J. Zechner Associates Inc.
130 Adelaide St. West, Suite 1701
P.O. Box 100, Toronto, Ontario
M5H 3P5

Main Line

(416) 867-8945

Toll Free

1 (866) 259-6482
Privacy

For privacy concerns, please contact:

Jeff Herold, Chief Privacy Officer

(416) 867-8832

E-Mail

jherold@jzechner.com
Institutional Services

For further information regarding Institutional Investment Services, please contact:

David Cohen, President

Connect on

Direct Line

(416) 867-8649

E-Mail

dcohen@jzechner.com
Private Client Services

For further information regarding Private Wealth Services, please contact:

John Zechner, Chairman

Connect on

Direct Line

(647) 501-0606

E-Mail

jzechner@jzechner.com

Summary

  • Stocks in Canada fell for the 6th straight month in September as selling accelerated on Euro-slowdown fears.  The S&P/TSX index fell 9.0% in September and 12.6% for the 3rd quarter of 2011.  US stocks fell 14.3% while the Global stock index fell by 17.1% over the past three months.
  • The Canadian bond market once again benefitted from economic growth fears and stock market weakness which sent funds back into the bond market and pushed yields lower.  The DEX bond index gained 1.82% in September and 5.12% in the 3rd quarter as government bond yields fell to all-time lows.  
  • Commodity prices were mostly weaker last month as the CRB main index lost a massive 13.0%, led lower by Silver (down 28%), Copper (down 25%) and Lumber (down 16%).  Uranium was the only gainer, rising 8.5%.      
  • The Economic data was not nearly as dire as the market expectations.  US growth slowed but remained positive as did the data from China.  Europe was the only region to show overall declines in some key economic data points.  
  • In terms of stock sectors it was more of the same in September as the resource groups lead on the downside (Energy down 15.2% and Basic Materials down 14.7%) while the defensive sectors showed some net gains (Consumer Staples up 1.4% and Utilities up 0.3%).
  • Our Stock Market Outlook is still positive despite being far too bullish so far in 2011.  Stocks are reflecting a recession that has yet to occur and may not actually come about.  Fears about slowdowns due to the Euro-zone financial crisis and additional worries about growth in China and the U.S. has created the lowest stock valuations in decades at a time when interest rates are at all-time lows (which historically supports higher stock valuations), earnings growth remains positive, companies are flush with cash and the economic data has yet to show the slowdown feared by investors, who are also showing the most bearish sentiment towards stocks since the last market lows in early 2009.  Such periods have always resulted in strong future stock prices and we continue to view current stock levels as a ‘generational buying opportunity.’

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