The Week Ahead Ahead – May 29

Overshadowing all economic reports and earnings will be the anticipated pre-packaged bankruptcy of GM. Up until now, the market has held up pretty well as it has built the expectation of bankruptcy into the equation.

Next week is relatively light for earnings announcements on the Canadian front. Bombardier (BBD.B) reports on Wednesday with an eps estimate of .103.  Reitmans reports on June 3rd as well with a target of 0.123 per share.

Canadian Western Bank reports on Thursday June 4th with an estimate of .309 per share.  For a complete list of US earnings, you can click on the following link HERE

For a complete listing of economic data being reported in Canada and the US next week, you can click on the following link Here

Have a Great Weekend. Your comments are always greatly appreciated

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Consumer Confidence Index…What is it?

Market in North America rallied after the consumer confidence index was materially higher than expected. That’s great but what does it mean?

The National Bank put out a report on May 22nd that answered this question as the index in Canada is quite different than the index in the US. Why are they different?

Well, each index asks different questions and they compile their results on different dates. Once the answers are compiled, they are input and calculated differently to come up with their number.

Marc Pinsonneault of National Bank Financial provides some ideas on how to reconstruct the US index to compare it more closely to the Canadian index. To find out what questions are asked, when they are asked and how the index is caluclated, you can click on the following link here.

Your comments and thoughts are always appreciated.

Why This Market Upturn May Have Legs

The TSX has moved from its low of 7479 to over 10,000 in less than two months. Market sentiment has improved and bad news seems to be ignored by investors driving stocks ever higher.

I was emailed a very interesting chart relating to current and historical amounts of cash sitting on the sidelines in money market funds. In February, there was rougly $3.9 Trillion in US money market funds that represented 60% of the value of the S & P 500.

Today, with the markets increase, money market funds still have over 50% of the value of the S & P. Historically this percentage has averaged18.2%. 

As well, money market funds totalled approximately $2.0 Trillion. With rates nearing 0%, this money will eventually flow out creating tremendous upside potential for the market.

What are your thoughts? Do you think this market has the legs to continue higher?