Daily Pulse

By Michel Doucet Friday, May 19, 2017

Canada

With the first-quarter earnings season coming to a close, the verdict is in on the synchronized global expansion: It’s alive and well. A picture of strong earnings growth and positive surprises has emerged across both industries and geography, adding to evidence the world’s major economies are increasingly running in lockstep.

The iShares S&P/TSX Capped REIT Index ETF has fallen 3.1 percent since April 19 – steeper than the benchmark gauge’s 1.8 percent decline – when regulators accused Home Capital of misleading investors, triggering a run on deposits and raising questions about its survival. Short interest on the ETF rose to a record 4 million on April 13 and was at 3.8 million or 4.6 percent of shares outstanding at the end of last month, according to the latest exchange data.

U.S. President Donald Trump’s top trade negotiator came out of the gate sounding like he wants to fine-tune the North American Free Trade Agreement, not blow it up as some feared.

United-States

Donald Trump departs Friday for his first foreign trip as president with his White House engulfed in crisis and little prospect for a break from the drama disrupting his agenda. His eight-day odyssey across the Mideast and Europe is packed with crucial sit-downs with key allies. Saudi King Salman. Pope Francis. Newly elected French president Emmanuel Macron. Yet each of those meetings will be shadowed by Trump’s firing last week of FBI Director James Comey.

Deere & Co. raised its fiscal 2017 profit forecast as it draws confidence from signs that demand is recovering, particularly in South America. Sales will rise about 9 percent in the year through October, Deere said, up from an earlier projection for an increase of about 4 percent. Net income is now seen at about $2 billion, up from $1.5 billion previously. The shares rose 3.8 percent in pre-market.

2017 has brought synchronized equity inflows to all major regions, with emerging markets and Japan drawing the most money as proportion of assets under management, Citigroup strategists led by Robert Buckland write in a note.

Europe

The European Central Bank’s debate over the so-called sequencing of its exit from unconventional policy looks set to rumble gently on. Executive Board member Peter Praet has led the defense of the plan to end quantitative easing first and only start raising interest rates later, saying the strategy is based on “strong logic.”

Germans are increasingly concerned about where PresidentDonald Trump’s administration is headed, while Chancellor Angela Merkel’s approval rating is rebounding, according to a poll.

Asia

China has an insurance policy against a full-scale market meltdown: the daily currency fixing. With stocks and bonds in retreat amid anxiety over Beijing’s deleveraging campaign, officials have been guiding the yuan higher against the dollar in a move that’s caught market watchers by surprise.

Two Chinese SU-30 fighter jets intercepted an American military aircraft over the East China Sea on Tuesday, according to the U.S. Air Force.

The author

Michel Doucet
Michel Doucet
Vice-President and Portfolio Manager