March marks the fifth anniversary of the current bull market. And while some are suggesting that the

March marks the fifth anniversary of the current bull market. And while some are suggesting that the time has come to “slow down and cash in some chips” (WSJ: 03/23/14) ship cruise from australia queensland I am more persuaded by Robert Kavcic’s recent comment (BMO Capital Markets) that “a market that doesn’t respond bearishly to bearish news, is not bearish.” There are several recent happenings ship cruise from australia queensland that could have spooked investors ranging from events in the Crimea ship cruise from australia queensland that might possibly extend into the Ukraine (I doubt it will although a split between the western Ukraine and the pro-Russian east is a possibility) and possibly to a very pro Russian part of Moldova, cooling data and negative financial events in China and remarks from the Fed’s new Chair, Janet Yellen about a potential tightening sooner then many had expected (although some have suggested ship cruise from australia queensland that is really not what she meant to say).
On a “macro” basis in the U.S. many things continues to go well and some may be on the horizon. For example U.S. corporations are currently ship cruise from australia queensland spending 45 percent of operating cash flow on capex compared to the 55 percent average since 1989. Also, the age of U.S. physical plant is at the highest level since 1964. Any change in spending plans would be a great plus. Wages continue to rise and housing continues to be “affordable”. Inflation remains at surprisingly low levels (1.1 percent CPI in both Canada and the U.S.) although given rising food costs we may see a small upward blip in months to come. In the U.S., bond markets are discounting a 2.16 percent inflation rate. And even though nominal and real two, five and ten year government bond yields in Canada and the U.S. rose six to ten basis points post Yellen’s comments (the five-year UST yield increase of 18 basis points was the one outlier) I do not think yields will rise substantially from here. Finally, according ship cruise from australia queensland the RBC, there is a scarcity of U.S. stocks. For example, according to the Wilshire Group, there are currently 3,650 stocks available for investment compared to 7,800 in 2008.
On a technical basis the TSX and S P 500 50 and 200 day moving averages (“DMA”) continue to rise and other than a decline in the former during the January ship cruise from australia queensland correction each index remains ship cruise from australia queensland comfortably above the former. In terms of price earnings ratios (“PER”) at between 15 and 15.5 times this year’s EPS and about 14 times 2015’s estimated eps which is the historical average, stocks do not appear to be expensive.
I remain vigilant for potential swans of whatever colour but do not let that vigilance offset whatever market opportunities I see ahead. For example, both the TSX and the S P 500 currently ship cruise from australia queensland sell at about 17.8 and 16.7 times respectively 2013 reported earnings. At this point I do not see either market selling at the 18 – 19 times forward earnings as some have suggested. I am more comfortable using a 16.5 multiple of out year estimated eps. What is my worst case scenario from here? For the TSX a decline to its 50 and 200 DMA be a decline of 2.2 percent to 6.6 percent from Friday’s close. For the S P 500 the numbers are 1.6 percent and 6.0 percent respectively.
Hertz is in the global vehicle and equipment rental business. The former consists of car leasing ship cruise from australia queensland and auto fleet management for corporations (Donlen) and car rentals at both airport and non-airport locations. The airport business is the largest at about $6.2 billion, the non-airport at about $2.5 billion and Donlen at about $0.5 billion. ship cruise from australia queensland The equipment rental business (Herc) revenues are about $1.5 billion. Management has indicated that it plans to dispose of this business by way of a tax-free spin-off hopefully in 2015. Of the remaining airport and non-airport businesses the former’s growth ship cruise from australia queensland is a function of economic activity. The latter is expected to provide the faster growth ship cruise from australia queensland because of a rapidly growing presence in the insurance ship cruise from australia queensland replacement field and a further aggressive expansion into the leisure rental market. I think the stock is cheap (a 14.4 PER of estimated 2014 eps of $1.90) relative to Avis at a 16.6 PER. With the spin-off of Herc, I think their multiples will be comparable and closer to the Avis multiple.
The uncertainties facing fertilizer and seed companies are drought conditions in some parts of the world and a caterpillar infestation in Brazil. Added to these is an uncertainty of what will happen to the Ukraine’s 2014/15 corn and wheat crops. I understand that most of the 2013/14 crop has been harvested and is in the process of being shipped. In export terms the Ukraine is the world’s third largest exporter of corn and the sixth largest of wheat. Most goes to the Middle East and North Africa. In addition to the potential interruptions to next year’s growing season because of Russian activities, the Ukraine is currently suffering from a major drought with rainfall down as much as 50 percent in some areas. Assuming the worst case scenario I think it makes sense for investors to hedge themselves by owning at least on fertilizer company (AGU) and they may wish to consider a seed company.
The Royal is because of recent issues, is one of the cheapest of the big five Canadian banks. It has laid out a very clear strategy which is to have an even split between the typical bank business and investment management. Also, it plans to have an even split between domestic and international business.