Raptors/ Rate Cuts? / Bull Bear Ratio /Copper leads
Wow what a great game and playoff. Great for the team, Toronto and Canada. Amazing fans too. Equity markets steady this week after strong recovery rally last week – will this hold – earnings season coming, could spark summer rally.
Positives: Interest rates – possibly 2 cuts coming – 50-75 basis points in 2019 with another 25 basis in 2020 – however may not be necessary – will still to drive equities higher – politically driven possibly – however real GDP growth expected to be 1.5% second quarter (could be temporary) as normal rate is 2.5-3% - could be held back by inventory accumulation which is a temporary phenomenon (B Wesbury). Job growth continues and productivity growth has picked up due to deregulation and lower taxes on corporate profits and investment in US. Trump administration and Mexico reach a deal to advert higher tariffs. G20 meeting could lead to US Trade deal with China. US consumer prices edged higher in May and inflation slowed. China plans new stimulus measures – accelerate financing or major infrastructure projects VIA special purpose bonds issued by local governments. Chinese exports rise while inputs fall most in 3 years. Copper rallied this week – a leading economic indicator. Stock market sentiment indicator – Bull/bear ratio (BBR) rose for the first time in 6 weeks as bullish sentiment rose back to 50%. S+P 500 earnings/revenues valuations and margins – stall near record high for a ninth week and forward earnings rose for an eight week for its record high since early December (DR.E Yardini). Anti-trust overhangs technology companies – potential for a break up – it could unlock higher valuations for parts of each business (B Murray). TLT 20 year treasury may have peaked, yields start to rise could be a leading indication of a stronger economy.
Negatives: Corporate attacks by US governments – China isn’t the only target – the EU, Japan and India too. Anti-trust suits and technology will continue to overhang in the short term – looming potential of a breakup creates uncertainty. Summer doldrums season approaches. Volatility will return as there will be all ways be negative headlines. A worry of widening spreads between short term business credit and business inventories - that may be a sign of speculative excess, when more and more term business credit isn’t secured by inventories (Dr Ed Yardini). CDN exporters are reporting widespread concerns about a global recession – sentiment at lowest level in 7 years.
PORTFOLIO MANAGEMENT–Week’s Highlights
Stocks of the Day: NEM, PEP, HD, ENB, CAR.UN
New Issues: RIB.UN, AP.UN, MAX, AD’Z, APR.UN
Have a great weekend. Bruce
MacKay Weekly Investment Report Contents:
Page 1 - How I see It
Pages 2 & 3 - Notes and Quotes
Page 4 - CDN Mkts
Page 5 – Int’l Mkts
Page 6- Funds & ETFs
Page 7-9 – Favourite Charts
Page 10 – MacKay Group Portfolio Management
Page 11 – Comprehensive Wealth Management
Page 12 – MacKay Group News & Events