July 24, 2017

On Monday, the S&P 500 was down 0.1% and Toronto was down 0.4%.

CRH Medical had a modest bounce, up 10.6% in Toronto. They will report earnings a week from this Wednesday (i.e. August 2).

Constellation Software was up 2.8% after announcing another pending acquisition. It will report Q2 results on Thursday morning.

The yield on the government of Canda five year bond continues to rise. This is very positive for all those old rate reset preferred shares that have been trading under $25 due to the fact that it looked like they would reset at low interest rates. The higher the 5 year bond goes the gigher the reset goes. This is explained in our report on Canadian Western Bank Preferred shares.  

Also see the report on the Enbridge rate reset preferred share. In the case of the Enbridge shares I think they fell not only because of the lower 5 year bond yield but also because they were issued at a time when the market yield on rate reset preferred was particularly low (They were issued at the low yield of 4.4%). And Enbridge then restructured in a way that lowered the credit strength backing these shares as I recall.

Statistics Canada reported on Food Service and Drinking places for May. There were declines in sales in most provinces. The declines were in comparison to April and not to the same month in the prior year. I find it strange (an annoying) that Statistics Canad does not always make it abundantly clear if they are talking about a comparison to the month before or the same month a year ago. Their convention seems to be that the comparison is to the immediately prior period unless they say otherwise. They also by convention show seasonally adjusted numbers which is the best way to judge the change.  Investors are often more interested in the comparison to the prior year since that is how we usually look at corporate earnings growth. Looking at the same month a year ago sales for all of Canada were up 4.5% which is impressive and bodes well fro Boston Pizza. For Alberta sales in May were up 0.1% versus April and down 0.1% from May of 2016.

Statistics Canada also reported that wholesale trade had strong gains in May (versus April and seasonally adjusted)