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October 7, 2014

Economy. Germany is a concern. Italy and France are showing negative GDP numbers and now Germany is heading to be stalled out. It was supposed to be a beacon of strength along with the UK. US$ has been strong largely because it is the economy that has shown the most growth. This is a country that put together the most fiscal and monetary easing policies that has actually started to work, whereas some of the other countries are not getting the same response. You are seeing a flight to safety with the US$. With the easing policies everywhere else, the signs of inflation are really not there, so people are continuing to plow into US treasuries and keeping yields low. Given that the US continues to be strong and the job growth is there, corporate America is in the best shape that it has been in a long time. The next leg he would like to see is the consumer benefiting and starting to spend. Job growth has been there. He would like to see some wage growth next. Canada should benefit to some extent as the US economy does better. Our weakening dollar is a tailwind as well.

General Market Comment
October 7, 2014

Economy. Germany is a concern. Italy and France are showing negative GDP numbers and now Germany is heading to be stalled out. It was supposed to be a beacon of strength along with the UK. US$ has been strong largely because it is the economy that has shown the most growth. This is a country that put together the most fiscal and monetary easing policies that has actually started to work, whereas some of the other countries are not getting the same response. You are seeing a flight to safety with the US$. With the easing policies everywhere else, the signs of inflation are really not there, so people are continuing to plow into US treasuries and keeping yields low. Given that the US continues to be strong and the job growth is there, corporate America is in the best shape that it has been in a long time. The next leg he would like to see is the consumer benefiting and starting to spend. Job growth has been there. He would like to see some wage growth next. Canada should benefit to some extent as the US economy does better. Our weakening dollar is a tailwind as well.

Rob Stabile
Portfolio Manager, LDIC Inc
N/A
N/A
October 7, 2014

Energy. West Texas oil below $90 is a bit of concern. There is either a problem with demand or too much supply globally or a mixture of both. WTI is going to trade in relation to Brent or international pricing. It is worth keeping an eye on, because he thinks that a lot of the countries that have increased their production, especially the ones with geopolitical problems, are not sustainable. Over time they are going to run into hiccups.

General Market Comment
October 7, 2014

Energy. West Texas oil below $90 is a bit of concern. There is either a problem with demand or too much supply globally or a mixture of both. WTI is going to trade in relation to Brent or international pricing. It is worth keeping an eye on, because he thinks that a lot of the countries that have increased their production, especially the ones with geopolitical problems, are not sustainable. Over time they are going to run into hiccups.

Rob Stabile
Portfolio Manager, LDIC Inc
N/A
N/A
October 7, 2014

Markets. Markets are off today, but the S&P 500 is really only off about 4% from their highs, and the TSX is off about 7%. Maybe this is the 5%-10% that everybody keeps talking about. She doesn’t see anything on the horizon that would make it any more severe than that. Thinks there was probably some profit taking. Feels the US economy is recovering. As long as we get profit growth from the corporations, she can see markets continuing to have upside over the next year. Stock valuations are not that unreasonable given that there is not a lot of inflationary concern. PE multiples are just above historical averages. Germany is a concern because of US multinationals that do business there. Strong US$ is a headwind for multinationals. IMF is calling for 7%-7.5% growth in China.

General Market Comment
October 7, 2014

Markets. Markets are off today, but the S&P 500 is really only off about 4% from their highs, and the TSX is off about 7%. Maybe this is the 5%-10% that everybody keeps talking about. She doesn’t see anything on the horizon that would make it any more severe than that. Thinks there was probably some profit taking. Feels the US economy is recovering. As long as we get profit growth from the corporations, she can see markets continuing to have upside over the next year. Stock valuations are not that unreasonable given that there is not a lot of inflationary concern. PE multiples are just above historical averages. Germany is a concern because of US multinationals that do business there. Strong US$ is a headwind for multinationals. IMF is calling for 7%-7.5% growth in China.

Christine Poole
CEO & Managing Director, GlobeInvest Capital Management