Stocks were volatile on Tuesday as the indexes had been down mid day but finished the day with the S&P 500 up 0.6% and Toronto up 0.2%
Costco surged 3.4% to $140.50 on a favorable analyst report. This stock always seems expensive but the company has powerful economics and perhaps it would have been worth grabbing some on the recent dip to about $135.
Canadian Western Bank was down 1.6% to $27.31. I placed an order to buy some today when it was at 26.82. But my order was “declined” because a cheque from another financial institution had not yet cleared. Apparently it takes 7 business days for a cheque to clear. I deposited that cheque on June 25th. But with the holiday it will not clear until July 8th. I was not used to this because on day to day banking I believe my deposits are set to be available immediately or I have overdraft protection so this has not come up before. It really shows how cheques have become archaic. soon all money transfers will be electronic. For that matter so will all money be electronic, but that is another story.
With oil having taken a sudden drop to about $52, it is understandable that the Western Canada based companies are being bid down in price. But certainly Melcor and Canadian Western Bank look like good value to me. They are only indirectly affected by oil prices and the questions include, where will oil go and what impact will it have. Obviously no one really knows.
Toll Brothers was up 1.9% to $39.07. It’s up 14% this year to date in U.S. dollars and a lot more than that if measured in Canadian dollars. It’s my largest position and I may start to trim it back for that reason and also partly just to raise some U.S. cash some of which I might then transfer back to the Canadian side of my portfolio. I do think it remains a good way to participate in the recovery of U.S. house prices but it has also been quite volatile and not everyone would agree that the U.S. house price recovery will continue.
Canada’s trade deficit was in the news today. I would think that our lower dollar would certainly increase our imports substantially as most of what we import is priced in U.S. dollars and certainly not Canadian dollars. Meanwhile the dollar value of some but not all of our exports also rises with a lower dollar. To the extent that we sell products where the price is effectively set in U.S. dollars then our exports rise in Canadian dollar terms as our dollar sinks. But some exports are likely priced in Canadian dollars. Overall I suspect a lower dollar tends to increase the trade deficit even as it does definitely benefit exporters.