June 2014

Economic Data Thaws

Although off to a moderate start in 2014, the S&P500 Index has managed to grind its way above a 1900 closing price. After the North American ‘Polar Vortex’ pushed down US Gross Domestic Product (GDP) growth to 0.1% in the first quarter of 2014, results going forward are expected to make up for the shortfall. Given the soft start to the year and built-up demand going forward, Scotiabank has current estimates for GDP growth in the US at 4% for the second quarter (Scotiabank, 2014).
Interestingly enough, the cold weather across North America had a fairly positive impact for equities in the Canadian market given their reliance on commodity prices and their limited exposure to consumer spending. Cold weather combined with political instability in Russia/Ukraine pushed up oil and gas prices to levels that helped to improve company profitability. In addition, the political instability and weakness in gold prices throughout 2013 helped to mount a comeback for the precious metal in the early part of 2014; this gave the Toronto Stock Exchange (TSX) a nice boost. Although Canadian GDP growth in the first quarter of 2014 outpaced its neighbor to the south, the trend is expected to reverse going into the later stages of the year (Scotiabank, 2014).
In other nations around the globe bright spots are appearing. Italian assets surged after pro-European Prime Minister Matteo Renzi’s Democratic Party appeared set for a definitive win over Beppe Grillo. In addition, German markets have climbed to a record high as Angela Merkel’s Democrats finished atop polls. These two electoral votes suggest that anti-Euro parties are being pushed to the sidelines, which helps to relieve stock market concerns of a breakup. Another positive story was the strong electoral votes tallied by Petro Poroshenko in Ukraine. With strong diplomatic ties to both Russia and the West, markets celebrated the possibility that Poroshenko can bring stability to the region (Yahoo Finance, 2014).

This newsletter was prepared solely by Bruce Morrison who is a registered representative of HollisWealth™ (a division of Scotia Capital Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada). The view and opinions, including any recommendations, expressed in newsletter are those of Bruce Morrison only and not those of HollisWealth. TM Trademark of The Bank of Nova Scotia, used under license. Morrison & Partners Wealth Strategies is a personal trade name of Bruce Morrison.