Oil has jumped up over $57.00, for the first time in a long time.

Interest Rates

The 3 month T-bill rate is 0.84%, the 1 year T-bill rate is 1.05%, the 3 year government bond yield is 1.50%, the 10 year government bond yield is 1.95% and the long government bond yield is 2.27%. The yield curve is normal. Long government bonds appear very overvalued. There seems to be very little opportunity for profit in bonds. A safe haven, such as tangible assets (eg. precious metals, real estate, etc.), may be a better bet.

Expected (forward-looking) inflation is 1.63%. This is within the Canadian central bank’s target band of 1% to 3%.

The get_avgpe function is broken.The equity risk premium for large caps, in Canada, currently appears to be -1.95%. The get_avgpe function is broken.For small caps, it currently appears to be -1.95%.

Credit Environment

Bonds are looking up, especially corporates, long bonds, government bonds.

Currency

The Canadian Dollar (FXC), and Chinese Renminbi (FXCH), and Singapore Dollar (FXSG) are looking strong relative to the US dollar.
The Canadian dollar has been appreciating compared to the US dollar.

Equities

Where does there appear to be more opportunity right now?
US bonds vs. US stocks:

Canadian bonds vs. Canadian stocks:

Global Markets

Comparing national stock markets, Peru (EPU), China (MCHI), South Korea (EWY), Norway (ENOR), Germany (EWG), India (INDA), Italy (EWI), Chile (ECH), Austria (EWO), Russia (ERUS), Japan (EWJ), Philippines (EPHE), Canada (EWC), Thailand (THD), Poland (EPOL), Ireland (EIRL), France (EWQ), Brazil (EWZ), Singapore (EWS), Netherlands (EWN), Indonesia (EIDO), Belgium (EWK), Sweden (EWD), Finland (EFNL), Hong Kong (EWH), Turkey (TUR), Taiwan (EWT), Australia (EWA), United Kingdom (EWU), Denmark (EDEN), Switzerland (EWL), and South Africa (EZA), and New Zealand (ENZL) are rising, while other regions appear to be neutral or falling.

US Stocks

I have no data again this week.

Canadian Stocks

Last week’s closing price was $16,082.27. This is 0.39% higher than the prior week’s price ($16,020.20), and 1.74% higher than last month’s price ($15,807.20), and 6.98% higher than the price three months ago ($15,033.40), and 3.50% higher than the price six months ago ($15,537.90), and 10.49% higher than the price one year ago ($14,555.40).The get_avgpe function is broken.The average P/E ratio of the TSX60 (equal weighted) is 0.00. This implies the market is very undervalued. This looks like a good buying opportunity. This implies a forward capital return of 0.00% (before dividends).

The following stocks appear to present short-term (2-6 months) opportunities for price increase (buy high, sell higher):

These stocks appear to be priced attractively from a long-term (3-5 years) perspective (buy low, sell high):

  • Crescent Point Energy Corp (CPG.to)

Other Assets

Base metals (ZMT), crude oil (HUC), global stocks (XIN), US stocks (XSP), Canadian stocks (ZCN), international stocks (VDU), real estate (XRE), and silver (HUZ), and Canadian bonds (XBB) are performing better than cash.
The gold price is neutral.
The oil price is rising, which increases manufacturing input costs and energy costs and may slow economic expansion.

Portfolio

A theoretical portfolio, split evenly between gold (IGT in Cdn$), real estate (XRE in Cdn$), Canadian stocks (XIU in Cdn$), US stocks (XSP hedged to Cdn$), international stocks (VDU in Cdn$) and bonds (XBB in Cdn$).

As of today, the theoretical portfolio would hold:

  • One unit (20%) real estate
  • One unit (20%) Canadian stocks
  • One unit (20%) US stocks
  • 2 units (40%) bonds
Market Outlook, November 6, 2017

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