What BREXIT Market correction?
On Wednesday, the S&P 500 rose 1.7% to 2071. Toronto rose 1.4%.
Last Thursday, before the vote, the S&P 500 closed at 2113 as it rose that day and the day before in anticipation of a “stay” win. The S&P 500 had closed at this same 2071 of today on Friday June 17. So, it seems fair to say that BREXIT was just a little blip and has essentially been fully recovered from in the S&P 500. And oil was briefly back to $50 today and sits at $49.45. Bank stocks however are still down on BREXIT due to the view that interest rates will continue to be lower for longer.
BREXIT is still a BIG deal for the U.K and for Europe but as I suggested earlier it is apparently not a big deal for North America markets.
Individual stocks which closed higher today included Bank of America up 3.9%, American Express up 3.5% and AutoCanada up 2.9%.
Boston Pizza managed to climb over the $20 mark, closing at $20.03. This has been a bright spot in a year that has seen a lot of stocks decline. My timing was not good when I bought Boston Pizza when it had an offering of shares at $21.10 in 2014. And buying a lot more at prices over $19 in 2015 also looked questionable for quite a while. But it seems I was right to keep the faith and to also buy more at prices under $17 in January. Given the dividend I have done okay on this investment. Anyone who loaded up at prices in the $16s in January certainly did very well. Pity the folks who sold on January 15 when it closed at $15.15. The unit prices could certainly fall again, but the distributions have marched steadily although slowly upward and that should continue.
Bank of America passed its stress tests and will raise its dividend by 50%. It will still only pay 30 cents per year. But this is a very positive indication. And it will also buy back about $5 billion in shares (presumably depending on the price not getting too high) which is about 3.7% of the shares at the current price. We could finally see the start of a sustained and material recovery in this stock.
Wells Fargo similarly easily passed its stress test. But they were in a position to hold off on any immediate dividend increase. They will adjust their dividend in due course depending on earnings.
I recognise that I need to get some updates done. I was about to update FedEx this morning when I discovered a very strange thing. They apparently accidently omitted the recent 2016 Q4 balance sheet from their June 21, 2016 earnings release and statistical package. They accidently gave the 2013 to 2015 figures instead of 2014 to 2016. I have never seen this happen before (at any company). While mistakes do happen, this seems sloppy and it seems even worse that they have not corrected the release. I called and emailed their investor relations department and they simply said they will provide the figures when they file their more formal earnings figures with the Securities and Exchange Commission. They ignored my question about how it happened or if anyone else had even noticed. The American system is a bit strange. They typically release abbreviated earnings reports (often without a balance sheet on purpose) quite quickly but the details follow some weeks later. I prefer the Canadian system where we get the info all at once (as long as it can be kept confidential until released). I suspect I would rate FedEx a buy but I will likely wait now for its full earnings report. FedEx appears to be a well managed company and so perhaps this one strange mistake is no big deal. Most analysts don’t care about the balance sheet anyhow, but I do.