Fed outlook boosts stocks

TORONTO — Stock markets look set to build on the 2009 rally this coming week after U.S. Federal Reserve Board chairman Ben Bernanke said that the U.S. economy is on the verge of a long-awaited recovery from the worst recession since the Great Depression.

TORONTO — Stock markets look set to build on the 2009 rally this coming week after U.S. Federal Reserve Board chairman Ben Bernanke said that the U.S. economy is on the verge of a long-awaited recovery from the worst recession since the Great Depression.

His comment Friday came at the end of a volatile week that saw the Toronto market lose ground for a second week on worries centred around how much help the U.S. consumer and Asian economies will be in supporting a recovery.

And despite Bernanke’s upbeat assessment of the economy, there are still plenty of worries about the American consumer, which makes up a huge 70 per cent of the economy.

“I just don’t see any customers,” said Danielle Park at Venable Park Investment Counsel in Barrie, Ont.

“They’re literally so stressed out trying to juggle the debt they do have and are afraid about their jobs that they’e just looking at stuff going: ’don’t need it, drive on.”’

The Toronto market made headway following Bernanke’s comments, which also included a warning that despite much progress in stabilizing financial markets and trying to bust through credit clogs, consumers and businesses are still having trouble getting loans. The situation is not back to normal, he said.

Restoring the free flow of credit is a critical component to a lasting recovery.

The gain Friday left the Toronto market up 43 per cent from the start of the rally in early March and 20.5 per cent year to date.

It has also left analysts impressed with the resiliency of markets despite signs of a tough recovery and second-quarter earnings results that saw many companies beat earnings expectations but also reported revenue growth that came strictly from cutting back.

But some investors believe the sharp gains racked up so far can be improved on since “the evidence is there that economies have come out of recession,” said Andrew Pyle, investment adviser at Scotia McLeod in Peterborough, Ont.

“We came out of the (1980s) recession only to fall back into it. So it’s a very selective process that’s going on right now among the bullish investors, that I’m going ignore the past, I’m going to ignore the risk that commercial real estate could still drag the U.S. economy down.”

Positive news from the U.S. housing sector also improved sentiment at week’s end after the National Association of Realtors said sales of existing homes rose 7.2 per cent to a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June.

It was the fourth straight monthly increase and the highest level of sales since August 2007

“But inventories were unchanged — we still have nine and a half months worth of homes on the market unsold in the U.S. — in fact, condo inventories went up,” observed Pyle.

“So it’s very selective — they’re not looking at those things, just that sales are up, great, let’s run with it.”

Park said that she is bothered by the fact that the big gains seen on indexes this year means that investors have priced in a 50 per cent increase in corporate earnings next year.

“Maybe they will find other places to cut costs, and more people to layoff and that kind of thing, but once you have done that, if you’re going to grow earnings by 50 per cent you have to really pull some rabbits out of the hat,” she said.

“You need some actual sales. And I just don’t see the sales pickup the way people are hoping. I hate to be dark again but I just feel there’s something really spooky going on. It’s the low volume, it’s the speculation in China driving commodity prices. ”

Just Posted

City Hall Park construction begins next week

Construction to update Red Deer’s City Hall Park is set to begin… Continue reading

PHOTOS: Jazz at the Lake begins

The 16 annual event began Friday and runs until Sunday in Sylvan Lake

Photos: Lunchtime tunes on Alexander Way

Final concert of the summer

Clearwater regional firefighters in B.C.

Crew operating west of Prince George

PHOTOS: Samson Cree Nation Pow Wow

The Samson Cree Nation hosted its annual Pow Wow, celebrating youth last weekend

WATCH: Feasting at Red Deer Ribfest this weekend

Ribfest runs until Sunday at Rotary Recreation Park

Canadians believe in immigration but concerned about asylum seekers: study

OTTAWA — Canadians are generally supportive of current immigration levels, a survey… Continue reading

Quebec announces plan to compensate taxi drivers after Uber’s arrival

MONTREAL — The Quebec government has outlined how it intends to compensate… Continue reading

Hospitals to see ‘delays’ in care after losing Saudi students, health group says

OTTAWA — The loss of Saudi Arabian resident physicians in Canada’s hospitals… Continue reading

PHOTOS: B.C. city wakes up to darkness under wildfire smoke

The rest of the province also dealing with thick haze as smoky skies continue

Death Valley worker has seen highest, lowest temperatures

LAS VEGAS — Thousands of tourists descend on Death Valley each summer… Continue reading

Banff’s Sunshine ski resort upset with proposed guidelines from Parks Canada

BANFF, Alta. — An internationally known ski resort in Banff National Park… Continue reading

Folk singer Ian Tyson cancels show due to ‘serious medical situation’

TORONTO — Canadian folk singer-songwriter Ian Tyson has cancelled his appearance at… Continue reading

Judge lifts publication ban, revealing details about Fredericton shooting

FREDERICTON — Newly released documents reveal how last week’s deadly attack unfolded… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month