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December 7 2013 - Weekend Market Comment

December 7 2013 – Well last week was going nicely according to plan -- gold continued to disintegrate, bond yield marched up to almost 4% and the markets sold off. Then Friday’s reports came out and we had a solid one-day bounce.  Of course a one day bounce is no reason to go back the truck up and load up on equities, we are still overbought here. But if this pattern continues into next week you may need to do some shopping.

For the week overall U.S. stocks ended their longest streak of weekly gains in a decade as data on economic growth and manufacturing stoked concern the Federal Reserve may reduce stimulus soon.

Equities rallied on the final session of the week, halting a five-day slide, as better-than-forecast jobs growth spurred speculation the economy may be strong enough to weather a potential reduction in Fed bond purchases.The 203,000 non-farm payrolls added in November showed an improving trend but in the view of many traders wasn't enough to push the Fed to slow its bond-buying program at the December meeting. Many Fed watchers expect it to start the process in March, though some say January is possible.

Stocks could be buoyant in the week ahead, helped by year-end seasonality—or maybe Santa. Traders expect to see a fairly merry market clear on through December now that the November jobs report is out of the way. Still there is a fed meeting in two weeks and taper talk is still around.

Vix that was my main concern -- is dropping back after a run up. So traders see a strong week ahead.

(as always click any graphic to enlarge) 

The YP primary sell has not a whiff of concern.

What is Doing Well Now:

In Canada this might be a great time to get a woody. Yes lumber prices are increasing and three picks to look at are West Fraser Timber, Canfor and Norbord.

Canfor Corporation For the quarter, the company reported total operating income of CAD 49.3 million against CAD 18.1 million a year ago. Sales were CAD 755.9 million against CAD 663.7 million a year ago. 

Canfor Corporation announced that it has agreed to form a 50/50 joint venture with Tangshan Caofeidian Wood Industry Co. Ltd. of China. There's no sign that China's appetite for lumber is waning despite its somewhat slower economic growth. About 30 per cent of Canadian production is currently exported to China, Japan and Korea, compared with just five to eight per cent in 2007. Canfor Corporation announced that the company will proceed with capital investments totaling approximately $36 million to improve efficiency and recovery in its Houston, British Columbia sawmill.

Of Course rails continue to ship Canadian timber and oil at records rates so look at Canadian Pacific and Stella Jones

Also picking up nicely Horizon North Logistics has had a great run.

In the USA things are going well for regional banks. Second derivative plays on finance  abound including McGraw Hill  that owns Moody’s a major debt rating agency, and Equifax a perpetual money maker .

As more Americans go back to work look to these three to benefit from a return to outsourcing.

First up the king of programming offshore Cognizant Solutions, over the years I have made a bundle on this stock.

Next up the Mexican maquiladora business is returning as Padro makes your new VW to compete with Detroit unions . The Mexican ETF EWW should do well.

And if you are not much for getting a Golf GTI then look at an Audi A6 or Porsche Cayenne by investing in deutschland -- EWG is the German ETF still doing well

U.S. Healthcare stocks are some of the best performers right now. Have a look at adding some NVS - Novartis, RHHBY - Rouche, BSX - Boston Scientific and HLS - Health South.

My Top picks in the USA are MA – MasterCard, McGraw Hill (see above) and Cognizant Solutions (see above) as unemployment continues to fall. Also buying the come back kid N - Netsuite, see below.

If you would rather market time some good stock in a pull back look at technology, including N - Netsuite, TRIP - Tripavisor, LNKD - Linkedin and RYAAY - Ryanair and my favorite dividend play Companhia Energetica de Minas Gerais Ticker CIG., yielding 17% ya baby!


It is December 7th Pearl Harbor Day, I plan to go out and get bombed. :)