Morning Market Note: May 14, 2014

Morning Market Note: May 14, 2014

 Morning Market Note: May 14, 2014 A slowing global economy and deflation are worrying western economic leaders. China announces new policies to sustain growth. Here in Canada AGF works on a turnaround. BMO Harris continues to grow its advisor teams in the United States. Former market darling, PIMCO, faces tough questions on poor performance. The good news: The TSX is the world's best performing stock market so far this year.
Allianz Faces Questions About PIMCO
Europe’s biggest insurer, Allianz SE, announced profit at the compan'ys asset management unit slid 29% on client withdrawals. The news surprised markets—the asset management unit includes the well-known bond investing firm, Newport Beach, California-based Pacific Investment Management Co. (Pimco). Pimco is the world's largest bond fund manager. The company's former CEO, Bill Gross, was a well-known manager and market commentator. Michael Diekmann, Allianz’s chief executive officer, had to defend Pimco at the firm's annual general meeting in Munich last week where shareholders were critical of the firm's declining returns and management infighting. According to Allianz Pimco experienced net outflows of 21.7 billion euros.  

BMO Harris Brags About US Advisor Strength
BMO Harris Bank announced this week the company's BMO Harris Premier Service is growing strongly in the United States. The BMO Harris Premier Services program offers service for clients with $250,000 to $1 million in invest able assets. The program pairs a BMO Harris Bank banker with a BMO Harris financial advisor to offer clients a so-called “360-degree view” of the client's financial picture. The company announced there are 100 such teams in place across the United States.

AGF Announces New President and CIO
Massive Canadian mutual fund firm AGF Management Limited announced this week Kevin McCreadie will be the new president and chief investment officer. AGF has had a rough ride in the wake of the 2008 recession. The company experienced client withdrawals and an outflow of employees while the firm's stock price plunged. Hiring McCreadie is widely seen as part of a rehabilitation program at AGF. The company has demonstrated a new confidence and has been buying up its own stock since last year fall. Prior to joining AGF Mr. McCreadie was president and CIO of PNC Capital Advisors, LLC, a large U.S. financial services organization. There he oversaw $58 billion assets under management. Mr. McCreadie began his career in 1982 at J.P. Morgan. He holds a Chartered Financial Analyst designation and an MBA from the Wharton. The new position is effective June 17, 201

TSX World's Best Performing Stock Market so far in 2014
Canada’s job numbers have been unimpressive and the housing market may, or may not, be in a bubble, but at least the stock market is doing well. Halfway through 2014 the S&P/TSX Composite Index is the world's best-performing major stock market, outperforming every other major stock index so far this year. The TSX is up almost 8 per cent on the year. This compares well to New York’s Dow Jones, up just 1 per cent on the year, or NASDAS, which is down two per cent in 2014. Smaller markets like Denmark's OMX Copenhagen Index or Pakistan's KSE 100, up 16 percent and 15 per cent respectively, have done better. But among the major markets the TSX is the global leader.

Chinese Government Efforts Sustaining Strength in Slowing Chinese Economy
The Chinese central bank this week asked commercial banks to speed up the granting of home loans as a way of stimulating a slowing Chinese economy. The central bank also suggested mortgage rates be set at “reasonable levels,” underscoring concerns about a sharp deterioration in the property market. The Chinese economy has slowed from the double-digit growth rates of the mid-2000s, sparking concerns about a global economic slowdown. The moves by the central bank are seen as an attempt to keep the economy growing.  Last week China's cabinet promised to allow local governments to issue bonds and also streamlined the approval process for initial public stock offerings. This has been good for Canadian markets. Base metal miners are doing well as copper prices jumped in response to moves to open up Chinese markets. The world's three largest companies are now, according to Forbes magazine, the Commercial Bank of China, China Construction Bank and Agricultural Bank of China.

IMF Head Warns of Deflation
IMF Managing Director Christine Lagarde warned Tuesday that inflation rates across the global economy are too low. She says the low rates pose a risk in the outlook for the global economy as a whole. The comments highlight growing concern about the euro zone, which some suggest is heading toward deflation. Inflation was just 0.7% in the 18-member bloc, far below the European Central Bank's target of just under 2%. "In terms of risks that we see on the horizon, one is the sustainably low – too low – inflation, particularly in the euro area but more generally in the advanced economies," said Lagarde.  She also suggested the big risk to the global economy is “the tapering of the monetary policy initiated by the Fed.” Lagarde was speaking during a news conference with Chancellor Angela Merkel in Berlin. Bond markets continues to signal ongoing weakness in the American economy. The yield on 10-year bonds dropped 4 basis points in the wake of a report suggesting soft retail sales.