October 10, 2013 Comments

In a remarkably strong day on the markets, on Thursday the S&P 500 rose 2.2% and Toronto rose 1.3%. Apparently this was due to meetings that were expected to take place after the close on Thursday. The rumor was that the Republicans would allow a six week extension to the debt ceiling. It seems remarkable that just a (lousy) six week extension could make the market so happy. Clearly the market is not very fearful of the shutdown and the debt ceiling.

Almost all of our stock picks were up, with many rising over 2%.

Early in the trading day there was news that Canadian Tire’s REIT was all set to go and they would be selling 15% of the REIT and keeping 85%. Around noon, the rumor was confirmed.

So with Canadian Tire now at $93.88, it may be a case of “what you see, is what you get”. That is , the REIT may now be fully priced into the stock. The next driver for the share price (aside from movements in the overall market) might be the Q3 earnings release. I expect that it had a strong Q3 but it likely incurred costs related to the REIT and it is not clear whether the market will essentially look through those earnings and focus on adjusted earnings.

Again, I have not looked at the REIT and am not really interested in it.

Leave a Reply

Your email address will not be published. Required fields are marked *