Commentary

1 Jan 2015

Market Overview

From the start of 2014, the S&P/TSX Composite Index went up pretty much in a straight line for the entire year, until the end of August. At that point most Canadian funds pretty well hit their peaks for the year. Beginning in September, the market entered a period of greater volatility. In fact, with only nine and half trading days left, it appeared the market would be down on the year. Thankfully, Santa did come, and a rally ensued, ensuring that 2014 would end with an almost double-digit return.

1 Jan 2015

Market Overview

From the start of 2014, the S&P/TSX Composite Index went up pretty much in a straight line for the entire year, until the end of August. At that point most Canadian funds pretty well hit their peaks for the year. Beginning in September, the market entered a period of greater volatility. In fact, with only nine and half trading days left, it appeared the market would be down on the year. Thankfully, Santa did come, and a rally ensued, ensuring that 2014 would end with an almost double-digit return.

1 Jan 2015

Market Overview

For the fourth quarter of 2014, MLPs, as measured by the Alerian MLP Index (“AMZ”), were down 13.5% on a price basis and down 12.3% once distributions or dividends are considered. Midstream MLPs, as measured by the Alerian MLP Infrastructure Index (“AMZI”), fell 11.5% on a price basis and lost 10.3% on a total return basis. For context, the broader market, as measured by the S&P 500, provided a return of 4.9% with price performance contributing 4.4%. As a result, for the year-ended December 31, 2014, the AMZ and the AMZI generated total returns of 4.8% and 7.6%, respectively, compared to the S&P 500’s 13.7% return.

10 Nov 2014

By Norm Lamarche

Share prices for energy stocks are down about as much as we’ve ever seen them over such a short, three-month period, largely because of uncertainty on how low and how sustainable falling oil prices may become.

31 Oct 2014

By Frank Mersch & Rick Brown

Market Overview

During the quarter, we stated that we were becoming more cautious.

31 Oct 2014

By Rick Brown

Market Overview

The month of July epitomized what negative fund flows can do.  High yield came under pressure as a result of large outflows from retail investors, while institutional buyers continued to move into the asset class.

31 Oct 2014

By Frank Mersch & Rick Brown

Market Overview

During the quarter, we stated that we were becoming more cautious. While we believed that nothing fundamentally was wrong, we nevertheless tactically moved the asset mix of our balanced funds, increasing the fixed income component.

30 Oct 2014

By OFI Steelpath

 

Market Overview

For the third quarter of 2014, MLPs, as measured by the Alerian MLP Index (“AMZ”), provided a total return of 2.7% with price performance contributing 1.3% and the remainder earned from distributions or dividends paid.

30 Oct 2014

By Frank Mersch

Market Overview

Towards the end of the third quarter, markets hit a wall on the back of tighter monetary conditions, a glut of new issuances, a weakening Europe and Ebola.

29 Oct 2014

By Frank Mersch

Market Overview

Up until September, the S&P/TSX Composite Index was largely powered by the energy sector. Towards the end of the third quarter however, we saw significant declines in energy, base metals and gold indices.

15 Oct 2014

By Norm Lamarche & Craig Porter

Energy Overview

A number of factors led to the weakness in the energy group, as well as in the broader resources sectors. The geopolitically-charged year finally caught up with the world’s economies.

31 Jul 2014

By Rick Brown

Fixed Income Market Overview

During the month of July, rates were relatively stable, with the U.S. 10-year Treasury starting and ending the month in the mid 2.50% range. It hit a high of 2.639% on July 3rd, before breaking lower mid-month to 2.447%. However, the end of the month saw the U.S. 10-year jump 10 bps higher on the back of stronger than expected GDP numbers out of the U.S.

24 Jul 2014

By OFI Steelpath

Market Overview

For the second quarter of 2014, MLPs, as measured by the Alerian MLP Index (“AMZ”), provided a total return of 14.2% with price performance contributing 12.6% and the remainder earned from distributions or dividends. For context, the broader market, as measured by the S&P 500, provided a return of 5.2% with price performance contributing 4.7%. Notably, this represents the first time the AMZ has meaningfully outperformed the S&P 500 index, on both a price and total return basis, since the first quarter of 2013.

21 Jul 2014

By Norm Lamarche & Craig Porter

Energy Overview

Readers of our commentaries over the past five years have come to appreciate that North American energy has not only been a large theme at Front Street Capital, but also for very non-conventional reasons.

18 Jul 2014
Chemicals & Energy

In May, the Chemical Activity Barometer (CAB) reached its highest peak since February 2008. It also had its biggest gain year over year since September 2010. This is a leading economic indicator created by the American Chemistry Council (ACC) that has been shown to lead the National Bureau of Economic Research by four months on average, since 1919.

17 Jul 2014

By Frank Mersch

Equity Market Overview

The S&P/TSX Composite Index registered a +5.7% return for the quarter, with a +11.2% return year to date. The strongest returns were seen in the energy (+9.7%) and industrials (+9.0%) sectors, with the weakest sectors being utilities (+0.2%), telecom services (-0.3%) and health care (-6.6%).

17 Jul 2014

By Frank Mersch & Rick Brown

Equity Market Overview

The S&P/TSX Composite Index registered a +5.7% return for the quarter, with a +11.2% return year-to-date. The strongest returns were seen in the energy (+9.7%) and industrials (+9.0%) sectors, with the weakest sectors being utilities (+0.2%), telecom services (-0.3%) and health care (-6.6%).

17 Jul 2014

By Frank Mersch & Rick Brown

Equity Market Overview

At the end of the second quarter, the big picture is that the secular bull market is very much intact. U.S. corporate fundamentals, and moreover the U.S. recovery, remain the bellwether for the rest of the world.

15 Jul 2014

By Frank Mersch

Equity Market Overview

At the end of the second quarter, the big picture is that the secular bull market is very much intact. U.S. corporate fundamentals, and moreover the U.S. recovery, remain the bellwether for the rest of the world.

15 Jul 2014

By Rick Brown

Fixed Income Market Overview

To date, 2014 has been an ideal environment for high yield. Economic data continues to be good, but not spectacular. This has led to a very stable rate environment with extremely low volatility.

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Disclaimer:

The opinions expressed herein reflect those of the individual portfolio manager. These opinions are subject to change at any time based on market or other conditions, and Front Street Capital disclaims any responsibility to update such views. These opinions may differ from those of other portfolio managers or of Front Street Capital as a whole.

These views are for informational purposes only and are not intended to be a forecast of future events, a guarantee of future results or investment advice. All data referenced herein are from sources deemed to be reliable but cannot be guaranteed.

These views may not be relied upon as investment advice and, because investment decisions are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of Front Street Capital. Any discussion of any of the funds’ holdings are as of the podcast interview date, and are subject to change.

If specific securities are referenced, they have been selected by the portfolio manager on an objective basis to illustrate the views expressed herein. Such references do not include all material information about such securities, including risks, and are not intended to be recommendations to take any action with respect to such securities. Referenced securities may not be representative of the portfolio manager's current or future investments and are subject to change at any time.