The banks have had a long run of strong profits but the good times are about to become a little less so, according to Ed Clark, chief executive of Toronto-Dominion Bank.
Europe remains in a shambles, the U.S. still hasn’t recovered, while in Canada strong tailwinds such as the housing market have turned into headwinds. But the real challenge, “the underlying issue” is what’s going to happen to interest rates, Mr. Clark told RBC Capital Markets’ annual bank CEO conference in Toronto on Tuesday.
Canada’s life insurance companies can’t seem to catch a break as stubbornly low interest rates continue to hamper earnings six years after the hard crash of the financial crisis.
The picture seemed to be brightening for lifecos last May, when the U.S. Federal Reserve first began hinting that it would scale back its massive bond buying program — a program that has kept long-term interest rates at record lows. The news led to a temporary spike in bond yields and a flood of investors poured into lifecos looking to capitalize.
TORONTO — The Canadian dollar drifted lower Wednesday morning amid general U.S. dollar strength.
The loonie was down 0.07 of a cent to 91.27 cents US to levels last seen in September 2009.
The new year is only two weeks old and the loonie has already fallen 3.1%, making it the worst performing primary currency.
The reasons for the decline are many. One is that the greenback has gained in value as the Federal Reserve starts to back away from its massive monthly bond purchases.
The big story in economics is the recent rise in interest rates. In just the past several weeks, as talk has grown about reducing the pace of bond purchases via quantitative easing, yields on the US 10-year have surged past 2.5%. Very recently they were barely above 1.5%.
The U.S. stock market has finally rolled over, after going 3 years without so much as a single 10% decline. We are not quite there yet (at today’s S&P 500 low of 1,837 the index is down 9% from its peak reached last month), but for all practical purposes this is what a correction looks and feels like. So does it matter? Are stocks down to a point where investors should consider adding to their stock holdings? Let me share some thoughts as to how I am viewing the market’s current position.
WTI Crude plunged another 3.75% to as low as $74.06 today - the lowest since Sept 2010 and dropping at the fastest rate of collapse since Lehman. Airlines popped and Energy stocks dropped 2.7% (now worst sector of the year) but Small Caps were the worst performing major index of the day (turning first around 1030ET and dropping most in over 3 weeks). The S&P tested back into the red for the week but was VWAP-rescued twice. AAPL once again bid saved the Nasdaq.
Hedge fund performance continues to be weak so far in 2014 and this week was no different as long/short funds found to their dismay that trading on rational thought and fundamental analysis was for losers. However, global macro strategies are doing the worst of all as carry trades unwind, sanctions create inflows, and geopolitical chaos creates nonsense from sense. The best performing hedge fund strategy... buying-the-most-shorted is beaten only by Bonds.. and in first place of all assets - Gold.