in at $0.42/share and above consensus of $0.39/share, with the beat driven by higher other income and lower total opex.
- February 23, 2015:
Berkshire Hathaway – Warren Buffett’s Berkshire Hathaway Inc agreed to buy German motorcycle apparel and accessories retailer Detlev Louis Motorrad-Vertriebs GmbH for a little more than €400 million ($456 million).
- February 17, 2015:
Bank Of England Inflation report was upbeat. GDP forecasts and wage growth was revised higher while the unemployment rate was revised lower.
- February 9, 2015:
Suncor Energy, Canada’s largest oil and gas company, reported fourthquarter profit lower by roughly 80%, hit by the rapid slide in oil prices and weaker output from its Alberta oil sands operations. Struggling to cope with oil prices that have fallen by more than half since June, Suncor last month laid off 1,000 staff and contractors, deferred some oil sands projects and slashed $1 billion from its capital-spending budget.
- February 3, 2015:
Chevron – the second-largest U.S. oil producer, reported a 30% drop in its quarterly profit for the last quarter of 2014 due to plunging crude prices.
- January 23, 2015:
BHP Billiton –said on Wednesday it would cut its spending on shale drilling over the next six months as it looks to meet its promise not to reduce dividends in the face of a collapse in iron ore, copper and oil prices.
- January 19, 2015:
Suncor – Canada’s largest oil and gas company Suncor Energy Inc announced it would cut about 1,000 employees and contractors, freeze hiring and slash C$1 billion (US$837 million) in capital spending in response to falling crude oil prices.
- January 9, 2015:
A panel to the U.S. Food and Drug Administration unanimously backed the approval of Novartis AG’s copy of Amgen Inc’s blockbuster cancer drug Neupogen, setting the stage for the regulator’s first approval of a biosimilar.
- January 5, 2014:
A busy weekend in Europe that started with a Der Spiegel article on Saturday morning suggesting both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the euro zone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit manageable.
- December 29, 2014:
Manulife announced last week that it has entered into an agreement to acquire New York Life Retirement Plans Services (RPS) business. Terms were not disclosed.
- December 22, 2014:
Chevron Corp is putting a plan to drill for oil in the Beaufort Sea in Canada’s Arctic on hold indefinitely because of what it called “economic uncertainty in the industry” as oil prices fall.
- December 15, 2014:
Sumitomo Mitsui Financial Group Inc. will announce an agreement to buy Citigroup Inc. Japanese consumer-banking business as soon as next week, people with knowledge of the matter said.
- December 8, 2014:
The US consumer credit meanwhile saw a $13.23 billion increase in October, less than the expected $16.48 billion and less than September’s $15.44 billion.
- December 1, 2014:
The US personal income advanced 0.2% in October, less than the expected 0.4% improvement and in line with September’s 0.2% reading.
- November 24, 2014:
Barrick Gold Corp named mining industry veteran Shaun Usmar as its chief financial officer designate last week, marking the latest shake-up at the world’s biggest gold miner.
- November 17, 2014:
Northland Power reported results broadly in line for its third quarter. The bottom line was affected by the marking to market of interest rate swaps related to the Gemini financing (accounting effect expected to revert in time).
- November 10, 2014:
The ECB/EBA bank stress test results: were in line with expectations with 24 banks failing under the adverse scenario.
- October 27, 2014:
The ECB/EBA bank stress test results: were in line with expectations with 24 banks failing under the adverse scenario.
- October 21, 2014:
Why Have Stocks (Energy in Particular) Been Volatile Recently? A number of factors, largely unrelated could be pointed as causes of the current market turbulence
- October 13, 2014:
Canadian Oil Sands/Enbridge/Suncor – Canadian crude exports to the United States topped 3 million barrels per day earlier this month for the first time, suggesting delays to new export pipelines such as TransCanada Corp’s Keystone XL were failing to check oil sands development.
- October 6, 2014:
On the US housing front, the pending home sales, a leading indicator of existing home sales, retreated 1.0% in August, offsetting July’s 3.20% improvement.
- September 29, 2014:
Colombia’s multibillion-dollar investment in new highways and bridges is likely to boost the business of the nation’s largest banking group, Grupo Aval, by 10%, its president said in an interview.
- September 22, 2014:
Berkshire Hathaway – US Agriculture Secretary Thomas Vilsack met with Warren Buffett last week to urge the billionaire investor to make sure his BNSF railroad is ready for an expected record corn and soy harvest this year.
- September 15, 2014:
Apple doing payments/NFC - Apple’s latest product launch included doing payments/NFC (Near Field Communication) using the existing payments infrastructure and linked in with Mastercard, Visa, etc.
- September 8, 2014:
The US services sector appears to be set for further strengthening ahead, as the non-manufacturing purchasing managers index (NMI) followed in the steps of its manufacturing counterpart (the PMI), with a strong reading for the month of August.
- September 2, 2014:
Royal Dutch Shell said it had reached deals on some of the four Nigerian oil fields it has offered for sale as the oil major pushes ahead with divesting global assets to cut costs.
- August 25, 2014:
BHP Billiton – The world’s biggest mining company, announced plans to spin off businesses worth an estimated $16 billion, most of them acquired in a 2001 merger, to focus on its most profitable activities.
- August 18, 2014:
The US industrial production advanced by 0.44% in July, ahead of the expected 0.30% improvement and building on June’s 0.38% increase. The improvement was wide based with all but one sector, the US utilities, advancing in the month.
- August 11, 2014:
Brookfield Property Partners (BPY) - second quarter results were strong with funds from operations (FFO) of $0.32/share, up 14%, while total revenue was $1.21 billion relative to last year’s $1.09 billion.
- August 1, 2014:
JPMorgan posted second-quarter profit that beat estimates as fixed-income trading revenue fell less than analysts expected.
- July 28, 2014:
Barclays has hit out against a US lawsuit alleging the bank misled clients about the level of high-frequency trading activity in its anonymous “dark pool” venue.
- July 21, 2014:
Morgan Stanley reported 2Q14 EPS from continuing operations of $0.94. Excluding Debt Value Adjustments of $87mn, it was $0.91. Results also included a net discrete tax benefit of $609mn ($0.31), principally related to the re-measurement of reserves and related interest.
- July 14, 2014:
Commerzbank is expected to pay between $600mn and $800mn to resolve investigations into its dealings with Iran and other countries under U.S. sanctions, sources familiar with the matter said, Reuters reports.
- July 7, 2014:
Influenced by the withdrawal of quantitative easing, the U.S. 30 year mortgage market rate has increased to 4.12% - (was 3.31%, end of November 2012 the lowest rate since the Federal Reserve began tracking rates in 1971), as the Federal Reserve effectively continues to give priority to incentivising home ownership.
- June 30, 2014:
The Bank of England said mortgage demand increased significantly this quarter and lenders forecast it will rise further in the coming months.
- June 23, 2014:
Argentina’s sovereign credit rating was cut two notches by rating agency S&Ps on Tuesday, a day after the US Supreme Court ruled that the country had to repay $1.5bn to “holdout” investors before servicing its restructured debt.
- June 16, 2014:
The Canadian government could technically delay an imminent decision on whether to approve the controversial Northern Gateway pipeline from Alberta’s oil sands to the Pacific coast, Natural Resources Minister Greg Rickford said on Wednesday.
- June 9, 2014:
Barclays has last week cut several hundred jobs in its investment bank as part of its plan to shrink the business by 7,000 staff over the next three years to save costs.
- June 2, 2014:
Lloyds Banking Group expects to float about 25% of its TSB Bank business on the London Stock Exchange next month through an Initial Public Offering with the remainder to be sold before the end of 2015.
- May 26, 2014:
The consumer price inflation as measured by the changes in the consumer price index (CPI), was up to a 2.0% rate in April, in line with the expectations and a significant acceleration compared to March’s 1.5% read.
- May 19, 2014:
Canada unveiled new rules on Wednesday to enhance pipeline safety and spill response, ahead of the development of new projects proposed to carry crude from Alberta’s oil sands to coastal ports for export.
- May 12, 2014:
Citi has been chosen to safeguard the securities of the world’s largest sovereign wealth fund, Norway’s $865 billion oil fund, Norges Bank Investment Management, away from its rival JP Morgan.
- May 5, 2014:
The Financial Times reported last week that China will overtake the US as the world’s largest economy this year. The US has been #1 since 1872. The calculations are from a report by the International Comparison Programme, hosted by the World Bank and are based on estimates of purchasing power parity.
- April 28, 2014:
The US housing sector continued to cool off in March, with both existing home sales and new home sales retreating in the month. While the 4.59 million units of existing home sales is only a notch below the previous month’s level, the new home sales took a 15% tumble in March. A lack of inventory is partly to blame, which also explains an accelerated price increase for new homes, up 12.6% year on year.
- April 21, 2014:
News from the US housing sector continued to illustrate the slower pace of activity in the sector with housing starts, at 946,000 units annualized in March, falling short of the consensus expectations, though an improvement over February’s 920,000 units annualized level.
- April 14, 2014:
Influenced by the withdrawal of quantitative easing, the U.S. 30 year mortgage market rate has increased to 4.34% - (was 3.31%, end of November 2012 the lowest rate since the Federal Reserve began tracking rates in 1971), as the Federal Reserve effectively continues to give priority to incentivising home ownership.
- April 7, 2014:
Barclays agreed to sell its retail banking business in the United Arab Emirates to Abu Dhabi Islamic Bank PJSC (ADIB) for US$177 million as the U.K.’s second-biggest lender by assets shrinks its business.
- March 31, 2014:
Bank of America announced that it had reached a $6.3 billion settlement with the FHFA covering $57.5bn private-label RMBS purchased by Fannie Mae and Freddie Mac.
- March 24, 2014:
Allianz has confirmed that it is to buy the renewal rights of selected contracts from Unipol for up to €440mn in cash. This transaction was expected.
- March 10, 2014:
Bank of Nova Scotia Q1 earnings of $1.34, were in line with consensus estimates, with Return On Equity at 15.4%,compared to 16.8% y/y. Canadian Banking’s contribution of $575 million vs $539 million y/y benefited from strong loan and deposit growth of 5% y/y, respectively.
- March 3, 2014:
Royal Bank of Canada posted a steady quarter, with solid contributions from all segments and a continuing favorable credit environment, which should be supportive of spreads. Reported adjusted cash EPS were $1.47, which was better than consensus expectations of $1.45.
- September 9, 2013:
US Federal Reserve Governor Ben Bernanke last week said the Fed will support a weak economy for the foreseeable future, in a testimony to Congress.
- August 26, 2013:
BHP has cut bonus payouts to its top executives, as total returns to shareholders fell over five years, even though the top global miner beat its target for outperforming its peers over that period.
- August 19, 2013:
Influenced by the possibility of the withdrawal of quantitative easing, the U.S. 30 year mortgage market rate has recently increased at 4.40% - (3.31%, end of November the lowest rate since the Federal Reserve began tracking rates in 1971), as the Federal Reserve effectively continues to give priority to incentivising home ownership.
- August 12, 2013:
Rio Tinto - Mining group Rio Tinto has put on hold efforts to sell its loss-making Pacific Aluminium business, because of poor market conditions. Rio’s first half profit was 18% dragged down by weaker iron ore, copper and coal prices.
- August 5, 2013:
GlaxoSmithKline – reported second quarter results which were broadly in line with the expectations, as the group’s worldwide sales rose by 2% to £6.6Bn, while its core earnings per share were up 1% to 26.3 pence.
- July 22, 2013:
US Federal Reserve Governor Ben Bernanke last week said the Fed will support a weak economy for the foreseeable future, in a testimony to Congress.
- July 15, 2013:
US Federal Reserve policymakers remain determined to flatten the yield curve as much as possible, having indicated they expect ‘exceptionally low levels of interest rates until the unemployment rate falls below 6.5% (June 7.6%) which is likely to be through 2014.
- July 8, 2013:
Following the significant back up in global bond yields over the past couple of months, UK and European central bankers are doing their utmost to clarify that policy rates will remain near-zero for an extended period.
- July 1, 2013:
A People’s Bank of China official said the central bank will guide interest rates to a “reasonable range,” suggesting a potential end to a cash crunch that has gripped the country’s financial system this month.
- June 24, 2013:
Influenced by the possibility of the withdrawal of quantitative easing, the U.S. 30 year mortgage market rate has recently increased although remains very low at 3.93%
- June 17, 2013:
Key report of the US business activity, the industrial production report was underwhelming for the month of May, recording a flat reading against the expected 0.2% improvement.
- June 10, 2013:
Bank of America’s US$8.5bn settlement with mortgage-bond investors is now being considered by a New York judge, two years after the lender struck the deal to resolve claims over home loans bundled into securities.
- June 3, 2013:
The Canadian economy expanded by 2.5% in the first quarter, ahead of the expected 2.3% improvement, on the back of stronger net exports and inventory build-up. Consumer spending missed the expectations, while residential investment (housing activity) actually and not surprisingly subtracted from growth in the quarter as it pulled-back by 4.7%.
- May 27, 2013:
As concerns have swung from commercial real estate and unsecured consumer loans/credit card loans to European sovereign debts the number of small U.S. banks failing continues to grow, albeit at a more moderate pace with 13 in 2013 (compared to 49 in 2012, 95 in 2011 and 157 in 2010 which was the highest annual tally since 1992).
- May 20, 2013:
France fell into recession in the first three months of this year, official figures showed Wednesday. The national statistics agency INSEE said that the economy shrunk by 0.2% between January and March, after contracting by the same amount in the last quarter of 2012.
- May 13, 2013:
HSBC: Reported $8.4bn pre-tax profit ($7.6bn underlying mainly relating to $1.1bn gain on reclassification of Industrial Bank and $0.2bn Fair Value of own debt) and $6.8bn by adj. for further notable items (+$0.6bn Ping An, +$0.5bn Debt Value Adjustment, -0.2bn UK customer redress programs and -$0.1bn restructuring costs).
- May 6, 2013:
Netherlands-based ING is steering towards its completion of a EC-mandated portfolio reduction and has so far repaid E7.8 billion of the Dutch government rescue fund as well as E2.4 billion in interest.
- April 29, 2013:
A concern which is easing is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank and whether bank’s have mis-represented the quality of those assets sold to Freddie Mac and Fannie Mae.
- April 22, 2013:
The IMF has cut its world growth forecast for 2013 as the eurozone recession continues to drag, but predicts growth overall will pick up in the second half of the year.
- April 15, 2013:
US Federal Reserve policymakers remain determined to flatten the yield curve as much as possible, having indicated they expect ‘exceptionally low levels of interest rates until the unemployment rate falls below 6.5% (March 7.6%) which is likely to be through 2014.
- April 8, 2013:
Toyota Motor Sales USA Inc. reported 529,444 vehicles sold in the first quarter of 2013, an increase of 10.1% on daily selling rate bases.
- April 1, 2013:
Toyota has published a progress report for its Toyota New Global Architecture (TNGA). TNGA is the basic architecture for making vehicles in a manner that reconciles improved product appeal with reduced costs towards the “Making Ever-Better Cars” drive due to take shape under the leadership of CEO Akio Toyoda.
- March 25, 2013:
Last week was rich in macro-economic updates from the US housing sector, culminating with the existing home sales report last Thursday, which showed a 4.98mm units annualized sales rate for the month of February, an improvement relative to January’s 4.94mm units annualized rate, yet short of the expected 5mm units annualized level.
- March 18, 2013:
Influenced by the US ‘twist’, the U.S. 30 year mortgage market remains very low at 3.63% - (3.31%, end of November the lowest rate since the Federal Reserve began tracking rates in 1971), as the Federal Reserve effectively continues to give priority to incentivising home ownership.
- March 11, 2013:
Citigroup is considering pulling back from 21 countries as the most global of US banks trades cost-cutting for international footprint.
- March 4, 2013:
Business activity in the US seems to be progressing, albeit slowly. The durable goods orders report surprised on the downside for January, dropping more than 5% in the month. However, most of the retreat was due to a slump in aircraft orders, a notoriously volatile business.
- February 25, 2013:
A concern which is easing is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank and whether bank’s have mis-represented the quality of those assets sold to Freddie Mac and Fannie Mae.
- February 18, 2013:
Carnival has offered passengers $500, reimbursed their transportation and many onboard costs and given them a credit toward a future cruise equal to the amount they paid for the Triumph vacation.
- February 11, 2013:
Influenced by the US ‘twist’, the U.S. 30 year mortgage market remains very low at 3.53% - (3.31%, end of November the lowest rate since the Federal Reserve began tracking rates in 1971), as the Federal Reserve effectively continues to give priority to incentivising home ownership.
- February 4, 2013:
Goldman Sachs is seeking to reduce its exposure to China’s controversial banking sector by selling more of its shares in ICBC. The investment bank was offering $1bn worth of ICBC stock for HK$5.77 per share which represents a 3% discount to ICBC’s closing price in Hong Kong on Monday of HK$5.95.
- January 28, 2013:
Lloyds Banking Group is to shed 940 jobs across the UK, taking the total job losses announced by the state-backed lender this month to more than 1,300. Lloyds, which is 39% owned by the government, said on Wednesday that the reductions would take place across the group.
- January 21, 2013:
NY Post says that Barclays new CEO Anthony Jenkins will outline a plan on Feb. 12 when the bank delivers its fourth-quarter results to cut between 5 and 10% of its global workforce. According to unnamed sources, the cuts will be concentrated in ancillary areas in Europe and Asia.
- January 14, 2013:
A concern which is easing is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank and whether bank’s have mis-represented the quality of those assets sold to Freddie Mac and Fannie Mae.
- January 7, 2013:
US Federal Reserve policymakers remain determined to flatten the yield curve as much as possible, having indicated they expect ‘exceptionally low levels of interest rates through 2015 which is still an “exceptionally low level” in the grand scheme of things.
- December 24, 2012:
- December 17, 2012:
ABB announced Friday that, following its strategic review of the Power Systems division it is repositioning the business to secure higher and more consistent profitability.
- December 10, 2012:
US Federal Reserve policymakers remain determined to flatten the yield curve as much as possible, having indicated they expect ‘exceptionally low levels of interest rates through 2015 which is still an “exceptionally low level” in the grand scheme of things.
- December 3, 2012:
The Eurogroup issued a positive statement last week agreeing to reduce Greece’s debt load. A debt reduction plan should see debt to GDP of 175% by 2016 and 124% by 2020 as European Finance Ministers convince the IMF they have the plans to take further steps to reduce the debt to less than 110% in 2022.
- November 26, 2012:
The Canadian retail sector recorded a muted performance in September, up only 0.1% against expectations for a 0.5% improvement at the headline level and it fared even worse when adjusting for auto sales, which were up 0.9% in the month.
- November 19, 2012:
BHP revealed that it expects to expand its iron ore capacity by almost 20% by just making improvements to its current mines, rail lines and port facilities as it looks to control costs in a softer iron ore market.
- November 12, 2012:
After the ‘hurricane’ of political and economic news releases in the run-up to the US Presidential elections, the past week was rather light in macro economic data point releases. Of note was an unexpected drop in the US goods and services trade deficit, to $41.5Bn in September, contrary to an expected increase to $45Bn from August’s $43.8Bn.
- November 5, 2012:
This morning HSBC reported strong Q3 2012 earnings, with adjusted Profit before tax 7% above consensus at £6,058m. The beat against consensus was primarily driven by 27% lower than expected impairments, with North American impairments down 26% versus Q2 2012.
- October 29, 2012:
A concern which remains is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank and whether bank’s have mis-represented the quality of those assets sold to Freddie Mac and Fannie Mae.
- October 22, 2012:
>Wells Fargo is restructuring sales and trading operations to form a new markets division at its investment bank. The division will be one of five main units under the Wells Fargo Securities brand and include equity and fixed-income sales and trading, commodities, prime services and futures clearing ( Source: Bloomberg).
- October 15, 2012:
Royal Bank of Canada announced its intention last week to repurchase up to 30 million of its common shares, representing 2.1% of shares outstanding. Purchases may commence on November 1, 2012 and may continue until October 31, 2013.
- October 8, 2012:
A panel of experts appointed by the European Commission is expected to recommend that European banks introduce barriers between their investment and retail units to prevent consumer accounts from being put at risk by bank trading activities.
- October 1, 2012:
Invesco is acquiring a toehold in the India asset management market, similar to other large public managers, by agreeing to purchase a 49% interest in India’s Religare Asset Management (RAMC), an affiliate of financial conglomerate Religare Enterprises.
- September 24, 2012:
Siemens – is rumoured to be exploring the sale of the business support systems (BSS) of its Nokia Siemens Networks (NSN) telecom division. The US telecoms equipment maker Amdocs as well as Ericsson, the world’s top mobile network infrastructure supplier, are reportedly interested.
- September 17, 2012:
Deutsche Bank - Deutsche Bank has become the first global bank to introduce rules whereby it can claw back bonuses staff had earned at a previous employer, enabling it to take back unvested shares that newly hired staff received in exchange for stock earned at a previous bank.
- September 10, 2012:
A concern which remains is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank and whether bank’s have mis-represented the quality of those assets sold to Freddie Mac and Fannie Mae.
- September 3, 2012:
Deutsche Bank - Deutsche Bank has become the first global bank to introduce rules whereby it can claw back bonuses staff had earned at a previous employer, enabling it to take back unvested shares that newly hired staff received in exchange for stock earned at a previous bank.
- August 27, 2012:
The Globe & Mail reported today that Canada’s insurance brokers are asking regulators to look into the possibility that Royal Bank of Canada is sharing customer data with its insurance arm. The complaint stems from a marketing letter, which appears to be a form letter, that RBC Insurance sent to an individual in Alberta.
- August 20, 2012:
The US consumer sector related economic announcement surprised on the upside last week, as the US headline retail sales in July unexpectedly moved higher by 0.8%, reversing the June 0.7% drop, way ahead of the expectations, which were calling for a 0.3% improvement. Most retail categories contributed strongly in the month and even when accounting for the effect of auto vehicles retail sales were up a strong 0.8%.
- August 13, 2012:
On the bright side, US labour productivity returned to growth, to the tune of 1.6% for the second quarter, ahead of the expected 1.3% rate, while the US goods and services trade deficit shrank to a $42.9Bn level in June, compared to $48.0Bn in May and expectations for a modest retreat to a $47.5Bn level, as growth in exports was not matched by imports, down 1.5% in the month. The later could be seen as another foreteller of weak retail performance as most of the import retreat came for a drop in imports of consumer goods excluding autos.
- August 6, 2012:
HSBC remains cautiously upbeat over the outlook for growth through Asia’s banking markets as its first half profits were masked by attractive gains on businesses it sold and provisions on previous mistakes ( e.g. re money laundering mentioned above ). Underlying profits were about 3% lower than last year at $10.6 billion but still about 20% better than consensus estimates.
- July 30, 2012:
Lloyds Bank - Combined Profit before tax £1,165m against £1,278m consensus expectations. However, driven by fair value unwind (£157m against £419m expectation).
- July 23, 2012:
Citigroup reported 2Q 2012 EPS of $0.95. Consensus was $0.89. Excluding the impact of positive Debt Value Adjustments ($219mn; $0.05) and a net loss on the previously disclosed sale of a 10.1% stake in Akbank ($424mn; $0.09), EPS was $1.00, marked by better than expected Fixed income, currencies and commodities and Investment Banking revenues.
- July 16, 2012:
HSBC - Is to sell two of its Bermuda based insurance units to Catalina Holdings for an undisclosed sum, the sale is due to complete in Q3. The deal is part of HSBC’s ongoing disposal program of non-core assets. This follows the banks last sale of its general insurance business 4 months ago for $914m.Financial Times reports that HSBC may be fined $1bn for failing to prevent money laundering.
- July 9, 2012:
A relatively light week in macro-economic releases was dominated by the employment report issued Friday by the Department of Labour and which revealed weaker than expected non-farm payroll additions in June, at only 80,000 positions, compared to the consensus expectations of 90,000 positions.
- July 2, 2012:
As concerns have swung from commercial real estate and unsecured consumer loans/credit card loans to European sovereign debts the number of small U.S. banks failing continues to grow, albeit at a more moderate pace with 32 in 2012 (compared to 95 in 2011 and 157 in 2010 which was the highest annual tally since 1992). Franchises are being acquired/absorbed as convergence of the financial services industry accelerates – favouring we believe the stronger, better managed banks. Typically banks acquiring collapsed bank franchises from the Federal Deposit Insurance Corporation (FDIC) are paying little or no premium for deposits, assets are purchased at a discount and are covered by loss sharing agreements – so that such deals can be expected to be immediately accretive to earnings per share.
- June 25, 2012:
The US Federal Reserve has ended a crunch policy meeting with a decision to extend existing stimulus measures until the end of the year, in a bid to tackle subpar US jobs growth.
- June 18, 2012:
Europe’s securitisation industry has officially launched a new labelling system that aims to revive the fortunes of a financial product that some dubbed as toxic during the US subprime crisis. The Prime Collateralised Securities project will award a stamp of approval to high quality European Asset-Backed Securites that meet a set of criteria in terms of quality, transparency, simplicity and standardisation. (source Financial Times).
- June 11, 2012:
The Canadian employment for the month of May added 7,700 jobs added, shy of expectations for 10,000. Worryingly, the private sector shed 22,500 jobs in the month, with the construction sector being a significant drag. Analysts are quick to point out that a slow-down was to be expected following a couple of months of strong job gains.
- June 4, 2012:
A concern which remains is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank and whether bank’s have mis-represented the quality of those assets sold to Freddie Mac and Fannie Mae. Such legal debates are likely to drag on for years but from recent bank investor relations presentations it does seem the rate of “put backs” are now beginning to decline and that litigation reserves have been increased suggesting overall current levels of total provisions should suffice, enabling banks to continue to post increasing earnings per share (as credit improves) over the next 2 years by when we expect more normalized earnings power to have returned. For the larger franchises the quantum of proactive provisioning continues to act as a differentiator of quality which we believe has still to be fully appreciated.
- May 28, 2012:
As concerns have swung from commercial real estate and unsecured consumer loans/credit card loans to European sovereign debts the number of small U.S. banks failing continues to grow, albeit at a more moderate pace with 25 in 2012 (compared to 95 in 2011 and 157 in 2010 which was the highest annual tally since 1992).
- May 21, 2012:
US consumer’s appetite slowed down more than expected, as retail sales for April grew a meagre 0.1%, short of expectations for a 0.2% improvement and just a fraction of March’s 0.7% advance. Even after stripping out the more volatile auto sales, the result was similarly disappointing. Despite the weather, sales of building materials and gardening supplies weakened in the month, offset by stronger sales of furniture and electronics and appliances.
- May 14, 2012:
Spanish banks - Numerous local press articles suggest that, as part of the real estate clean up regulation, Spanish banks will have to make further provisions. The Spanish government and the Bank of Spain are working on a proposal to increase the provisioning rate on loans to developers (that are still performing) up to 30% from the current 7% on top of the Non Performing Loan Commercial Real Estate requirements.
- May 7, 2012:
Wells Fargo, already the largest US home lender, won the biggest market share ever recorded as competitors led by Bank of America pulled back after suffering more than US$65bn in combined mortgage losses. Wells Fargo made 33.9% of the US$385bn of mortgages originated in 1Q, up from 30.1% in the preceding 3 months, more than triple the share of the closest competitor, JPMorgan (Source : Bloomberg).
- April 30, 2012:
Barclays, Britain’s second- biggest bank by assets, posted 1Q profit that beat consensus estimates as revenue at its investment banking unit rebounded from 4Q. Pretax profit excluding losses on the valuation of the lender’s debt rose 22% to £2.45bn from £2bn in the year-earlier period. On an adjusted basis Barclays delivered a 14.3% Return on net asset value in 1Q12.
- April 23, 2012:
A concern which remains is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank and whether bank’s have mis-represented the quality of those assets sold to Freddie Mac and Fannie Mae. Such legal debates are likely to drag on for years but from recent bank investor relations presentations it does seem the rate of “put backs” are now beginning to decline and that litigation reserves have been increased suggesting overall current levels of total provisions should suffice, enabling banks to continue to post increasing earnings per share (as credit improves) over the next 2 years by when we expect more normalized earnings power to have returned.
- April 16, 2012:
As concerns have swung from commercial real estate and unsecured consumer loans/credit card loans to European sovereign debts the number of small U.S. banks failing continues to grow, albeit at a more moderate pace with 17 in 2012 (compared to 95 in 2011 and 157 in 2010 which was the highest annual tally since 1992). Franchises are being acquired/absorbed as convergence of the financial services industry accelerates – favouring we believe the stronger, better managed banks.
- April 9, 2012:
Canada – In contrast with the US counterpart, the Canadian employment report was a knock-out, with 82,300 jobs being added in March, way ahead of the 10,000 additions expected and easily offsetting the 2,800 February jobs loss.
- April 2, 2012:
Bank of America stated last week it was launching a pilot program that will allow homeowners facing foreclosure an opportunity to remain in their homes while transitioning to tenant status. Under the pilot program known as “Mortgage to Lease,” participants will transfer their property titles to the bank and have their outstanding mortgage debt forgiven. Fewer than 1,000 customers will be invited to participate in the first phase of the pilot and the bank said it has started selecting customers in test markets in Arizona, Nevada and New York - three states hit hard in the housing downturn. (Source: Reuters).
- March 26, 2012:
This fund is in the process of going through its annual redemption which is to be paid on April 23rd to shareholders who have submitted their Units for redemption in March. This creates an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption.
- March 19, 2012:
Federal Reserve policymakers appear determined to flatten the yield curve as much as possible, having indicated they expect ‘exceptionally low levels’ of interest rates “at least through late 2014”. which is still an “exceptionally low level” in the grand scheme of things. Fed Reserve Chairman Ben Bernanke has indicated 1% or less would be considered exceptionally low. The advent of the US ‘twist’ ( whereby the Federal Reserve is selling 3 year and less maturities to buy 6 years and longer) means all parts of the yield curve will benefit from a near-zero anchor for essentially the next 3 years.
- March 12, 2012:
Carnival – The world’s largest cruise operator reported first quarter results last Friday, which were marginally better than expected, yet it had to cut the outlook for the full year, as the group is absorbing the effects of the Costa Concordia tragic incident. For the quarter, the group announced underlying earnings per share of $0.02, while the reported figures where a loss of $0.18 per share, with the difference being accounted mostly by a $173mm write-down in the value of the Ibero Cruises, the company’s Spanish cruise operator.
- March 5, 2012:
Federal Reserve policymakers appear determined to flatten the yield curve as much as possible, having indicated they expect ‘exceptionally low levels’ of interest rates “at least through late 2014”. which is still an “exceptionally low level” in the grand scheme of things. Fed Reserve Chairman Ben Bernanke has indicated 1% or less would be considered exceptionally low.
- February 27, 2012:
As concerns have swung from commercial real estate and unsecured consumer loans/credit card loans to European sovereign debts the number of small U.S. banks failing continues to grow, albeit at a more moderate pace with 11 in 2012 (compared to 95 in 2011 and 157 in 2010 which was the highest annual tally since 1992). Franchises are being acquired/absorbed as convergence of the financial services industry accelerates – favouring we believe the stronger, better managed banks.
- February 20, 2012:
Canada – inflation in Canada moved higher in January, reaching 2.5% year on year in headline terms, helped by gasoline pricing, but also by the removal of seasonal discounts for some discretionary spending categories. The headline reading moved higher as well, to 2.1% year on year, ahead of the expectations for a 1.9% reading as well as ahead of December’s 1.9% level.
- February 13, 2012:
JPMorgan, Bank of America, Citigroup, Wells Fargo, and Ally Financial, have agreed in principal with a number of state and federal agencies to a settlement relating to the servicing and origination of mortgages. The overall settlement includes a $5 billion penalty, payable to borrowers, states and the Federal Government and to provide $20 billion in principal reductions and refinancing for borrowers who are current, but underwater, on their mortgages.
- February 6, 2012:
Outlook of the current fiscal year is bright, as the company expects demand in its sales markets to match the high levels seen in 2011. The group expects order intake to increase by 5%, same as revenues, while pricing environment is expected to stay the same. Earnings before interest and tax (EBIT) margin is forecasted to increase slightly. On the back of the encouraging results, the company proposed an increased dividend, of €0.55 per share, up from €0.40 per share.
- January 30, 2012:
After a number of encouraging reports, the housing sector delivered a couple of rather weak readings last week, as the new home sales rate retreated to 307,000 units annualized in December, short of expectations for an improvement to 320,000 units annualized. The pending home sales retreated by 3.5% in December, partially reverting a strong improvement in November. .
- January 23, 2012:
The advent of the US ‘twist’ means policymakers are no longer accommodating a recovery in bank profits (gained via them trading on a steep yield curve) . The U.S. 2 year/10 year treasury spread has been falling and is now 1.83% and the U.K.’s 2 year/10 year treasury spread is 1.74% - meaning investment banks will need to seek operational efficiencies, including job cuts, to maintain acceptable levels of profit, i.e. above their costs of capital.
- January 16, 2012:
Bank of England left rates unchanged at 0.5% and kept its asset buying program at £275 Billion. The current program is expected to be finished in February but the BOE is likely to increase its purchases in the following months as a recovery in the UK has yet to take hold and Europe looks to continue to slow.
- January 9, 2012:
US – the Institute for Supply Management’s (ISM) non-manufacturing Purchasing Managers Index (PMI) was less upbeat than its manufacturing counterpart, issued a couple of days earlier, however, it managed to advance to 52.6 index points in December, just shy of the expected 53.0 reading. While the employment component of the index advanced to 49.4, the business activity kept steady at 56.2.
- January 3, 2012:
Visa announced that it will deposit $1.57B into the litigation escrow account, effectively acting as a 15.5M share repurchase for Class A stockholders. Under Visa’s Retroactive Responsibility Plan, funds deposited into the escrow reduce the conversion ratio of its Class B shares, having the equivalent impact on EPS as a stock buyback. Visa will use funds it had previously allocated for share repurchases, which will exhaust its current $2B share repurchase authorization. This news demonstrates yet another tool Visa can use to drive EPS growth and shareholder value.
- December 28, 2011:
ING - announced last week that they successfully completed their US tender offers and institutional EUR and GBP exchange offers. The institutional take-up was 66% versus so the capital gain is in the region of €0.5bn, better than expected.
- December 19, 2011:
Barclays’ Barcap unit is close to a sale of more than €1bn worth of German apartments. The sale involves 26,000 residential properties. The deal will be one of the largest deals of its kind and would be a significant step towards unwinding Barclays European property book.
- December 12, 2011:
AMP has completed an A$1bn syndicated loan facility. Following strong investor support, the syndicated loan facility was upsized to A$1bn from the original launch amount of A$700mn. The syndicated loan facility comprises two tranches being 2 and 4 years, each for A$500mn, and is intended to be used for general corporate purposes. The 2 year tranche is priced at 120bp over the bank bill swap rate and is a revolving facility. The 4 year tranche is priced at 150bp over the bank bill swap rate and is a term loan.
- December 5, 2011:
The Federal Reserve and five other central banks agreed last Wednesday to reduce the interest rate on dollar liquidity swap lines by 50 basis points and extend their authorization through Feb. 1, 2013.The new interest rate has been reduced to the dollar overnight index swap rate plus 50 basis points, or half a percentage point, from 100 basis points, the Fed said in a statement in Washington. The Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank are involved in the coordinated action, the Fed said.
- November 28, 2011:
The International Monetary Fund said last Tuesday it approved two new lending tools that can better help countries cope with economic crisis. The new Precautionary and Liquidity Line can be used in broad circumstances, “including as insurance against future shocks and as a short-term liquidity window” between six months to two years. A country can now borrow up to ten times its contributions to the IMF to help pay its bills.
- November 21, 2011:
A number of mostly positive US macro-economic data-points did little to improve the mood of the markets last week as investors were focusing on the European drama. Of note, the all important consumer sector turned out to be more resilient than expected. The October US retail sales advanced by 0.5%, on top of September’s strong 1.1% growth and ahead of the expected 0.3% rate, as Americans increased their expenditures on autos, electronics, home and garden and sporting goods.
- November 14, 2011:
Bank of America, which has been divesting assets in recent months, agreed to sell its stake in the largest Pizza Hut Franchisee to private-equity firm Olympus Partners in a deal worth around US$755mn. ( referenced in Wall Street Journal)
- November 7, 2011:
Credit Suisse 3Q11 results: Outside of CHF1.3bn of own debt gains which analysts had in their estimates the Investment Bank results were flattered by CHF538m of debit valuation adjustments. Stripping these out then the IB misses consensus by almost 20%. Costs also significantly higher.
- October 31, 2011:
Financial Times reports that China is very likely to contribute to the EFSF but the scope of its involvement will depend on European leaders satisfying some key conditions and Beijing must be given strong guarantees, according to two senior advisers to the Chinese government.
- October 24, 2011:
The advent of the US ‘twist’ means policymakers are no longer accommodating a recovery in bank profits (gained via them trading on a steep yield curve). The U.S. 2 year/10 year treasury spread has been falling and is now 1.79 and the U.K.’s 2 year/10 year treasury spread is 1.75% - meaning investment banks will need to seek operational efficiencies, including job cuts, to maintain acceptable levels of profit – above their costs of capital.
- October 17, 2011:
European Banks: Manuel Baroso, President of the EC, outlined yesterday the basis of the Euro banks recapitalisaion plan. This was for a fully coordinated approach to strengthen Europe’s banks - this should be based on a reassessment by the supervising authorities using a temporary significantly higher capital ratio of highest quality capital after accounting for exposure. Banks should first use private sources of capital, with national governments providing support if necessary.
- October 10, 2011:
United States – Economic news out of US last week helped alleviate worries for a renewed recession, as two key contributors of economic growth continued to show signs of life. The ‘star’ announcement last week was the September retail sales numbers, higher by 1.1% in the month, compared to Augusts 0.3% growth and the expected 0.7% advance. The improvement was driven mainly by auto sales, but even excluding sales of motor vehicles, retail advanced in US in the month by 0.5%.
- October 3, 2011:
Canada – The July GDP report revealed a 0.3% improvement, as expected, as the manufacturing and utilities sectors powered ahead. Retail trade offset some of the growth, while mining and construction bucked the recent trend, dipping slightly in the month. Of note, the economic activity in the month was not touched by the malign effects of the recent market turmoil, which was initiated in early August.
- September 26, 2011:
Italy and Greece: Italy’s credit rating was cut by S&P to A from A+ with a negative outlook on concern that weakening economic growth and a “fragile” government mean the nation won’t be able to reduce their debt burden, the agency put Italy on review for downgrade in May. The statement said that Italy’s net general government debt is the highest among A-rated sovereigns, and they expect Italian debt to peak later and at a higher level than it had previously anticipated.
- September 19, 2011:
Bank of America said last Monday that it plans to eliminate 30,000 jobs, the first phase of cost savings will save $5bn per annum by 2013 (around 7% of the cost base). BofA has already disclosed plans to eliminate a total of 6,000 jobs this year and it recently announced a management shakeup that effectively will split the bank into two units: one serving consumers and one serving commercial clients. The bank said it expects a “significant portion” of the reduction in headcount to occur through attrition and the elimination of unfilled positions. BofA had a total of 287,000 employees as of June 30.
- September 12, 2011:
In a widely anticipated speech, the US President Barack Obama tabled a $447bn economic stimulus plan in front of a joint session of Congress last week. The package includes tax cuts and new spending aimed at providing a ‘jolt’ to the lagging US economy.
- September 6, 2011:
US – The macro-economic week south of the border was dominated by the jobs situation, with the August employment report confirming some of the worst fears concerning the state of the US economy. The non-farm payrolls saw no additions in the month, against expectations for 75,000 net new jobs, and, while some of the weak performance can be attributed to one off factors, such as a massive strike at the mobile operator Verizon, it is actually not surprising given the economic outlook and poor levels of confidence affected by credit downgrades and developments overseas.
- August 29, 2011:
Bank of America announced last Thursday it had reached an agreement to sell 50,000 shares of Cumulative Perpetual Preferred Stock with a liquidation value of $100,000 per share to Berkshire Hathaway in a private offering, for $5bn. The preferred stock has a dividend of 6% per annum ($300mn), payable in equal quarterly installments, and is redeemable by the company at any time at a 5% premium.
- August 22, 2011:
AMP reported an underlying profit of $455mn for the half year to 30 June 2011, which includes a A$61m contribution from AXA for the second quarter of 2011, following the merger of the two businesses on 30 March 20112. On a like for like basis, AMP’s underlying profit for 1H 11 was up 3% on 1H 10. The interim dividend has been set at 15 cents per share, the same level as 1H 10 and will be 30% franked. The dividend represents a payout ratio of 81% of underlying profit.
- August 15, 2011:
Earlier last week financial services companies in UK, Italy and then France came under intense selling pressure due to multiple rumours related to France losing its AAA credit rating; Societe Generale selling gold; Groupama, Societe Generale’s main shareholder selling down its stake, etc. Besides the rumours, the bank’s exposure to peripheral Eurozone sovereign debt, although limited, has continued to fuel concerns.
- August 8, 2011:
For the first time in history, the US credit rating was downgraded by the Standard & Poor’s to AA+ from its ‘risk free’ asset rating of AAA. Many have questioned the S&P’s decision, pointing out a serious credibility shortfall stemming from the agency’s generous approach in handing the top credit rating for the infamously opaque mortgage backed securities, which turned out to be collections of little or no values subprime lending contracts and which triggered the great financial crisis.
- August 2, 2011:
In the last minute possible the US Democrats and Republicans got to an agreement in regards to raising the government debt ceiling and passed a bill through the House of Representatives, thus virtually (the Senate still has to vote later today and President Obama needs to sign the bill into law) removing the imminent danger of default that had been hanging on top of the capital markets and financial institutions for the last couple of months. Needless to say, neither of the political party is satisfied with the compromised solution, which saves the entitlement programs (at least for the time being) and avoids raising taxes.
- July 25, 2011:
Policymakers continue to accommodate a recovery in bank profits, albeit less than 6 months ago. The U.S. 2 year/10 year treasury spread is 2.60 % and the U.K.’s 2 year/10 year treasury spread is 2.34 % - enabling financial services companies’ assets booked at these levels, to be profitable.
- July 18, 2011:
U.S. has had its Aaa bond rating placed on review for possible downgrade by Moody’s Investors Service, which cited the “rising possibility” that the debt limit won’t be raised on a timely basis. “There is a small but rising risk of a short-lived default,” Moody’s said. S&P then joined Moody’s in placing the US credit rating on negative watch pending a resolution to the debt ceiling crisis. S&P says there is at least 50% chance the US rating will be cut by 1 or 2 notches within 3 months.
- July 11, 2011:
The US nonfarm payrolls managed to only add 18,000 jobs in June, the fewest in nine months and well below the expected 90,000 jobs additions. The unemployment rate moved higher, to 9.2%, even as people actually left the labour force during the period. One of the main drags was the government sector, which reduced its employment by 39,000 jobs, a direct result of the precarious fiscal situation at both federal and state levels.
- June 27, 2011:
Portland and Manulife they have issued press releases pertaining to ongoing distribution payments. Recirculation of shares in Copernican International Financial Split Corp. (CIR and CIR.PR.A) This split share fund is in the process of going through its annual redemption which is to be paid on July 13 to shareholders who have submitted their Units for redemption in June (a ‘Unit” being one preferred share and one Class A share). This creates an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption. As outlined in the prospectus we, on behalf of Manulife, have entered into a recirculation agreement whereby CIBC as the recirculation agent uses commercially reasonable efforts to find purchasers at a price which is not less than the prescribed redemption price to be paid to the redeeming unitholders. In practice this means that CIBC will, on the fund’s behalf, be offering to sell Units via the TSX at prices which are net of the current retraction fees ($0.75) and which need to be settled on or before the payment date for the redeeming unitholders.
- June 20, 2011:
The newly merged AMP-AXA group is to target the growing $430bn self-managed superannuation market, chief executive Craig Dunn has stated. The SMS market has become the largest part of the $1.36tn super industry. In the past, traditional players such as AMP have tended to focus on the retail end of the market, which now accounts for $370bn.
- June 13, 2011:
Deutsche Boerse/ NY Stock Exchange announced a sweetened offer of EUR 2 special dividend upon the closing of the New York Stock Exchange /Deutsche Bourse deal. The special dividend gives shareholders a 3.7% additional yield on top of the regular 4.3% yield. This amounts to $1.38 per NYX share and increases the value of the deal by 70c. At the same time DB also announced that they will be buying out the minority interests (Swiss X) in EUREX which is c. 2% accretive.
- June 6, 2011:
Canada: as expected, the Bank of Canada left its policy overnight interest rate unchanged at 1.00% with the only noticeable change in sentiment being that the future withdrawal of stimulus would be eventually withdrawn, rather than merely considered. While this is more forceful language relative to the last communiqué, it is consistent with the passage of time and the reality that rates will move up – but not yet.
- May 30, 2011:
The first quarter GDP report indicated a robust 3.9% annual rate of growth, just shy of the expectations for a 4.0% rate, supported mostly by business investment, as consumers and government went on the sidelines. The net exports was a net drag on economic growth as imports outpaced exports in the quarter, despite record levels of oil exports. In this light, the growth is expected to cool-off for the rest of the year.
- May 23, 2011:
European finance ministers for the first time floated the idea of talks with bondholders over extending Greece’s debt-repayment schedule, saying that last year’s 110 billion-euro ($156 billion) rescue has failed to restore the country to financial health. However HAngela Merkel, German chancellor, has spelt out her strong opposition to restructuring debt in any member state of the eurozone, contradicting speculation that Germany was pushing such a solution in Greece.
- May 16, 2011:
HSBC: Profit before tax of $4.4bn was approx $1.51bn below consensus but there were some unexpected items, which depressed the result; a $589m negative fair value adjustment on its own debt – as markets normalize; a $0.1bn charge for non qualifying hedges and; provision was taken for the PPI claims of $440m (re Payment protection insurance - as all UK banks are now deciding not to appeal the adverse judgment in the Judicial Review which found in favour of the Govt. that this PPI insurance was onerous).
- May 9, 2011:
BNP Paribas delivered a beat in 1Q 2011 with net at EUR 2.616bn vs consensus of 2.2bn. generating a return on equity of 15.1%. Lower provisions were a key driver with a provisioning cost of 54bps down from 68bp in Q4. The beat to consensus came across all divisions.
- May 2, 2011:
Policymakers continue to accommodate a recovery in bank profits, albeit less than 6 months ago. The U.S. 2 year/10 year treasury spread is 2.68 % and the U.K.’s 2 year/10 year treasury spread is 2.21 % - enabling financial services companies’ assets booked at these levels, to be profitable.
- April 25, 2011:
Strong revenues in Goldman Sachs’ newly created investments and lending arm saw the bank lift 1Q11 net income above consensus expectations. Excluding one off costs, earnings fell to US$4.38 a share from US$5.59 a year earlier. The consensus estimate was US$3.65 a share. Total revenue slipped 7% to US$11.9bn, as the bank’s trading results failed to match year-earlier results. Revenue from fixed-income, currency and commodities trading totalled US$4.3bn, 28% below the year-earlier results. Investment Bank revenue of $1.27bn was slightly higher than consensus at $1.17bn (lower M&A and probably some lower fees on government deals, but better debt underwriting - likely CMBS deals).
- April 18, 2011:
The Bank of Canada kept its key overnight lending rate unchanged at 1.0% for the fifth consecutive meeting with no indication they were poised to hike at the next meeting. As well, the Bank stressed the dampening impact of the Canadian dollar on both growth and inflation. The Bank raised it GDP growth forecast for 2011 to 2.9% from 2.4%. The output gap is now seen to be closing by mid-2012. We believe this timeframe leaves some room before needing to hike rates.
- April 11, 2011:
Financial conditions are slowly improving, as evidenced by better than expected increase in the consumer credit, higher by $7.62bn in February, significantly higher than the expected $4.70bn improvement.
- April 4, 2011:
Policymakers continue to accommodate a recovery in bank profits, albeit less than 6 months ago. The U.S. 2 year/10 year treasury spread is 2.66% and the U.K.’s 2 year/10 year treasury spread is 2.35% - enabling financial services companies’ assets booked at these levels, to be profitable.
- March 28, 2011:
Euro-zone nations have agreed to set up their permanent bailout fund with a capital base of €700bn ($990bn) to ensure an AAA rating and put the single currency on a firmer footing. The European Stability Mechanism will have €80bn of paid-in capital from the 17 euro countries and €620bn in callable capital, which will have to be made available if a recipient country becomes unable to repay its loans. This will give the facility an effective lending capacity of €500bn when, in mid-2013, it supersedes the temporary fund set up to rescue Greece and the Republic of Ireland.
- March 14, 2011:
A concern which remains is the extent to which mortgage foreclosures have been properly documented, thereby enabling mortgages to be “put back” to the originating bank. However, from recent bank investor relations presentations it does seem the rate of “put backs” are now expected to decline, suggesting current levels of provisions should suffice.
- March 7, 2011:
TD reported net income was $1,541 million, compared with $1,297 million (first quarter 2010). Operating earnings increased 9% to $1.74 per share, due to record results from Canadian Personal & Commercial and very strong results from Wealth Management and U.S. P&C. TD increased the annual dividend 8% to $2.64 per share from $2.44 per share.
- Frebruary 28, 2011:
Barclays: A US bankruptcy court judge has ruled that Barclays’ purchase of Lehman Brothers’ US broker-dealer in 2008 was fair and should not be revisited. This is material good news. Worst fears had suggested $11bn of liability for Barclays (i.e. giving assets back that they had thought they acquired in the Lehmans transaction) which would have been c55p a share of value. Whilst that was a worst case, Judge Peck did agree with the Lehman Trustee that Barclays took some assets that were not part of the deal, believed to be in the order of £2.6bn (c16p a share) against which they have already taken a £600m provision .. within this amount approx $1.9bn was held in a ‘clearance box’ held by Depository Trust & Clearing Corporation to which the Judge has ruled Barclays remains entitled – net from which it is understood Barclay’s probably stands to relinquish up to US$2.5 bn. The Financial Times reported that ‘Barclays, pleased by the decision, had no comment on what it might owe.’
- Frebruary 21, 2011:
Axa reported FY10 NPAT of 2.75bn but this was affected by the 1.6bn charge on the sale of the UK to Resolution. On an underlying basis, the result was 3.9bn, up 1pct yoy. EPS of 1.57 was down 6pct, mainly due to higher share count. The dividend is 0.69 per share, up 25pct on 2009. Operating cashflow increased to 3.7bn, vs 3.1bn in the prior year. The primary driver of growth was the 600m increase from the life business. Embedded Economic Value per share is 14.90, up 11pct yoy. Return on EV was solid at 16%, despite a negative 7% impact from adverse investment variances. Net net these look like decent results and after a frustrating 2010 it has been the best performing large cap insurer this year and remains the most levered to an improving macro environment.
- Frebruary 14, 2011:
Canada’s OFSI: The Office of the Superintendent of Financial Institutions has issued two advisories on its proposed treatment of capital, particularly after January 1st 2013 by when the Basel Committee’s requirements for improved capital is phased in through to 2019. The advisories support the global regulator’s call for more and better quality capital.
- Frebruary 7, 2011:
The European Central Bank has suspended its emergency purchases of eurozone government bonds last week as the debt crisis eased, allowing it to focus on combating inflation.
- January 31, 2011:
Recirculation of shares in Copernican British Banks Fund ( CBB.UN) - This fund is in the process of going through its annual redemption which is to be paid on February 22nd to shareholders who have submitted their Units for redemption in January. This creates an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption.
- January 17, 2011:
JPMorgan reported 4Q Earnings per share of $1.12, versus consensus $0.99. Net income rose in all major lines of business except Retail Financial Services. JPM again produced core underlying quarterly EPS of around $1, while funding needed reserve builds (primarily for mortgage put-backs) through releases of other excess reserves, and realization of portfolio gains. We believe 10% resultant “core” ROE is impressive at a time when consumer-credit loss rates remain very high and expect this to improve to ~11% in 2011.
- January 10, 2011:
Our concerns are mostly focused around the later cycle issues facing financial services companies – particularly commercial real estate and unsecured consumer loans/credit card loans. However, commercial real estate exposure is more acutely held by US, Spanish and German regional banks (as identified in the European stress tests) – rather than larger more diversified global financial services companies.
- January 3, 2011:
TD Bank agrees to buy Chrysler financial corp from Cerberus for $6.3bn, the transaction will all be in cash and its estimated will add $100m to 2012 profits with TD stating the IRR should be in about 3-4 years “well above 20%”. The value that TD brings is access to capital and/or funding, which could allow Chrysler Financial to renew making new loans, with an attractive cost base under the TD ownership; and a brand, which is important as Chrysler Financial is no longer affiliated with Chrysler and TD will seek to start making loans again, under the TD brand.
- December 20, 2010:
Manulife Asset Management has announced that it is to seek shareholder approval to extend the termination date of AIC Global Financial Split Corp from May 31, 2011 to May 31, 2016. Also, a quarterly distribution in the amount of $0.13125 per Preferred Share will be paid on January 13, 2011 to Preferred shareholders of record as of December 31, 2010
- December 6, 2010:
Policymakers continue to accommodate a recovery in bank profits, albeit less than 6 months ago. The U.S. 2 year/10 year treasury spread is 2.51% and the U.K.’s 2 year/10 year treasury spread is 2.39% - enabling financial services companies’ assets booked at these levels, to be profitable.
- November 29, 2010:
This split share fund is in the process of going through its annual redemption which is to be paid on December 10th to shareholders who have submitted their Units for redemption in November ( a ‘Unit” being one preferred share and one Class A share). This creates an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption.
- November 22, 2010:
The CPM.UN fund is in the process of going through its annual redemption which is to be paid on December 21st to unitholders who have submitted their units for redemption in November. This creates an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption.
- November 8, 2010:
Manulife Financial (MFC) reported a net loss per share of ($0.55), above the consensus of ($0.73). Adjusting for market movements and other abnormal items (largely pre-announced), core EPS was $0.43. In aggregate, the adjusted operating earnings of $760 million fell within the upper-end of management’s guidance range of $700-800M, reflecting the benefit of the higher equity markets and more favorable claims experiences in its US businesses. Solid capital improvements: The MCCSR (minimum contingency capital solvency ratio) ratio increased 13 points to 234%, reflecting the $2 billion of debt raised in the quarter and the benefit of higher equity markets, which more than offset reserve strengthening related to assumption changes.
- October 18, 2010:
US Mortgage foreclosures - It appears that the large banks may incur penalties from state Attorneys-General across the US for their lax foreclosure practices whereby mortgage documents were rubber-stamped without checking their accuracy. The mortgage-related issues are two-fold: (1) put-backs from the GSEs (government sponsored entities) and potentially the private label market, and (2) intensified concerns about the foreclosure process and title issues. Jamie Dimon (CEO JP Morgan) has indicated bank costs might rise as a result of the controversy but “we don’t think there are cases where people have been evicted ..where they shouldn’t have been”.
- October 12, 2010:
Last Thursday, the Fed released its data of consumer credit outstanding through the end of August. Revolving (credit card) balances INCREASED $0.5B (0.7% annualized) in August on a NON-SEASONALLY adjusted basis, which compares to a $1.5B drop in July. August is one of the stronger months for credit growth seasonally (13% avg annualized growth from 1996-2007), so this month’s growth in balances isn’t that surprising. Outstanding debt was revised downwards by $0.6B in July, meaning that loan balances contracted slightly more than previously thought. Year-over-year, August balances fell 9%, a slightly slower pace of decline than July (9.3%). Non-revolving consumer credit (mostly auto loans) increased $1.6B in August.
- October 4, 2010:
Prudential Financial is, as anticipated, acquiring from AIG the Japanese life insurance businesses Star/Edison for a net purchase price of $4.2 billion, which equates to 10x earnings post anticipated cost savings and closer to 10.5x if we include a present value estimate of one-time integration expenses. Prudential will fund the deal through $1.7 billion of excess capital, a $1.3 billion common equity offering and a $1.2 billion debt offering. At about 95% of Book Value, Prudential remains materially undervalued in our view.
- September 27, 2010:
Australia New Zealand is keeping its options open on how to fund a possible acquisition of a majority stake in Korea Exchange Bank, stating that it is still continuing with its due diligence.
- September 20, 2010:
Canada’s financial services regulator has opened the door for the country’s big banks to pursue acquisitions and raise their dividends after a three-year hiatus. The Superintendent of Financial Institutions told the banks in a memo that in light of “greater certainty as to reform of capital rules” it was lifting restrictions on transactions that could impair their capital, which were imposed at the height of the financial crisis. Thus, we expect banks to proceed cautiously on all new capital actions such as dividend raises, share buybacks, and acquisitions.
- September 13, 2010:
At yesterday’s meeting of the G-10 Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision, new capital requirements and levels were agreed upon. These capital reforms, together with the introduction of a global liquidity standard, will be presented to the Seoul G-20 Leaders summit on November 11-12. The clear goal – stated by regulators – is that the revised capital requirements will increase the quality, quantity, and international consistency of capital; will strengthen liquidity standards; will discourage excessive leverage and risk taking; and will reduce pro-cyclicality of regulatory requirements.
- September 6, 2010:
The CBK.UN fund is undergoing its annual redemption privilege. This creates an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption. As outlined in the prospectus we have entered into a recirculation agreement whereby CIBC as the recirculation agent uses commercially reasonable efforts to find purchasers at a price which is not less than the prescribed redemption price to be paid to the redeeming unitholders. In practice this means that for 1- 2 days CIBC will, on the fund’s behalf, be offering to sell units via the TSX. During this period there will therefore likely be considerably more liquidity in the shares enabling larger purchase orders to be filled…. which we understand is a challenge during other trading periods. We intend to commence this recirculation opportunity, via CIBC, towards the end of this week – and as soon as CIBC have undertaken a sale then the recirculation ‘window’ will close at latest the day after. If you are interested in purchasing shares over this period we have attached the most recent client friendly fund brief.
- August 30, 2010:
Global economy - the WSJ writes after the Jackson Hole meeting that current and former central bankers from around the world said an uneven global economic recovery was likely to stay on track despite worries about the vitality of the U.S. economy. They also endorsed Ben Bernanke’s comments on Friday according to the article.
- August 23, 2010:
Some of the changes to be expected in running Potash Corp’s operations in the case of a successful takeover by BHP include an immediate ramp up of the capacity utilization to about 90% from the current level of below 80% as well as a likely exit of the Canpotex (the potash North American marketing cartel) in the medium term. The changes would not include, as stated, a reduction in the number of employees, currently at about 5,000. BHP’s philosophy is based on owning only tier one assets, running them at full capacity and marketing their products themselves, under the assumption that, being at the lower end of the cost curve, they would be making money irrespective of the market conditions.
- August 16, 2010:
US – The retail sales numbers for July, the closest watched gage of the consumer sector, although mildly positive on month on month terms, at 0.4%, were below the expected 0.5% monthly growth rate and were supported largely by sales of gasoline, up 2.3%, and motor vehicles and parts, up 1.6%. Most other components actually declined in the month. The year on year change is sitting at 5.5%, versus a weak July 2009, while retail sales excluding motor vehicles and parts (about 25% of the retail sales) were up 4.9% year on year. Earlier in the week the US trade balance report spooked the markets as the trade deficit opened wider than expected at 49.9 billion USD in June, the largest since October of 2009.
- August 9, 2010:
With US regulatory reform and European Stress Tests now behind them, US and European banks have been very quick to return to the markets to fund ongoing medium term needs and reduce the potential risk of investor appetite being insufficient later on. Santander, BBVA, Barclays, HSBC, BNP Paribas Credit Suisse, UBS and Royal Bank of Scotland have all issued bonds at pricing lower than they were required to pay during the credit crisis …. and so their net interest margins will be widened – or at least sufficient to compensate for an extended period of low interest rates.
- August 3, 2010:
HSBC reported Profit Before Tax (ex Fair Value gains) of US$10bn in 1st Half 2010, versus consensus of US$8.6bn. Driving the beat was reduced bad debts, which were $ 7.5bn – about US$2bn lower than expected. Driving the beat were lower bad debts in the US (c.US$1bn), Europe (c.US$700mn) and Asia (c.US$400mn). In the US, HSBC saw a reduction in bad debt in each division with solid improvement in HSBC Finance. This was notable in cards; delinquencies fell to 5.6% (1Q10: 6.8%). Outside the US, bad debt fell sharply in Europe, with HSBC noting a significant improvement in commercial real estate and in Asia, as the economy rebounded. We expect trends to continue to improve and for bad debts to normalize further.
- July 26, 2010:
The bank stress test has been released ( Summary report attached) from which 7 of 91 banks failed -ending with an overall Tier 1 capital ratio below 6% as a result of the adverse scenario An additional 11 banks fall between 6-6.5% In the stressed scenario a ‘double dip’ recession is assumed with the euro area seeing a decrease in GDP of -0.2% in 2010 and -0.6% in 2011. Over the 2 years, the adverse scenario assumes a 3% deviation of GDP for the EU compared to the benchmark scenario of 0.7% GDP growth in 2010 and 1.5%
- July 19, 2010:
Our concerns are mostly focused around the later cycle issues facing financial services companies – particularly commercial real estate and unsecured consumer loans/credit card loans. However, commercial real estate exposure is more acutely held by US, Spanish and German regional banks – rather than larger more diversified global financial services companies.
- July 12, 2010:
Financial Services Companies: Manulife, Canada’s biggest life insurer, would be interested in buying American International Group Inc.’s (AIG) AIA Group Ltd. to expand its insurance business in Asia, at the right price, a company spokesman said last week. Standard Chartered: Trading Statement issued last week. Income was up in both businesses, the commentary says only slightly on 1H09 but double-digit over 2nd half 2009. In our view the overall tone is slightly weaker than in May. Royal Bank of Scotland - CEO Stephen Hester said in Welt am Sonntag that he expects the British Government to start selling their stake in the bank next year. Barclays announces the signing of a Joint Venture Agreement with Sumitomo Mitsui Banking Corporation (“SMBC”) and Nikko Cordial Securities Inc. Santander is considering a partial stock market listing of its UK business as a way of raising cash. The bank has already made a similar move with its Brazilian operations, which was widely seen as a success. G20 calls for banks to hold significantly higher capital buffers, but has backed down on the timing from a hard target down to an “aim” of 2012, and the phase in period will vary across individual countries. The G20 also agreed a compromise pledge to halve fiscal deficits by 2013, presuming this will be growth neutral. EU lawmakers and member states last week backed the toughest restrictions on bankers bonuses seen so far. Under rules expected to pass the European parliament next week, 40% to 60% of a bonus payment would be deferred for three to five years and half the upfront bonus would be paid in securities linked to the bank’s performance.
- June 28, 2010:
Global Banks – Update on reform – Plans by global regulators to compel banks to set aside significant extra capital to cope with future crises are now expected to be pared back after intense lobbying by the industry…. the most significant change to the proposed Basel committee reforms is that there is now unlikely to be a ‘net stable funding ratio’ wherein the maturity of assets and liabilities were to be much closer aligned… instead a form of oversight will be considered… so averting the concern that funding costs / borrowing costs would need to be raised to cope with the extra demands for liquidity. In addition, the overriding aim to seek a level competitive playing field still means – in our view – that any agreed actions will be given several years to adopt … much like is now evident in the US reforms mentioned above.
- June 14, 2010:
The G-20 meeting of Finance Ministers and Central Bank Governors in Busan, Republic of Korea, June 5, 2010 released a Communiqué which appears to drop the idea of a Global Bank Tax, stating they “agreed the financial sector should make a fair and substantial contribution towards paying for any burden associated with government interventions, where they occur, to repair the banking system or fund resolution. To that end, recognizing that there is a range of policy approaches, we agreed to develop principles reflecting the need to protect taxpayers, reduce risks from the financial system, protect the flow of credit in good times and bad, taking into account the individual country’s circumstances and options, and helping promote level playing field.
- June 7, 2010:
We believe the next few years will highlight the growing polarization between strong and weak institutions. Companies that have capital strength will buy assets from those required to divest. Companies that have a strong presence in emerging markets will likely grow quicker than those that do not. Banks that have strong retail deposit franchises will take market share from those that rely on wholesale markets to fund loan growth at attractive margins. Financial services companies that have breached client trust will keep losing business to those reputations that have been enhanced by the crisis. We believe the Funds we manage are extremely well positioned to benefit from the strength of their portfolios of strong, dominant, attractively priced financial services companies.
- May 31, 2010:
European Austerity measures are detailed in this issue.
- May 24, 2010:
The EPD.UN fund is undergoing its annual redemption privilege. This creates an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption. As outlined in the prospectus we have entered into a recirculation agreement whereby CIBC as the recirculation agent uses commercially reasonable efforts to find purchasers at a price which is not less than the prescribed redemption price (including the deduction for the redemption fee of $.045) to be paid to the redeeming unitholders. In practice this means that for 1 or 2 days CIBC (broker code 79) will, on the fund’s behalf, be offering to sell units. During this period there will therefore likely be considerably more liquidity in the shares enabling larger purchase orders to be filled…. which I understand is a challenge during other trading periods. We therefore wanted to bring to your attention that in early June this recirculation opportunity will be opened – however as soon as CIBC have physically traded a sale then the recirculation ‘window’ will close at latest the day after.
- May 17, 2010:
Financials litigation: public scrutiny is increasingly underway with: (i) New York Attorney General Cuomo and Securities Exchange Commission investigating whether rating agencies were “duped” by 8 banks (Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Credit Agricole and Bank of America) over ratings of synthetic Collateralised Debt Obligations and; (ii) in Germany Deutsche Banks’ CEO Josef Ackermann told a Dusseldorf court that the lender wasn’t responsible for the 2007 funding crisis that forced IKB Deutsche Industriebank AG to seek a bailout and; (iii) The US Financial Reform Bill has included a late entry – to reduce the interchange fee that banks receive from debit card purchases.
- May 10, 2010:
European policy makers unveiled an unprecedented loan package on Sunday worth almost $1 trillion and a program of bond purchases to stop a sovereign-debt crisis that threatened to damage confidence in the euro. In its press release, the Council of the European Union highlighted the creation of a European stabilization mechanism based on Article 122 of its governing treaty. That Article provides for the provision of financial support for Member States in difficulties caused by exceptional circumstances beyond their control. The 16 euro nations agreed to offer as much as €750bn, including IMF backing to countries facing instability and the ECB said it will buy government and private debt. In our view there are several pieces of encouraging news: 1. The ECB moved quickly to say that they would be buying secondary debt in both the public / private sector. These amounts are being sterilized but are akin to the EU being ready to provide subsidized finance to those countries most in need. 2. E 750 billion .. of which E 500 bn from the EU (E60 bn is from the EU emergency fund and E 440 bn is to be loans from euro-zone governments) and E 250 billion from the IMF. We understand this is enough for over three years of financing Spain and Portugal’s budget deficit. It is equivalent to 62% of Spanish and Portuguese GDP and 91% of their outstanding debt. 3. The ECB / Federal Reserve have reactivated their Swap programmes in order to alleviate the shortage of short-term dollar funding that had arisen in recent weeks…. This re-opening was in co-operation with the Bank of England, Swiss National Bank, Bank of Japan and Bank of Canada – we understand the lines will now be kept open until January 2011. 4. Spain and Portugal have announced further significant moves to tighten their fiscal policy.
- May 3, 2010:
The long-awaited ‘Greek bailout package’ was confirmed over the week-end. The EU and IMF have agreed a €110 billion, three-year loan programme. The 15 other eurozone countries will contribute E80 billion over this timeframe , with Germany providing 285 and the IMF contributing the balance of E 30 billion. Greece agreed to austerity measures to cut their budget deficit to under 3% by 2014, including wage cuts ( the abolition of 13th and 14th monthly salaries) and pension freezes for public sector workers ( effectively moving up the average retirement age from 53 to closer to the 67 years of age sought elsewhere across Europe) and an increase in Value added Tax to 23%. If the government achieves its targets on budget and economic growth, its estimated that debt to GDP will rise to between 135% and 145% of GDP, depending on inflation, by 2013, when the programme ends. But by then the debt ratio should be stabilising or even falling.
- April 26, 2010:
Wells Fargo – reported 1Q 2010 earnings per share of $0.45 – beating consensus at $0.42. However, this beat was understandably more modest than those banks with larger fixed income / trading desks and its net interest income and levels of nonperforming assets were more disappointing by comparison. However, management’s outlook on credit was positive and the company did not see the need to build reserves and so we believe it continues to be evident that retail-centric Wells Fargo’s rate of recovery continues to lag its peers as it absorb’s the retail-centic Wachovia franchise. In our view, testimony to its unrelenting earnings power are its improving capital ratios with Tier 1 common equity up to 7.1% ( from 6.5%) and Tier 1 up to 10% ( from 9.3%). Looking ahead and we continue to like how this very large retail bank is positioned – with less regulatory risks compared to more universal banks and less government-funded overhang and tarnished franchises compared to smaller retail banks.
- April 19, 2010:
Goldman Sachs – The Securities and Exchange Commission ( SEC) has sued Goldman Sachs ( GS), alleging fraud in the subprime CDO market, indicating GS should have disclosed conflicts of interest related to the creation of synthetic CDOs backed by subprime RMBS. SEC commenting “Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.” It is alleged that the Hedge fund Paulson & Co. approached Goldman to structure a pool of mortgage securities it then intended to go short against and a Goldman Sachs Vice President agreed. The deal, called Abacus- 2007 AC1 ended up costing investors including European Banks, $1 billion while netting Paulson a corresponding $1 billion profit and Goldman $15 million in fees. Link to press release: http://www.sec.gov/litigation/complaints/2010/comppr2010- 59.pdf
- April 12, 2010:
Australia has raised its benchmark rate to 4.25% and signaled further increases. The Reserve Bank of Australia raised its benchmark rate by 25 basis points to 4.25% last week. In the accompanying statement, the RBA said it believes growth is near trend and that inflation is expected to come in close to target in the coming year. The RBA cited that it is appropriate for interest rates to be closer to average and that today’s move is a further step in that process, thus keeping its tightening process. UK Construction PMI came out stronger than expected at 53.1 vs 48.7, posting a new 2 year high. Markets, however, decided to focus instead on Gordon Brown’s announcement of a UK election on May 6th. Markets are still very concerned about a possible hung parliament. In the UK, the Institute of Supply Management’s services sector index rose from 53 in February to 55.4. Readings above 50 signal expansion.
- April 5, 2010:
Recirculation of shares in Global Banks Premium Income Trust (GBP.UN): The GBP.UN fund has completed its annual redemption privilege. This has created an opportunity for those wishing to increase their stake in this fund via the resale of those units which have been tendered for redemption.
- March 29, 2010:
The US Healthcare reform was signed into law by President Obama on March 23 and the final adjustments were voted in the Senate and the House of Representatives over the next couple of days.Overall, the impact of the new law on the pharmaceuticals industry is seen to be neutral, in particular for the European pharma companies, which are traditionally underexposed to the US market. Our holdings in the sector are Roche Holding, Novartis AG and Bayer AG.
- March 22, 2010:
The macro-economic indicators released last week in Canada continued to strengthen the opinion that the economic recovery has gained a lot of traction and that the Bank of Canada (BoC) is likely to adjust upwards the interest rates rather sooner than later, with or without a similar move from the Feds. The consumer price index (CPI) reading was surprisingly strong in February, with the core (excluding the 8 most volatile price components, mainly food and gasoline) number exhibiting a 2.1% annual rate growth, marginally outside (on the plus side) BoC’s comfort level. While exceptional factors (the winter Olympics) contributed to this inflationary reading, the high level is likely to keep the Bank of Canada on alert.
- March 15, 2010:
Good news out of the US on the retail front, where the headline number advanced 0.3% in February versus the previous month. Consensus expectations were calling for a 0.2% contraction. Sales increases were present in most retail categories, one exception being the auto sales which were reported flat. So far it seems that the consumer expenditure will be a net contributor to the Q1 GDP growth, but with the painfully slow recovery in the job markets it remains to be seen how the retail story will unfold in the coming quarters.
- March 8, 2010:
The US consumer credit grew in January stopping an 11 month slide. While this is hardly evidence of a significant rebound in the consumer sector, in particular after the disappointing consumer confidence data issued a week before, it contributes to the overall improved economic outlook as implied by the manufacturing numbers and the financial conditions indicators (in particular the steepness of the yield curve). This improvement also comes to confirm the easing in lending standards as reflected by the Fed’s Senior Loan Officer’s Survey on Bank Lending Practices in January. The growth in consumer credit was of 5 billion USD, supported largely by the growth in non-revolving credit by 6.6 billion USD, offset by a modest 1.7 billion USD retreat in the revolving credit. In relative terms, consumer credit grew month on month by 2.4% annual rate.
- March 1, 2010:
US Consumer Confidence sharply missed expectations in February, down 18.5% m/m to 46.0 from 56.5 in January (revised up from 55.9) and versus expectations for 55.0. The decrease in the February reading was driven by both decreases in consumer sentiment surrounding the present situation (down 23.2% m/m and the lowest reading in over 40 years), and in sentiment surrounding the future conditions (down 17.4% m/m). The spread between the two narrowed, but remains in negative territory, which it had initially touched in September 2008, a pattern consistent with past “official” recessions.
- February 22, 2010:
The Federal Reserve’s announcement last Thursday that it would increase the interest rate it charges banks for emergency loans by 0.25% to 0.75% does not mean that it plans to enact significantly tighter monetary policy in the near future. The announcement stated “Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve’s lending facilities. The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in outlook for the economy or for monetary policy.” As of February 10th, there was less than $15 billion outstanding of primary credit borrowing via the discount window, down from a crisis peak of above $110 billion… and so we should expect migration of the residual amount back to the interbank market… impacting (modestly) those banks which remain wholesale funded and favouring those banks which are retail funded / lenders into the interbank market – like HSBC, Standard Chartered, Santander and JPMorgan.
- February 16, 2010:
We are this week concluding our recirculation of some shares of Copernican British Banks (CBB) and on behalf of Manulife, some shares of Copernican World Financial Infrastructure (CIW). In our view this recirculation offers an opportunity particularly to investors looking to hold a position in CBB for at least 4 years – as, at that time, there will be no retraction fee.
- February 1, 2010:
We intend next week to start re-circulating some shares of Copernican British Banks (CBB) and on behalf of Manulife, some shares of Copernican World Financial Infrastructure (CIW). In our view this recirculation offers an opportunity particularly to investors looking to hold a position in CBB for at least 4 years – as, at that time, there will be no retraction fee.
- January 25, 2010:
Signs of economic recovery continue despite tremendous hurdles. The US Leading Economic Indicator Index, published by the Conference Board, has recorded the ninth consecutive monthly improvement in December. The index grew an impressive 1.1% over the previous month, significantly better than the expected 0.7% monthly growth. Moreover, eight of the ten component indexes indicated growth, with only a couple (manufacturing workweek and consumer goods indices) posting flat readings. The Coincident Economic Index posted a growth number as well, at 0.3% over the previous month.
- January 18, 2010:
The fragile nature of the current recovery process in the US has been reiterated by the latest economic numbers issued last week statewide. The University of Michigan’s consumer confidence index moved up to 72.8, a 0.3 increase versus the previous reading but, below the expectations of 73.9. Moreover, the increase was driven by the current conditions index, while the expectations index fell for the third time in the last four months. The retail sales, which were expected to edge higher, decreased by 0.3% in December, a significant change of pace and direction after the 1.8% growth for November, with the core retail spending, which excludes sales of automobiles, gasoline and building materials, decreasing as well. The consumer price index (CPI) reading indicated a modest increase in both the headline and core values, a reflection of the considerable slack in the economy as measured by both the output gap and the unemployment numbers.
- January 11, 2010:
A series of economic indicators issued last week highlighted that the current recovery process remains fragile with significant hurdles yet to be passed. While the manufacturing environment has improved significantly stateside supported by the inventory build-up from historically low levels, the consumer sector is still very weak: some 84k jobs were lost in December albeit the numbers were revised and improved for November – with 4k jobs gained rather than 11k lost as originally reported. Real income remains stagnant and the housing is expected to soften over the next few months as indicated by the pending home sales numbers which were down 16% in November. And consumer credit has contracted for the 9th consecutive month which ultimately augurs well for a society that needs to deleverage before it can stage a stronger based recovery. In Canada last week the Ivey Purchasing Managers Index dipped below 50, from 55.9 at 48.4 for the month of December, indicating contraction in the manufacturing sector. However this is significantly higher than the December 2008 reading of 39.1. The employment numbers, indicating a loss of 2.6k, while not reassuring, provide a support level from which expansion could be initiated.
- January 4, 2010:
Worldwide, the improvements in financial conditions are providing support for a rebound in the economic activity and an upgrade in the business conditions. Policymakers continue to accommodate a recovery in bank profits. The U.S. 2 year/10 year treasury spread is 2.71% and the U.K.’s 2 year/10 year treasury spread is 2.66% - enabling financial services companies’ assets booked at these levels, to be very profitable, so enabling them to accelerate the absorption of anticipated consumer credit losses.
- December 13, 2009:
Dubai has announced it has received a $10 billion bailout from Abu Dhabi to pay part of the debt of government-owned conglomerate Dubai World and its struggling property unit Nakheel. Of this, $4.1 billion will be used to repay Nakheel’s Islamic bond, or sukuk, that matures today. The remainder of the funds will be used to finance Dubai World’s needs up until the end of April 2010. We believe that the support Dubai World is receiving from the UAE Central Bank and Abu Dhabi government confirms that the UAE is one country and is supporting its corporate sector – which augurs well for those foreign banks who in turn are supporting the corporate sector.
- December 7, 2009:
Further to Friday’s note I can advise we are today closing on behalf of Manulife, the recirculation of securities for Copernican World Banks Split Inc. Class A Shares and Preferred Shares (CBW and CBW.PR.A) and AIC Global Financial Split Corp. Class A Shares (ASC). We will for the rest of the week and early next, be looking to re-circulate some shares of Copernican International Premium Dividend Fund (CPM).
- November 30, 2009:
Last week the UAE government said it would take charge of restructuring its corporate flagship, Dubai World and asked creditors to accept delayed payments. Dubai World has $20 billion of loans and bonds coming due in the next 18 months and although the UAE has stated it does not guarantee Dubai World’s debt its Central Bank has said it ‘stands behind’ the country’s local and foreign banks offering them access to extra liquidity in need. We believe the contagion related to the threat of a Dubai World default appears to be contained as Dubai is simply not large enough to threaten the global banking system. Leading foreign banks with exposure to the UAE region (HSBC, Standard Chartered, Barclays) have indicated relatively modest exposure with no or little expected impact on impairments this year. And we expect Abu Dhabi to play a lead and lucrative participating role in rescuing its debt-laden neighbour.
November 24, 2009:
Worldwide, the improvements in financial conditions are providing support for a rebound in the economic activity and an upgrade in the business conditions. Most purchasing managers indices (PMI) point towards a bottoming in the manufacturing activity with the latest PMI from the Institute for Supply Management (ISM) reaching the highest value since the summer of 2006 (for October) at 55.7 rising from the low of 32.9 (December 2008). The improvement reflects an upturn in exports and auto production and further inventory rebuilding.
- November 16, 2009:
With the deliberately stringent stress tests conducted in the U.S.A. and U.K. now in the rearview mirror and with government injected capital (‘TARP’ in the case of U.S. banks) in the process of being withdrawn, we thought it would be helpful to compare how several banks which populate our closed-end Funds have weathered the global recession and resultant credit losses to date and have further strengthened their levels of capital adequacy beyond those levels which were achieved during the earlier part of the year, when capital raisings were being mandated. Pre the credit crisis, regulators required the Tier 1 ratio to be at least 4% (Tier 1 capital excludes goodwill).
- November 9, 2009:
Worldwide, the improvements in financial conditions are providing support for a rebound in the economic activity and an upgrade in the business conditions. Most purchasing managers indices (PMI) point towards a bottoming in the manufacturing activity with the latest PMI from the Institute for Supply Management (ISM) reaching the highest value since the summer of 2006 for October at 55.7. The improvement reflects an upturn in exports and auto production and further inventory rebuilding. The spread between New Orders and Inventories (both ISM/PMI components) being the highest since 1976 in September; the October reading shows signs of improvement pointing to a slightly lower spread indicating a slow-down in destocking activity as inventories are trying to keep up with new orders. The U.S. services sector is showing signs of expansion but the growth is sluggish, with the latest nonmanufacturing index (NMI) reading being slightly lower than for the previous month. The U.S. leading economic indicators (LEI) have recorded the sixth consecutive month of improvement in September. We believe, three consecutive months of increases, or three consecutive months of decreases traditionally signal an upturn or a downturn in the economy within three to six months. In its latest quarterly release the US Department of Labor unveiled a quarterly productivity increase of 9.5%, on top of the previous increase of 6.9%; such levels of productivity growth haven’t been seen since the fall of 2003 and are characteristic of an end of recession.
- November 2, 2009:
Worldwide, the improvements in financial conditions are providing support for a rebound in the economic activity and an upgrade in the business conditions. Most purchasing managers indices (PMI) point towards a bottoming in the manufacturing activity with the latest PMI from the Institute for Supply Management (ISM) reaching the highest value since the summer of 2006 for October at 55.7. The improvement reflects an upturn in exports and auto production and further inventory rebuilding. The spread between New Orders and Inventories (both ISM/PMI components) being the highest since 1976 in September; the October reading shows signs of improvement pointing to a slightly lower spread indicating a slow-down in de-stocking activity as inventories are trying to keep up with new orders. The U.S. services sector is showing signs of expansion for the first time in a year. The U.S. leading economic indicators (LEI) have recorded the sixth consecutive month of improvement in August. We believe, three consecutive months of increases, or three consecutive months of decreases traditionally signal an upturn or a downturn in the economy within three to six months.
- October 26, 2009:
3Q results continue to reflect a recovery in financial conditions with signs of credit stabilization increasingly evident. Sentiment across the global credit markets has calmed with TED spreads (the rate at which banks lend to each other) at approximately 0.23% well off the highs of 4.6% witnessed late September/early October and back to pre-crisis normal levels. In addition, the U.S. 2 year/10 year treasury spread is 2.50% and the U.K.’s 2 year/10 year treasury spread is 2.78% - enabling financial services companies’ assets booked at these levels, to be very profitable, so enabling them to absorb anticipated consumer credit losses.
- October 13, 2009:
The Reserve Bank of Australia raised interest rates by ¼% to 3¼% on October 6th further supporting our continued belief that the economic background is starting to stabilize. Sentiment across the global credit markets has calmed with TED spreads (the rate at which banks lend to each other) at approximately 0.22% well off the highs of 4.6% witnessed late September/early October and back to pre-crisis normal levels. In addition, the U.S. 2 year/10 year treasury spread is 2.40% and the U.K.’s 2 year/10 year treasury spread is 2.62% - enabling financial services companies’ assets booked at these levels, to be very profitable, so enabling them to absorb anticipated consumer credit losses. Our concerns are mostly focused around the later cycle issues facing financial services companies – particularly commercial real estate and unsecured consumer loans / credit card loans. However, commercial real estate exposure is more acutely held by US regional banks – rather than larger more diversified global financial services companies and recent comments from credit card executives speak to an improving trend in credit card / consumer loan delinquencies.