Integra's market commentary is available both weekly, monthly, and quarterly.
Weekly Market Review |
Commentary for the week ending January 10, 2003 |
Canada continues to create jobs at a swift pace while our U.S. neighbours struggle to add to their payrolls. Canadian job creation continues to dramatically outperform the U.S. with the December Canadian unemployment rate holding at a steady 7.5% due to a large number of people entering the workforce. With the 58,000 jobs created in December, the 2002 annual figure for employment growth becomes the biggest jump in 15 years.
In an attempt to kick start the U.S. economy, President Bush, earlier this week, announced a $670-billion economic stimulus package aimed at cutting taxes and stimulating job growth.
Canadian housing starts continued to benefit from low interest rates, jumping more than 25% from a year earlier. December's seasonally adjusted rate of 198,500 from The Canada Mortgage and Housing Corporation put the final touches on the highest annual growth rate since 1983.
The Canadian dollar also gained on the news, climbing 0.25 of a cent (U.S.) to 64.71 cents Friday, to close the week up 1.2%.
With this backdrop of positive data, Canadians are twice as optimistic about the country's economic prospects heading into 2003 compared to a year earlier, according to a poll by Pollara Inc. A confident 56 per cent of Canadians said they felt the economy would improve this year, compared to 28 percent at the start of 2002.Both the Bank of England and the European Central Bank announced Thursday they were holding steady on their key interest rates.
The information technology sector was the big gainer for the week up 13.2%, with telecoms also doing well up 2.8%.
The Government of Canada 10 year bond yield was up 0.6% to 4.96 for the week.
The S&P/TSX was up 0.43% , the S&P 500 gained 0.80% , and Oil was down 4.2% for the week.
If you have any questions about the Weekly Market Review or would like more investment information, please contact us.
We look forward to hearing from you!
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Monthly Market Review |
Commentary for the month of September |
In an extended stock market downturn, confidence in a recovery is continually beaten down as it seems that one day of good news is followed by two days of losses. Some investors feel the best way to deal with such an emotional roller-coaster is to simply get off. The yield on the US 10-year bond reached its lowest level, 3.91%, since 1963 on Friday. It was only a couple of years ago investors were not satisfied if stock returns were less than 20%. Now volatility is of greater concern than maximizing return. As is human nature, the pendulum may have now swung too far in the other direction.
The best opportunities generally arise when everyone else is heading for the exit. Beutel Goodman is the newest portfolio manager in the Integra family of specialty managers. Beutel Goodman is the Canadian equity value manager in the Integra Global Life Cycle Funds, including the Strategic Allocation Fund, as well as the Integra Canadian Value Growth Fund. This Team has taken advantage of selected stocks selling at prices well below intrinsic value. The Team has been building positions in TD Bank, Manulife, Investors Group and Alcan among other value opportunities.
For the week, the S&P/TSX was down slightly, losing –0.053%. The S&P 500 gave up -0.417% and the Russell 2000 fell –0.362%.
The yield on the Canada 10-year bond fell to 4.87%.
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Integra Insight Quarterly |
Horace was a poet in Greece over 2000 years ago. Today, he would probably find his fortune along side Warren Buffett as a famous contrarian investor. Usually the greatest value can be found in those areas that have been badly beaten down while, conversely, those areas that seem to be doing well suffer the risk that the good times cannot continue indefinitely.
The end of 2002 marks only the second time in the last 100 years that bonds performed better than stocks for three straight years. The chart below summarizes the great bear markets of the last century. The important characteristic is not so much the depth of the sell-off but, rather, the strength of the subsequent recoveries in a relatively short space of time. What is of particular interest is that, in almost all cases, the most significant part of the gain for the three years following the “bottom” occurs in the first 12 months. Clearly, it is important to be well positioned early in a market recovery.
We did see a rally last spring that ended with a vicious sell-off during the summer. There was no particular positive stimulus for the rally and it lost its support as investors backed away. However, the rise in stock prices that began again in mid-October seems to be far more sensitive to what we believe should be the driving force in stock values, that is, the strength of the underlying economy and the ability of companies to participate by growing their earnings.
North America is enjoying a slow but steady improvement in its economies bolstered by improved productivity and consumers whose jobs are reasonably secure and whose houses have increased in value. Slower growth makes it likely that interest rates will remain stable for quite some time, which should keep consumers happy. For Canada, improved prices for commodities such as oil, gold and copper are always positive for our economy plus we have developed increased industrial capabilities that provide a rich level of diversification. Recent government initiatives that seemingly threaten competitiveness through higher taxes still face healthy debate on the cost/benefit of these ideas, and that should play out positively over the long term.
Outside North America, there is real cause for excitement in many of the Asian economies. China seems set to grow at a phenomenal rate, as this nation becomes a major player on the world stage. More than a billion people will want to raise their living standards and the trade with their neighbours will benefit all. Japan still has the greatest savings of any other nation and slowly is gathering the will to address its significant banking problems. Meanwhile, the European markets are showing some potential for growth as they have now started to reduce interest rates, following the U.S. lead. Additional countries are joining the European common market and trade and capital flows are increasing. However, there are areas of potential disappointment such as the loan losses that many German banks have yet to realize that will result from the collapse of the Telecom stocks.
Bonds have been a safe haven for investors over the last couple of years. But interest rates are not likely to continue falling, particularly as the economic recovery becomes more apparent. The geo-political situation certainly contains risk. However, the forces of the west are formidable and the likelihood is that its overwhelming advantage will contain any conflict. Although we must be careful, there are better opportunities in owning company stocks going forward. When we write the final newsletter at the end of 2003 we believe that the honour that Horace spoke of shall be restored to stocks.
If you have any questions about the Integra Insight Quarterly or would like more investment information, please contact us.
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