June 14, 2017

On Wednesday the S&P 500 closed down 0.1% while Toronto was down a hefty 1.4%.

Oil is down to $44.69 which pushed Toronto lower.

Toll Brothers was up 1.4% to $39.12.

AutoCanada was down 2.3%. Statistics Canada today reported the April new vehicle sales. For Canada as a whole the number of vehicles sold was down 1.6% versus 2016 but in dollars the sales were up 4.7%. In Alberta there was a strong recovery with unit sales up a hefty 15% and sales in dollars up 18%. This actually look like a very positive result for AutoCanada. However it is also the case that AutoCanada’s sales in Alberta have lagged the average as some of its dealers are in harder hit areas. ¬†AutoCanada has not yet reported buying back ANY shares under its recently announced buy back approval.

TFI International (TransForce) was down 2.5% and is certainly worth considering.

CRH Medical was down 4.6% in Toronto. I would be tempted to continue to add to my position here but I probably have enough of it.

Home Capital has announced a settlement with regulators. Its former long-time CEO will pay a fine of one million dollars and be barred from being a director of a public company for four years. Two others will pay $500,00 each and be barred for two years. This is a very light penalty in comparison to the enormous grief and damage caused by the announcement of the regulator’s investigation. I believe both the regulator and Home Capital really bungled this whole matter.

In addition some $39.5 million will be paid by the company for a class action lawsuit settlement. In my view this is totally inappropriate as it amounts to today’s innocent Home Capital share owners (indirectly) paying money to a sub-group of owners or former owners. Typically most class action settlement money goes to lawyers which is ridiculous.

There is speculation that Home Capital’s share price will recover strongly on this news and rumors that it is getting a $2 billion loan at a more reasonable interest rate. Perhaps so, but then again an awful lot of damage has been done to Home Capital’s business model.

The FED did raise interest rates today. The FED rate is still only in a target range of 1.0% to 1.25%. But this is the fourth increase in 19 months and the third in 7 months. And four more increases are expected in the next 18 months. Slowly but surely it seems that we have finally entered a period of rising interest rates. Bond yields actually declined somewhat today but overall the trend may now be up.

Meanwhile we have indications that Trump is now being officially investigated by the special prosecutor for obstruction of justice. I don’t think he will end up being charged but it might be something for the market to worry about.

With the targeted attack on Republican law makers today I would think that the terrorism threat has just become a LOT more real in their minds. Possibly this could lead to increased security. That won’t be good for trade and tourism and should be something else for the market to worry about.

Trump and the Republicans have a lot of things to worry about. Providing corporate income tax rate relief may not be so high on the agenda.