August 19, 2019

Monday was yet another non-boring day in the markets as the S&P 500 was up 1.2% and Toronto was up 1.0%.

Canadian Western Bank was up 5.0% although there was no news from the company. Linamar was up 2.5%, and Toll Brothers was up 3.5%.

The banks will begin reporting their Q3 earnings this week. There may not be much chance that the this push their prices up. Even if the report no material increase in bad loans and if they report good profits,, the markets will likely focus on fears that net interest margins will predecease and that bad loans will increase. And if either of those two has already happened in Q3 then the bank shares would decline.

I suspect Canadian Western Bank continues to do well. But if any of the big banks stumble then that could pull CWB down as well. The point being that even though CWB seems cheap, there may be too much fear in the market (regarding lower interest rates and high bad loans) for the share price to rise much even if its Q3 report is strong. A possible catalyst for CWB would be if they report good progress in their project to move to the more favorable advanced system for measuring their risk-weighted assets and if they start to indicate what the profit benefit of that will be.

Checking insider trading, I notice that Melcor has resumed buying back its little quota of 1000 shares per day. Also their CFO added 400 shares at $12.06 on Friday to hold 2000 shares in her RRSP account. These are both small buys but still nice to see.

After reporting Q2 results, Linamar is once again buying back shares. The CEO also bought shares for her children last week and one other executive added a few shares.

Toll Brothers will report earnings this week. Expectations seem rather low at 83 cents versus $1.26 last year. Hopefully they can beat this muted expectation.