2013

Fed tapering less rosy for emerging markets
Financial Post, December 19, 2013

“For developed markets, the Fed’s ‘enhanced’ guidance coupled with the dovish taper was decidedly good news,” said Pierre Lapointe, head of global strategy and research at Montreal-based Pavilion Global Markets, in a note to clients. “The reaction in emerging markets, however, was less unambiguously positive.”


Don’t fear the Fed: Four reasons to embrace the taper
The Globe and Mail, December 12, 2013

“Strategists at Pavilion Global Markets believe the Fed will taper its monthly bond purchases in late January, and they expect the central bank will drop heavy hints about the move at the conclusion of next week’s monetary policy meeting.  “That the taper is coming is well understood,” the strategists said in a note. “What isn’t explicitly known, however, is the impact that the taper will have on the economy and on markets.”


Why investors should keep an eye on the Fed
Financial Post, December 10, 2013

“The real driver of global asset classes is increasingly the United States,” said Pierre Lapointe, head of global strategy and research at Pavilion Global Markets in Montreal, in a note to clients.  Based on his research, U.S. equities have impacted other benchmarks more and more over the years, noting the variance in stocks south of the border explained about half of the movement in the MSCI World index during the past 12 months.


Warren Buffett Market-Beating Skills Revealed: Cutting Research
 Bloomberg, December 5, 2013

U.S. stock and bond movements “greatly influence” those elsewhere, yet shifts abroad don’t impact American assets.  So says Pierre LaPointe, head of global strategy and research at Pavilion Global Markets Ltd. in Montreal. The MSCI USA Index explains about 40 percent of the variance of similar gauges in Germany, France and the U.K since 2000. The proportion is lower in Asia and as high as 52 percent in Canada.  By contrast, fluctuations in equities outside the U.S. explain only 1.4 percent of the variance in the MSCI USA Index.


BlackBerry Ltd., Potash Corp. , Barrick Gold among unlucky stocks bound for bruising in tax-loss selling
Financial Post, November 25, 2013

When stock markets do well, the number of candidates for tax-loss selling is usually low,” said Pierre Lapointe, head of global strategy and research at Pavilion Capital Markets in Montreal. “The bottom line is that tax-loss selling will be concentrated in a few names, which have already done poorly this year.”


16,000 (and falling?) A milestone brings out the bears
GlobeAdvisor.com, November 19, 2013

But corporate insiders, who are ideally positioned to know when their shares are cheap or expensive, have been shying away. According to Pavilion Global Markets, a steady number of insider “sells” and a drop in the number of “buys” has driven the sell/buy ratio near its highest level in a decade. “Historically, spikes in the sell/buy ratio heralded weak returns in the three to six months that follow,” Pavilion strategists said in a note.


The S&P 500:  1,800 or Bust
Barron’s, November 18, 2013

Pavilion Global Markets’ Pierre Lapointe and team worry about the ratio of insider sellers to buyers and what it means for returns during the next three to six months.


Yellen and the Fed may make stimulus move come January
Financial Post, November 13, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Financial Corp., points out that incoming Fed chair Janet Yellen is very focused on providing forward guidance, further strengthening the threshold view.  Mr. Lapointe also sees tapering starting in January and dismisses arguments that Ms. Yellen is a dove who will wait as long as possible to begin tapering. A lowering of the unemployment threshold would be within her strategy of assuring markets when changing monetary policy.


Putting the brakes on household borrowing could stall Canada growth
The Wall Street Journal, November 11, 2013

Cutting back too much on borrowing could be a big negative for gross domestic product growth that appears to be mired below 2%, some analysts say.  “There are several signs that Canada is heading toward a cyclical peak in terms of household leverage. For example, consumer and residential mortgage credit growth numbers have been plunging of late,” Pierre Lapointe and other strategists at Montreal’s Pavilion Global Markets said in a recent report.


European stocks to keep rolling despite rocky patch
Financial Post, November 6, 2013

Europe’s economic recovery has hit another rocky patch, but that’s not expected to keep stock markets in the region from continuing to rally.  Indeed, the rockiness — highlighted by deflationary pressures — may even help drive equity prices higher should the European Central Bank eventually step up its monetary easing regimen as expected.  “This is a key part of our positive thesis for European risk assets,” said Pierre Lapointe, head of global strategy and research at Pavilion Global Markets. “More ECB easing is coming, helping to sustain the uptrend in those markets.

A fundamentally better indexing strategy
The Globe and Mail, November 6, 2013

Strategists at Pavilion Global Markets added to the discussion with a report examining long-term returns on alternative strategies tied to the S&P 500, and found that they have done far better than the benchmark index using data going back to 1991.


‘Smart Beta’:  Higher Returns, Higher Risk
Barron’s, November 5, 2013

Pavilion strategists Pierre Lapointe, Alex Bellefleur and Frances Donald ran the numbers on a range of monthly rebalanced smart-beta versions of the S&P since 1991.  Their finding: All the methods beat the no-frills S&P 500. But the group found that only one strategy — screening for stocks exhibiting low volatility over three months — beat the index with reduced risk.


Bank of Japan to support equities if Fed tapers
Financial Post, October 30, 2013

Pull quote:  “Pierre Lapointe, head of global head of global strategy and research at Pavilion Global Markets in Montreal, said investors should expect the Bank of Japan to flood markets with even more liquidity in the coming months, in part because wage growth in the country remains anemic.  “Expectations are still lacklustre, with corporations indicating they won’t be raising wages anytime soon,” he said. “In our view, the BoJ is the last hope to boost these expectations and thus wages themselves.”


The Great Rotation spins its wheels
Financial Post, October 13, 2013

Pierre Lapointe, head of global strategy and rate research at Pavilion Corp., said the data suggest the Great Rotation has been restricted to the U.S. so far, but he expects other countries will begin to experience their own rotations soon.


Investors play multiple choice with multiples
Financial Post, October 9, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Corp., calculates that 68% of the S&P 500’s returns this year can be attributed to expanding multiples.


Surprise – earnings season is here
Financial Post, October 9, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Global Markets in Montreal, said the low growth figures will make it difficult to attract interest from investors. He does not expect realized earnings to be the market mover they usually are because of the fiscal drama ongoing in the U.S.


Third-quarter earnings season forecast: Overcast, chance of pain
The Globe and Mail, September 30, 2013

This economic recovery has been unusual in that it has not been led by the consumer. “This time around, it was more of a policy-led expansion,” said Pierre Lapointe, head of global strategy and research at Pavilion Global Markets Ltd. Now, with the U.S. Federal Reserve inching toward slowing its bond-buying program, the U.S. economy will wean itself from fiscal and monetary stimulus, Mr. Lapointe said. “We expect in 2014, the U.S. consumer will start to lead again, and we’ll get the second phase of this expansion.” He, too, sees the possibility for further improvements in margins.


Europe rebound could impact other equity markets
Financial Post, September 25, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Global Markets, in his latest analysis said growing opportunities in central and eastern European markets are partly due to the improving western European cycle.


Bears Retreating as European Shorts Slide to Seven-Year Low
The Washington Post/Bloomberg, September 23, 2013

Europe’s economy helps make the ECB’s commitment to loose monetary policy more credible for investors, who have been skeptical of pledges of long-term easing from the Fed and the Bank of England, Pierre Lapointe, the Montreal-based head of global strategy and research at Pavilion Global Markets Ltd., wrote in a Sept. 17 report. The key interest rate in the euro area is 0.5 percent, compared with 0-0.25 percent in the U.S. and 0.1 percent in Japan.


Loonie Largely Maintains Altitude as Commodity-Dollar Cousins Dip
The Wall Street Journal, August 21, 2013

What’s keeping the loonie so lofty? Pierre Lapointe, head of global strategy and research for Pavilion Global Markets, thinks it’s Canada’s terms of trade situation, which – against all odds – has supported the currency.  Unlike many other commodity exporting countries, Canada’s exports are largely energy dependent. And in recent years, Canada’s export sector has become less dependent on natural gas and increasingly dependent on crude oil, Mr. Lapointe said in a report to clients released Wednesday.


European Recovery Means Little for Jobless Generation
Bloomberg, August 14, 2013

High labor costs “had been one of Spain’s weak point before the crisis, and is now being improved significantly, leading to stronger competitiveness,” Pierre Lapointe, the Montreal-based head of global strategy and research at Pavilion Global Markets Ltd., said in a note this week.”


Amid Spain’s woes, investment strategists see future brightening
The Globe and Mail, August 13, 2013

“…strategists at Pavilion Global Markets can see improvements in the making that should gain the attention of bond-rating agencies. They believe Moody’s Investors Service, in particular, is far too pessimistic about Spain and should upgrade the country’s debt rating – now just a notch above “junk” or non-investment grade status – when the economic cycle improves.”


Europe Stocks Cheaper Than Last Recovery as Profits Rebound
Bloomberg, August 12, 2013

Europe’s economy is showing signs of growth as governments relax efforts to trim deficits, according to Pierre Lapointe, the Montreal-based head of global strategy and research at Pavilion Global Markets Ltd. The European Commission in May gave France and Spain two more years to meet budget targets, easing austerity policies championed by Germany to combat the region’s debt crisis. Portugal won one extra year.


China unveils stimulus measures as emerging markets run out of steam
Financial Post, July 24, 2013

A number of the external conditions that favoured a violent emerging market selloff in recent months are no longer present, giving structurally weak countries room to breathe in the near term,” said Pierre Lapointe, head of global strategy and research at Pavilion Corp.  However, he cautioned while the selloff is overdone, the economic risks remain in place.


Market fear of Summers as U.S. Fed chair may be overblown
Financial Post, July 13, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Corp., questions the assumption that Mr. Summers is some sort of ultra hawk. “The idea that Summers is a ‘hawk’ who will immediately tighten policy seems exaggerated to us,” he said. “In our view, he only appears hawkish compared to Yellen’s apparent ultra loose policy mentality.”


Rotation into stocks stalls
Financial Post, July 5, 2013

“It is true that investors are massively selling their bond funds, but they are not using that money to buy into stocks yet,” said Pierre Lapointe, head of global strategy and research at Pavilion Corp.


Canada and U.S. Showing Signs of Economic Divergence
The Wall Street Journal, June 24, 2013

With growth in the U.S.  expected to hit a fairly robust 2.5% in the latter part of 2013, some high-profile economists have suggested Canada’s slowdown should come to an end shortly after the U.S. recovery accelerates.  Don’t bet on it, says Pierre Lapointe, head of global strategy and research at Strategy Pavilion Global Markets.


Hurting loonie to play havoc with stocks
The Financial Post, June 25, 2013

But there are other issues hindering the loonie, said Pierre Lapointe, head of global strategy and research at Pavilion Global Markets in Montreal.  He said the Canadian dollar tends to be viewed as a play on the U.S. economy because of the two countries close ties and the U.S. Federal Reserve’s influence on the Bank of Canada’s behaviour.


Worst is yet to come for emerging markets
Financial Post, June 21, 2013

From a structural perspective, something deeper is developing in certain emerging markets,” said Pierre Lapointe, head of global strategy and research at Pavilion Corp. “Structural problems are now being revealed by the impending tapering of quantitative easing and the medium-term trend in these markets has changed for the worse.


CNBC video:  Why Spanish Housing Outlook is “Much Brighter”
CNBC, June 14, 2013

Pull quote:  Pierre Lapointe, Head of Global Strategy and Research at Pavilion Global Markets, says that Spanish housing prices are starting to bottom which should help consumers deleverage faster and boost private equity investment.


Dormant Inflation Seen Giving Fed Time to Wait:  Chart
Bloomberg, June 13, 2013

The Federal Reserve may be able to take its time in adopting a more restrictive monetary policy because inflation is relatively tame, according to Pavilion Global Markets Ltd.  As the CHART OF THE DAY illustrates, the U.S. core consumer price index’s increase since the latest recession ended in June 2009 is the smallest for any multiyear recovery since the 1970s. The gauge of prices excluding food and energy rose 6.3 percent through April, according to the Labor Department.


Don’t fear the end of QE
The Globe and Mail, June 12, 2013

Investors are very worried about a potential reduction in QE programs,” said strategists at Pavilion Global Markets, in a note. “However, history tells us that the first tightening in a recovery does not lead to bear markets.


The TSX laggards:  Will energy overtake materials?
The Globe and Mail, June 7, 2013

But strategists at Pavilion Global Markets argue that crude oil is going to struggle to maintain its current price, due to lower demand and higher supply…China, the world’s second largest consumer of oil, is one reason for the rising spread between demand and supply: “In the past, this country provided the marginal growth in demand that was needed to push oil prices higher,” the Pavilion strategists said in a note. “However, since 2012, Chinese demand has moved sideways.


End of ‘Abenomics’?  More like the start of profit taking
The Globe and Mail, May 24, 2013

Are investors more fickle than they used to be? They may be,” the Pavilion strategists said in a note. “After all, two major bear markets in 10 years probably led many stockholders to become more protective of their gains.”


Fewer U.S. Shares Available Fuels Bull Market: Chart of the Day
Bloomberg, May 14, 2013

Repurchases are magnifying gains in U.S. stocks and are poised to lift prices further, according to Pavilion Global Markets Ltd. strategists. As the CHART OF THE DAY shows, the Wilshire 5000 Total Market Index has risen more than the market value of all U.S. companies since the current bull market started in March 2009, according to data compiled by Bloomberg. Through last week, the gap was about 13 percentage points.


The downside of share buybacks and more dividends
Financial Post, May 13, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Global Markets, largely agrees with this assessment, adding de-equitization is a global phenomenon that should continue to support stock markets.  “Company managers are supporting earnings per share and equity returns by buying back their shares with excess cash or bond issuance,” he said in note this week. “Since 2009, de-equitization added no less than 17 percentage points to the performance of the Wilshire 5000.


Seven things investors should look for in 2013
The Globe and Mail, April 15, 2013

Pavilion global strategy head Pierre Lapointe says that while profitability tends to take time changing directions, in the United States, at least, the stock market is already anticipating higher growth. Companies that have adjusted after the recession are now “lean and mean,” he says.


Charts signal prolonged weakness for European stocks
Reuters, April 12, 2013

Pavilion Global Markets said the insider selling ratio at S&P 500 firms was at 12.4, against the last decade’s average of 5.5.  “This leads us to conclude that insiders are not buying the current rally. History tells us that high insider selling is usually followed by disappointing S&P 500 returns in the following months,” Montreal-based Pierre Lapointe, Pavilion’s head of global strategy & research, said.


Equities at peaks may not be good buys
Regina Leader-Post, April 4, 2013

Some investors might see the 52-week high as a sign that stocks are expensive while others might see a strong momentum signal,” said Pierre Lapointe, the head of global strategy and research at Pavilion Global Markets Ltd., in a note to clients earlier this week. “Recent history tells us that when stocks are near their 52-week high, market participants usually take a breather.


Market’s surge is leaving even the optimists puzzled
The Globe and Mail, April 1, 2013

Strategists at Pavilion Global Markets looked at the number of stocks within the S&P 500 that are trading within 10 per cent of their 52-week highs. The number is 81 per cent – which is exceptionally high and usually points to poor performance over the next three months.


Emerging Stocks Suffer as Earnings Gap Shrinks
Bloomberg, March 28, 2013

Emerging-market companies have to become more profitable to draw the foreign investment needed to lift their shares, according to Pierre Lapointe, head of global strategy and research at Pavilion Global Markets Ltd.


For Michael Kors Insiders, Cashing Out Is Very Much in Fashion
New York Times, February 21, 2013

Insiders are not buying the current rally,” Pierre Lapointe, the research chief at Pavilion, wrote in a note to clients. “The recent gains have given them reason to sell their own stock. History tells us that high insider selling is usually followed by disappointing S.&.P. 500 returns in the following months.


Insider Sales Reach 2-Year High as S&P 500 Nears Record
Bloomberg Businessweek,  February 21, 2013

“Insiders are not buying the current rally,” Pavilion’s Lapointe wrote in a Feb. 11 research note. The recent gains have given them reason to sell their own stock. History tells us that high insider selling is usually followed by disappointing S&P 500 returns in the following months.


Energy revolution feeds bull market hopes
The Globe and Mail, February 19, 2013

Strategists at Pavilion Global Markets pointed out that domestic U.S. oil production has risen 21 per cent in the past 12 months, while imports have fallen 17 per cent – and they expect the trend to continue with improvements and advances in crude oil production technology, particularly fracking.


The End of Fear
GlobeAdvisor.com, February 2, 2013

Pull quote:  “There are no ‘known unknowns’ right now,” says Pierre Lapointe, the head of global strategy and research at Pavilion Global Markets Ltd., using a phrase made famous by former U.S. defence secretary Donald Rumsfeld. “It’s the first time since the beginning of 2007 that we see much less uncertainty.”


Profit margin doldrums:  Are we having fun yet?
The Globe & Mail, January 25, 2013

While smart investors always keep an eye on their portfolio, new things pop up each day to distract us from our holdings. … But a new report from Pavilion Global Markets suggests that you’ll start seeing more movement within your portfolio to steal your attention.


Debt Burden at ‘80s Level May Aid U.S. Economy:  Chart of the Day
Bloomberg, January 25, 2013

Mortgage and consumer-loan payments in the U.S. amount to the smallest percentage of after-tax income since 1983.  That makes consumers better able to withstand higher taxes and help sustain the economic recovery, according to Pavilion Global Markets strategists.


When it comes to the January effect, not all stock markets are equal
Financial Post, January 3, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Global Markets, did some digging into the January Effect. He found that while the phenomenon is real, there is notable regional variation.  “The January Effect is observable over the long-run in most countries, but the strength of the effect differs by region,” he said in a note to clients.


 The ‘fiscal cliff’ deal will push middle-class consumers over the edge
GlobeAdvisor.com, January 3, 2013

Pierre Lapointe, head of global strategy and research at Pavilion Global Markets Ltd., noted that the end of the tax holiday will hurt consumer debt, too.  He cited a Federal Reserve Board survey that showed that one-third of U.S. workers had used their payroll tax reduction to pay down debt.  “If the payroll tax holiday was indeed helping to accelerate the deleveraging process, then we can assume its expiration will slow households’ return to credit demand and consumption growth, two major pillars of the U.S. economy that need to return before we can expect sustained economic growth,” Mr. Lapointe concluded.


Cliff deal is no panacea for market
Globe and Mail, January 2, 2013

“Analysts said that until a final outcome on the U.S. budget becomes clear, many U.S.-based companies could put off big decisions, and slow or even halt hiring and capital expenditures – creating considerable doubt about the potential for corporate earnings growth this year.

“Companies can’t write their playbook if they don’t know the game,” said Frances Donald, an economist at Pavilion Global Markets in Montreal.”