The major North American exchanges found a solid groove this last week with all five settling on Friday firmly ahead of the prior week's close. Optimism about the European debt crisis coupled with a host of strong earnings reports fueled the widespread gains. McDonalds and American Micro Devices (up roughly 20 percent with its report) in particular spurred investors to forget about weaker reports from the last quarter. The Toronto Venture Exchange was once again a standout, adding more than 2 percent to its total and making it five straight weeks that it has closed higher on Friday than it opened on Monday. Canadians also got a boost on the job front with data on unemployment insurance showing the eighth straight month of declines. The States got a shot in the arm with housing starts and building permits surging more than expected in June – giving hope to the gimping industry that a rebound could actually be in the making.
The U.S. debt ceiling fiasco still remains high on the priority list of events to watch for investors. The two political parties remain in gridlock as the November 2nd deadline draws closer. President Barrack Obama called a special meeting on Saturday of Congressional leaders in an attempt to patch negotiations back together after earlier meetings during the week failed to bring finalization of the matter. The two sides continue to wrestle with an agreement on raising the debt ceiling and slashing of spending and funding.
Helping drive the resource-heavy Canadian exchanges, gold busted through the $1,600 mark and despite a pullback held the new magic mark. Gold for August delivery wrapped the week at $1,601.50 an ounce on the Comex division of the New York Mercantile Exchange. Silver also held firm on the week with September silver closing on Friday at $40.10; up approximately $6 per ounce so far in July.
September crude oil pushed forward as well. With settlement quickly approaching, the black gold popped through $100 per barrel before slipping slightly back before the closing bell on Friday; ending the week at $99.87 per barrel.
Earnings will be in focus this week for the Canadian markets with industry behemoths such as Manulife, Barrick, Potash of Saskatchewan and Royal Bank of Canada all getting set to report with estimates calling for solid numbers from all the industry leaders.
The debt crisis in Europe remains in focus and got a boost as European leaders agreed to revamp their bail-out fund to assist Greece and other financially rescued countries. In an attempt to stop the spreading of the debt problems to other regional economies, the plan is now revised to approximately $160 billion (roughly 110 billion euros) and will rely upon aid from private investors who will agree to swap their Greek bonds for longer maturities. Although still not set in stone, the European Union estimates a private-sector contribution of around 50 billion euros.
Apple made an earnings wave this last week with huge earnings that crumpled expectations. Shares of AAPL continued their surge that began roughly a month ago and has driven share value nearly $100 upward to push on $400 each. In its latest quarter, Apple saw sales leap by 82 percent and more than doubled earnings from the year-earlier period. More than 20 million iPhones were sold in the recent quarter; topping estimates by more than three million.
In big merger news, Express Scripts Inc. agreed to buy Medco Health Solutions Inc. for $29.1 billion in cash and stock. The deal will blend two of the largest U.S. pharmacy-benefit managers. Per the agreement, Medco holders will receive $28.80 in cash and 0.81 Express Scripts shares for each share, valuing Medco at $71.36.
The legal issues for News Corp may be really starting to heat-up. Even though no formal investigation has been stated, the U.S. Justice Department is digging into allegations that the U.K. newspaper, The News of the World, bribed the British police amongst other claims related to the latest high-profile hack of private information. The latest reports state that the USJD is preparing subpoenas to start getting to the bottom of what actually happened, but nothing is confirmed at this point.
The S&P TSX Composite Index went back on the climb; adding 195.09 points, or 1.47%, on the week to 13,494.63. The TSX Venture Exchange continued its upward movement by adding 52.22 points, or 2.60%, to finish at 2,059.60.
In the States, the Dow Jones Industrial Average rose by 201.43 points, or 1.61%, on the week to 12,681.16. The much-broader S&P 500 followed, climbing 28.88 points, or 2.19%, on the week to close at 1,345.02. The tech-rich NASDAQ Composite completed the green sweep by moving upward by 69.03 points, or 2.47%, to close at 2,858.83.
On Monday, Statistics Canada reported that foreign investment in Canadian securities strengthened in May to reach $15.4 billion, led by investment in federal government debt instruments. Meanwhile, Canadian investors acquired $6.0 billion of foreign stocks while removing $2.5 billion of foreign debt instruments from their holdings. Additionally, StatsCan announced that the number of new motor vehicles sold declined 6.1% in May to 126,479 units, erasing gains made over the previous four months. North American-built passenger cars accounted for most of the decrease.
On Tuesday, with respect to Canadian leading indicators, the composite index rose 0.2% in June after a 0.8% gain in May. In June, four of the 10 components declined compared with none the month before. Most of the reversals occurred in manufacturing, where all three components swung from gains the month before to declines or no change. The United States got a surprise with housing starts surging in June to a new five-month high. 629,000 houses were started, an increase of 15 percent over May and almost 17 percent as compared to the year prior. New building permits also rose for the month; climbing by 2.5 percent to 624,000.
On Wednesday, StatsCan informed investors that wholesale sales increased 1.9% to $47.6 billion in May, following a 0.1% decline in April. Virtually all of the increase in May resulted from higher sales in the agricultural supplies and the farm, lawn and garden machinery and equipment industries. The U.S. National Association of Realtors reported that existing-home sales fell 0.8 percent in June. The decrease put June sales at an annual rate of 4.77 million, down from 4.81 million in May.
On Thursday, Canadian unemployment insurance was in focus as it was reported that the number of people receiving regular Employment Insurance benefits decreased by 18,100 (-3.0%) in May to 577,300. This was the eighth consecutive monthly decline. There were fewer beneficiaries in most provinces, with the largest percentage declines in Alberta, Ontario, Quebec and Manitoba. The Philadelphia Federal Reserve Bank reported that its business activity index rose to a reading of 3.2 from minus 7.7 the month before; topping economists' predictions. According to the U.S. Conference Board, the index of U.S. leading economic indicators rose slowly in June, signaling the recovery will be restrained in the second half of the year. The gauge of the outlook for the next three to six months climbed 0.3 percent after a 0.8 percent gain in May. The Labor Dept. announced that new claims for unemployment benefits rose 10,000 to a seasonally adjusted 418,000. The four-week average dipped to 421,250.
On Friday, StatsCan released info showing that retail sales edged up 0.1% in May. Higher sales in 7 of 11 subsectors were mostly offset by declines at motor vehicle and parts dealers and at food and beverage stores. Canadian consumer prices rose 3.1% in the 12 months to June, primarily the result of higher prices for gasoline and food purchased from stores. This followed a 3.7% increase posted in May.
Next week will bring investors Canadian data on payroll and earnings on Thursday. Friday will bring May's update on Gross Domestic Product as well as June updates on the Industrial Product Price Index and the Raw Materials Price Index.
In the States, economic data will be plentiful next week with new home sales, consumer confidence and the Richmond Fed Manufacturing Index updates coming on Tuesday; durable goods stats on Wednesday; and Gross Domestic Product updates coming on Friday along with Chicago PMI updates.
Among the stocks we watched this week, conglomerate company, Sandstorm Metals & Energy Ltd. (TSX-Venture:SND) gapped-upward on Monday and held firm the rest of the week by closing up a nickel, or 9.09%, at $0.60 after touching an intraweek high of $0.61. The other stock we had on radar, basic materials company Scorpio Gold Corp. (TSX-Venture:SGN) did a little walking up and down before kicking it in gear on Friday where it hit and held at its week high of $0.80, giving it gains of $0.06, or 8.11 percent on the week.
In the States, transportation equipment maker Xinde Technology Company (OTCBB:WTFS) had several somewhat volatile days, but wrapped the week almost right where it started; adding $0.001, or 0.69%, to close at $0.145 after touching $0.154 earlier in the week. The other U.S. stock on our watchlist, financial services company EastBridge Investment Group Corp. (OTCBB:EBIG) looked a few different times like it was going to roll upward, but simply couldn't muster the momentum, dropping on Friday to have the stock close down $0.009, or 13.85%, at $0.056 after hitting an intraweek high of $0.069 on Monday.
If you'd invested in all four stocks and held them to the end, you'd have seen an average gain of 1.01%. However, if you'd bought all four at the beginning of the week and sold each at its peak, you would have realized nice gains of 8.03%.
Next week, we focus on Yangarra Resources Ltd. (TSX-Venture:YGR) and Ucore Rare Metals, Inc. (TSX-Venture:UCU) and In the States, look for big things from Agenus, Inc. (NASDAQ:AGEN) and Marina Biotech, Inc. (NASDAQ:MRNA).
This was a great week for the markets in general and another solid performance for our stocks to watch, with the exception of EBIG. EBIG stung the final figures, but each chart provided a series of opportunities for technical traders. Keep an eye on this coming week as well.
Our latest U.S. spotlight, Bizzingo, Inc. (OTCBB:BIZZ) kicked-out news on Wednesday that we hope all our members took a moment to read as it could have some pretty strong implications for the future. We know that Bizzingo has it slated to reveal their new website in the short-term and now they are in discussions with IBG.com, Inc. for a possible merger. IBG is already handling marketing duties for Bizzingo and as a reputable company with a track record of industry success, the deal could be big for putting Bizzingo immediately on the map.
According to D. Michael Flynn, CEO of IBG.com, "A possible merger with Bizzingo would allow the companies to better serve businesses with a complete online offering of services, from communicating a company's marketing message to protecting and building its brands." Douglas Toth, Bizzingo's CEO, stated, "Together, Bizzingo and IBG have the opportunity to immediately launch and grow a unique and powerful social networking company that caters to businesses. Our vision is to change the way businesses market, search, and interact on the web. The transaction under discussion with IBG would present a timely, and a strategic approach to bringing this vision to reality."
Investors are encouraged to complete their due diligence on Bizzingo as the unique corporate strategies are generating newfound attention that could lead to sharp price movement at any time.
