Bargain hunters went shopping last week as all but one of the indices I tracked finished higher; last week’s 2.9% gain in the S&P/TSX composite made it the top performer. Major oil-field services company Schlumberger also went shopping last week when it announced a deal to acquire smaller rival Cameron International in a cash and stock deal valued at approximately USD$12.7B. Germany’s DAX, France’s CAC 40, and Japan’s Nikkei 225 are still posting decent positive YTD numbers.
This is going to be a busy week for Bay Street analysts and investors alike as each of the major Canadian banks (Bank of Montreal, CIBC, Royal Bank, TD Bank, National Bank of Canada, and Scotiabank) report their Q3 numbers.
BMO (Bank of Montreal) was the first out of the gate when it reported earnings Tuesday. I will first take a brief look at the overall numbers (top line and bottom line) and then do the same for the individual reporting segments.
Each of the indices I track ended squarely in the red last week as negative news reports – corporate and economic – and large currency moves sent investors fleeing stocks.
The Chinese Yuan devaluation, disappointing Chinese manufacturing numbers, and poor earnings coupled with reduced forecasts from American blue chips Deere and HP were among the negative news bites which sent investors bailing out of stocks and seeking safety in treasuries.
On a more positive note, Germany’s DAX, France’s CAC 40 and Japan’s Nikkei 225 are still up 3.25%, 8.38%, and 11.38% respectively since the beginning of the year despite this week’s market carnage.
My how times have changed! Anything which generates cash flows can be structured as an investment. Bridges, rail roads, toll roads, et cetera, all of these represent investment opportunities!
A review of how some of the major stock market indices did over the past week:
Warren Buffett’s Berkshire Hathaway wrote its biggest check – a whopping $37B including debt – in history last week with a deal to acquire industrial parts maker Precision Castparts. This deal is another step in what looks, to me, like a deliberate strategy to remake Berkshire into a more industrially focused business as opposed to its current form known for its massive insurance operations and equally massive stock portfolio.
China’s recent decision to devalue the Yuan will have the expected negative effect on luxury goods purveyors, commodity producers, as well as any non-Chinese company that exports its products into China.
Instead of panicking – as most investors are likely to do – and selling your shares in these businesses, now may be the time for long-term investors to step back, assess the situation, and possibly take advantage of any fall in share prices.