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Inside the Market

Up-to-the-minute insights
on developing market news

Entry archive:

Home Capital stock plunge ripples through mortgage sector

DAVID BERMAN

Short sellers are gloating, investors are writhing in pain – and everyone else is wondering whether Home Capital Group Inc.’s troubles will reverberate beyond the home lender’s withering stock.

The share price of the Canadian mortgage lender fell 65 per cent on Wednesday, extending the total decline this year to more than 80 per cent.

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These stocks could see major moves on Thursday

Brenda Bouw

All eyes will be on Home Capital Group Inc. again on Thursday to see if the alternative mortgage lender’s stock will continue to slide.

The stock fell 65 per cent on Wednesday after the company said it received a $2-billion credit line for its Home Trust subsidiary, amid continued withdrawals.

Home Capital said early Wednesday that it expected a “firm commitment” with the unnamed lender later in the day. There was no follow-up announcement by press deadline Wednesday night.

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The close: TSX slips on U.S. trade worries; Home Capital dives

Canada’s main stock index pulled back on Wednesday from a 2-month high the day before, pressured by a plunge in the shares of Home Capital Group Inc and investor worries about Canada’s trade relationship with the United States.

The White House is considering a draft executive order to withdraw the United States from the North American Free Trade Agreement, a trade pact with Canada and Mexico, a senior Trump administration official said.

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Ten stocks insiders are selling

JENNIFER DOWTY

On Tuesday, I reported 10 securities with recent insider trading activity. Today, the focus shifts to companies that insiders are selling.

Listed below are 10 companies that have experienced recent insider selling activities in the public market through their direct and indirect ownership positions. Interestingly, with the Nasdaq composite index up nearly 12 per cent year to date, several key executives from internet companies are trimming their positions.

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At midday: TSX flat as Home Capital slumps; energy stocks gain

Canada’s main stock index slipped on Wednesday, weighed by a plunge in shares of Home Capital Group Inc after the mortgage lender agreed to a major credit line, while energy stocks moved higher as oil prices reversed losses.

Home Capital fell 58.7 percent to C$7.06 after the alternative lender said it would secure a $2-billion redit line to shore up its shrinking balance sheet.

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Loonie weakens as Trump considers NAFTA withdrawal

ALASTAIR SHARP

The Canadian dollar weakened against its U.S. counterpart on Wednesday after a U.S. official said the White House was considering a draft executive order to withdraw from the NAFTA trade deal between the United States, Canada, and Mexico.

The loonie, as the Canadian currency is colloquially known, ended above $1.36 versus the greenback for the first time since February last year, but did not breach the 14-month high it hit during Tuesday’s session after the imposition of U.S. duties averaging 20 per cent on imports of Canadian softwood lumber.

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At the open: TSX falls with oil, Home Capital plummets

Canada’s main stock index fell on Wednesday, pulling back from a two-month high the day before as lower oil prices pressured energy stocks, while shares of Home Capital Group slumped after the company announced a credit line agreement.

The Toronto Stock Exchange’s S&P/TSX composite index was down 29.27 points, or 0.19 per cent, at 15,715.92, shortly after the open. Eight of the index’s 10 main groups were lower.

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Wednesday's analyst upgrades and downgrades

DAVID LEEDER

Inside the Market’s roundup of some of today’s key analyst actions

Though conditions in the mutual fund industry have improved thus far in 2017, the first-quarter results for Canadian asset managers are likely to be “varying,” according to Desjardins Securities analysts Gary Ho and Doug Young.

“We are moving to a neutral stance (from underweight),” they said in a research report previewing earnings season. “First, we believe fee compression has been reflected in estimates. Second, within the retail comps (CI, IGM and AGF), all now offer ETF products and that should allow them to capture some of the movement to passive investing. Third, concerns over regulatory changes are well-discussed; the impact from CRM2 has thus far been benign. Lastly, we are beginning to see some early signs of net flow improvements.”

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It’s time to start thinking about peak oil demand

Scott Barlow

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading this morning on the Web

I’ve been optimistic about energy stocks with a three-year outlook but that was always predicated on global oil demand – led by China and India- increasing by 1.0 to 1.4 million barrels per day every year. I’m still bullish but far less confident because of stories like these, even if they’re anecdotal,

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Wednesday's small-cap stocks to watch

Brenda Bouw

Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.

Home Capital Group Inc. (HCG-T) says its subsidiary, Home Trust, has reached a non-binding agreement in principle with a major institutional investor for a credit line of $2-billion. 

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Premarket: World stocks hit record high as corporate America shines

Abhinav Ramnarayan

World stocks hit a record high on Wednesday after strong earnings and the prospect of tax cuts for corporate America pushed U.S. shares to stratospheric levels and the euro held on to recent gains as political concerns in France ebbed.

European shares pulled back slightly from 20-month highs as some disappointing corporate results weighed on the market but Asian stocks powered ahead.

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These stocks are poised to see action Wednesday

DAVID BERMAN

If you like to hear what executives have to say about their underlying operations, you’ll want to keep tabs on several news-making businesses that are delivering their first-quarter results on Wednesday.

Cenovus Energy Inc., which announced last month a controversial $17.7-billion deal to acquire most of ConocoPhillips’ Canadian oil sands operations, is likely going to shed some additional light on the acquisition.

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The close: TSX posts 2-month high as banks, lumber shares rally

Global stock markets rallied for a second straight day on Tuesday, as solid U.S. earnings, speculation about U.S. tax reform and reduced chances of a U.S. government shutdown this weekend boosted investor optimism.

Wall Street gained as concerns about France’s election waned and investors cheered earnings from Dow components such as McDonald’s Corp, up 5.6 percent, and Caterpillar Inc , up 7.9 percent. The Nasdaq Composite index closed above the 6,000 mark for the first time.

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Q&A: Nikhil Thadani from Mackie Research highlights his top three stock picks

Jennifer Dowty

The Globe and Mail’s investment reporter, Jennifer Dowty, was joined Wednesday for a live chat with Nikhil Thadani, an equity analyst from Mackie Research Capital Corp. as he discussed his top stock picks. Companies that he currently covers include: Difference Capital Financial Inc. (DCF-T), Eguana Technologies Inc. (EGT-X), Espial Group Inc. (ESP-T), GoldMoney Inc. (XAU-T), Mogo Finance Technology Inc. (MOGO-T), Shopify Inc. (SHOP-T), Spectra7 Microsystems Inc. (SEV-T), and theScore Inc. (SCR-X).

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Trump’s tariffs revive loonie and peso bears amid trade threat

Ben Bartenstein and Lananh Nguyen

The long-suppressed worry has come raging back.

Concern Donald Trump would move to enact trade barriers with his NAFTA counterparts returned to the fore Tuesday after the U.S. slapped tariffs of up to 24 per cent on imported softwood lumber from Canada. That sent the loonie and Mexico’s peso tumbling as traders took the move as a signal that the U.S. administration could pursue protectionist policies.

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Ten companies with recent insider buying activity

JENNIFER DOWTY

Featured below are 10 companies that have experienced recent insider buying activity in the public market through their direct and indirect ownerships. Insider trading activity is noticeable light ahead of the first-quarter earnings reporting season.

Keep in mind, when looking at transaction activities by insiders, purchasing activity may reflect perceived value in a security. I tend to put great weight on insider transaction activities when I see multiple insiders buying shares of a company.

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Seventeen years after 5,000, Nasdaq tops 6,000

Chuck Mikolajczak and Rodrigo Campos

The Nasdaq Composite index crossed the 6,000 threshold for the first time on Tuesday, aided by gains in a handful of large-cap tech names, more than 17 years after it last marked a 1,000 point milestone.

The Nasdaq first breached the 5,000 mark on March 7, 2000 and closed above that level two days later during the height of the tech boom. It had taken the index only slightly more than three months to climb from 4,000 to the 5,000 mark.

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Loonie slumps to 14-month low after U.S. sets lumber duties

Alastair Sharp

The Canadian dollar slumped to a 14-month low against its U.S. counterpart on Tuesday after the United States said it would impose preliminary anti-subsidy duties averaging 20 per cent on imports of Canadian softwood lumber.

The move sets a tense tone as the two countries and Mexico prepare to renegotiate the 23-year-old North American Free Trade Agreement.

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At midday: TSX up with banks, energy stocks; lumber stocks rally

Canada’s main stock index touched a two-month high on Tuesday, led by gains for heavyweight financial and energy stocks, while shares of lumber companies rallied after new U.S. import duties on the product came out lower than some investors had expected.

The United States said it will impose preliminary anti-subsidy duties averaging 20 per cent on imports of Canadian softwood lumber, escalating a long-running trade dispute between the two neighbors.

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How to avoid being a victim of fake portfolio diversification

ROB CARRICK

There’s true portfolio diversification, and then there’s fake diversification.

In this era of low interest rates, be especially wary of the fake kind. That’s where you swap out bonds in favour of income-producing investments, like preferred shares or dividend-paying common shares. Substitutions like this are rationalized on the basis that bonds pay only trace amounts of interest right now and are basically dead money.

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Why the softwood lumber tariff is a gift for investors

DAVID BERMAN

After the United States announced hefty duties on Canadian softwood lumber exports, investors responded with defiance: They jumped into Canadian lumber stocks.

West Fraser Timber Co. Ltd. rose 8.8 per cent and Canfor Corp. rose 7.9 per cent, making these two stocks the top movers on the S&P/TSX composite index on Tuesday.

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At the open: Nasdaq breaches 6,000 mark; TSX hits 2-month high

 Canada’s main stock index rose to a two-month high, led by gains for the financial and energy groups, while some lumber stocks rallied after the U.S. set duties on the product that were lower than some market participants had expected.

The Toronto Stock Exchange’s S&P/TSX composite index was up 68.56 points, or 0.44 per cent, at 15,781.02, shortly after the open. Nine of the index’s 10 main groups were higher.

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On U.S. trade, Canada ‘will invariably end up taking it in the neck’

Scott Barlow

A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading this morning on the Web

The loonie fell hard Monday after U.S. President Donald Trump announced a 20 per cent tariff on Canadian softwood lumber and also suggested that dairy exports could be taxed next.

 Personally, I’m not that concerned. The extent of the loonie sell-off was, in large part ,caused by fears of more wide-reaching trade sanctions which may not occur – the new president does seem to have a short attention span. However, U.K.-based foreign exchange trader Ken Veksler has a far less sanguine view where the Canadian dollar is concerned, writing that the imposition of lumber taxes,

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Tuesday’s analyst upgrades and downgrades

DAVID LEEDER

Inside the Market’s roundup of some of today’s key analyst actions

In the wake of the U.S. Department of Commerce’s announcement that it is planning to impose tariffs averaging 20 per cent against softwood imports, lumber stocks now represent solid value, according to Raymond James analyst Daryl Swetlishoff.

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Tuesday's small-cap stocks to watch

Brenda Bouw

Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.

NYX Gaming Group Ltd (NYX-X) reported fourth-quarter revenue of $54.5-million, up from $18.4-million a year earlier.

"All revenue categories grew significantly as a result of a full quarter contribution, $30.4-million, from the company's recently acquired OpenBet business, and 14 new customer launches on OGS [open gaming system] during the fourth quarter of 2016," the company said.

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Premarket: Stocks rise on French vote relief, Trump tax plan talk

Nigel Stephenson

World stocks hit record highs on Tuesday, with investors’ relief at centrist Emmanuel Macron’s victory in the first round of the French presidential election supported by speculation about U.S. tax reform.

Safe-haven assets such as gold and the Japanese yen retreated as opinion polls suggested Macron would easily beat far-right, anti-EU candidate Marine Le Pen in a May 7 run-off.

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These stocks are poised to see action Tuesday

DAVID BERMAN

A slew of corporate results Monday evening and on Tuesday morning will make for an active day of trading, as the market gets a clearer picture of the first-quarter earnings season.

So far, companies in the S&P 500 have been beating analysts’ profit estimates by nearly 5 per cent, with profits rising more than 13 per cent.

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Does a gold-backed digital currency seem far-fetched? Look who's behind it

IAN McGUGAN

As gold miners begin reporting earnings this week, it’s time to ponder the long-term future of bullion demand. One of the most intriguing developments in that regard is an audacious $1-billion (U.S.) project to create a freely traded gold-backed digital currency.

To be sure, it’s easy to mock the new venture as a way-too-trendy attempt to marry the traditional appeal of precious metals with today’s enthusiasm for the blockchain technology behind bitcoin.

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Contra Guys: We see this stock as a takeover target that may offer big short-term gains

BENJ GALLANDER And BEN STADELMANN

Often, when Benj is on the Business News Network (BNN), the interviewer expresses amazement at how much patience we show at Contra the Heard. While it is lovely the odd time that a stock is bought and sold within a year for a huge gain, that is certainly the exception rather than the rule. At the other end of the spectrum, positions held for longer than 10 years, such as Service Corp. and Stewart Enterprises, are unusual. Those were sold for gains of 207 per cent and 322 per cent, respectively, with dividends to boot, making patience a well rewarded virtue.

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Why this utility stock is gaining appeal among longer-term investors

DAVID BERMAN

TransAlta Corp.’s withering share price and dividend cuts have demoralized investors over the past decade. But forgiving types are seeing an opportunity here.

The Calgary-based electricity generator, which fell off the S&P/TSX 60 index in 2015, is starting to attract sideways glances from some sophisticated institutional investors.

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What Inside the Market offers

Inside the Market provides up-to-the-minute insights on developing market news and trends for subscribers of Globe Unlimited. The section provides exclusive analysis from some of Canada’s most authoritative voices on finance, including The Globe’s in-house market strategist Scott Barlow, Globe investment analyst Jennifer Dowty, Globe personal finance columnist Rob Carrick, and outside finance experts such as investment newsletter writers Gordon Pape and The Contra Guys, economist David Rosenberg and strategist Don Coxe.


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