April 14, 2018

Friday was a less volatile day in the markets as the S&P 500 fell 0.5% and Toronto was about unchanged.

Most stocks were relatively stable.

WSP Global was up another 2.2%.

Some smaller companies were more volatile including CRH Medical up 3.7%. And penny stock Ceapro bounced up 6%. A tiny company like Ceapro on the Venture exchange is allowed 120 days or around the end of April to file year-end financials. Last year Ceapro filed on April 15 so I expect they will file soon. I don’t really expect any great news. This is a research company and positive results tend to come slowly (if at all).

Wells Fargo and several other large banks released Q1 earnings on Friday. Earnings growth was strong but Wells Fargo fell 3.4%. This apparently was because core banking growth was very weak even though profit were up due to lower taxes and investment banking.

If core banking growth is weak then we may see more competition among American banks for business which should lead to some of the income tax savings being passed onto customers. Many aspects of banking are not the subject of much competition. But things like mortgage lending rates are usually subject to still competition, I believe.

I doubt that the market will fall much if at all in reaction to the Syrian air strikes. In the end it is always difficult to predict market reactions but it is possible to react to whatever the market does.

90-day mortgage default figures for Canada were released on April 10. These figures are released on a delayed basis and we got December and January figure. The official 90-day defaults remain very low especially in Ontario at 0.10% or just one mortgage in one thousand being 90 days late. But this is up slightly from the probably all-time low of 0.09% in November. These figures tend to be apparently very much a lagging indicator rather than leading. At present most people can still borrow new money to help make payments on older debt. This may continue to be the case unless something happens to throw fear into the lenders. And they have to be careful. Slowing down the flow of new lending could reveal more people dependent on new debt to make old payments and could easily spiral into a sharp credit contraction. So far there is absolutely no sign of that.