Mountie Stocks

Tue, 2017/10/24 - 2:24pm | Your editor
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Very mixed US economic data today encourages me to talk up global investing some more. The US manufacturing purchasing manager's index rose to the highest level YTD at 54.5 and the services PMI rose even higher (but slower) to 55.9. Services employment and new orders (backlog fell) while both factory employment and backlog rose. However regional data showed problems in the US southeast.

Retail sales were up as we go into the holiday season, but same store sales fell by more than expected, 1.3% vs last October so far and by a scary 3.4% YTD vs the same period in 2016. The cause was probably the hurricanes.

 

Meanwhile in the euro area, the PMI fell to 55.9 today vs mid-Sept levels of 56.7. The forecast had been a much more buoyan 56.5 and there was no hurricane to explain the shortfall.

 

Today BofA-Merrill Lynch forecast that the Bank of Canada would delay further increases in interest rates for the rest of this year to check on the economic impact of recent back-to-back rate rises. It expects the Canada CB will only resume raising interest rates in 2018, with hikes to take the overnight interest rate in Canada to 1.75% by midsummer of next year.

The forecast also assumes that Canada and theUS will coordinate its rate policy with that of the Federal Reserve, withdrawing stimulus as rates turn positive. The two central banks will be synchronizing their rate policies.

The Canadian CB would only delay the rate hikes if a breakdown in Nafta negotiations put economic growth and housing sales at risk. (The analysts writing this were Carlos Capstran and John Shin.)

The news that oil prices are rising, with Brent crude at $57.63 and US crude at $52.23 has also boosted the Toronto market.

 

This gives me a chance to get current with Canada stocks in our portfolio. And other Americas positions.

 

Wall Street is down across the board today and the dollar is up and, for a change, gold has followed suit. Usually the buck and gold move in different directions. It is a new era, perhaps. ValuEngine says over 61% of US stocks are more than 20% overvalued by their market price. This is a call to action according to the stock advisor.

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