The price of oil has continued to climb and is almost at $57.00. The Canadian stock market continues to rise, having broken 16,000.

Interest Rates

The 3 month T-bill rate is 0.86%, the 1 year T-bill rate is 1.02%, the 3 year government bond yield is 1.50%, the 10 year government bond yield is 1.93% 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 1.64%. This is within the Canadian central bank’s target band of 1% to 3%.

Credit Environment

When the dials point left, the credit environment is cautious and risks are priced higher.

Currency

The Canadian Dollar (FXC), Singapore Dollar (FXSG), and British Pound (FXB) 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:
There’s no graph, but suffice it to say that stocks are presently more attractive.

Global Markets

  • UAE has changed -5.49% in price since last week’s close.

Comparing national stock markets, China (MCHI), Peru (EPU), South Korea (EWY), Austria (EWO), Hong Kong (EWH), Japan (EWJ), Canada (EWC), Norway (ENOR), Australia (EWA), Italy (EWI), Poland (EPOL), Germany (EWG), USA (IVV), Ireland (EIRL), Philippines (EPHE), Netherlands (EWN), Chile (ECH), Thailand (THD), France (EWQ), India (INDA), Taiwan (EWT), Indonesia (EIDO), Malaysia (EWM), Sweden (EWD), Belgium (EWK), and United Kingdom (EWU) are rising, while other regions appear to be neutral or falling.

US Stocks

Last week’s closing price was 2,582.30. This is -0.21% lower than the prior week’s price (2,587.84), and 1.14% higher than last month’s price (2,553.17), and 5.77% higher than the price three months ago (2,441.32), and 8.01% higher than the price six months ago (2,390.90), and 19.31% higher than the price one year ago (2,164.45).The following stocks appear to present short-term (2-6 months) opportunities for price increase (buy high, sell higher):

  • Qualcomm Inc (QCOM)
  • AbbVie Inc (ABBV)
  • PayPal Holdings Inc (PYPL)
  • Intel Corp (INTC)
  • Allstate Corp (ALL)
  • Wal-Mart Stores Inc (WMT)
  • ConocoPhillips (COP)
  • Caterpillar Inc (CAT)
  • Amazon.com Inc (AMZN)
  • Twenty-First Century Fox Inc Class A (FOXA)
  • Apple Inc (AAPL)
  • Occidental Petroleum Corp (OXY)
  • Twenty-First Century Fox Inc Class B (FOX)
  • Mastercard Inc A (MA)

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

  • Ford Motor Co (F)
  • General Motors Co (GM)

Canadian Stocks

Last week’s closing price was 16,039.30. This is 0.12% higher than the prior week’s price (16,020.20), and 1.47% higher than last month’s price (15,807.20), and 6.69% higher than the price three months ago (15,033.40), and 3.23% higher than the price six months ago (15,537.90), and 10.19% higher than the price one year ago (14,555.40).The following stocks appear to present short-term (2-6 months) opportunities for price increase (buy high, sell higher):

  • Valeant Pharmaceuticals International Inc (VRX.to)
  • Cenovus Energy Inc (CVE.to)
  • Encana Corp (ECA.to)
  • First Quantum Minerals Ltd (FM.to)
  • ARC Resources Ltd (ARX.to)
  • Suncor Energy Inc (SU.to)
  • Pembina Pipeline Corp (PPL.to)
  • Dollarama Inc (DOL.to)
  • Canadian Natural Resources Ltd (CNQ.to)

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

Crude oil (HUC), global stocks (XIN), Canadian stocks (ZCN), natural gas (HUN), and international stocks (VDU) 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%) international stocks
  • 2 units (40%) cash
Market Outlook, November 13, 2017

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