Fund Library News Wire
| Friday, February 17, 2017
By Mike Keerma
Against a backdrop of climbing inflation and more hawkish signals from the
Federal Reserve Board, U.S. stock markets closed at record highs on Friday,
extending a streak of record high closes through February. The
S&P 500 Composite Index
advanced 1.5% on the week, and is now ahead 5.0% year to date, while the
Nasdaq Composite Index
advanced 1.8% on the week for an 8.5% gain year to date. In Canada,
prices weighed on Toronto’s benchmark
S&P/TSX Composite Index
on Friday, but the index still gained 0.7% on the week, and is now ahead
3.6% year to date.
Meanwhile, U.S. Treasury bond yields edged down on Friday ahead of the U.S.
national President’s Day long weekend, extending their February slide as
the core rate of inflation climbed to an annual 2.3% in January. Bond
prices faced additional pressure last week following Federal Reserve
Chairwoman Janet Yellen’s comments on Tuesday that inflation is no longer
“at very low levels,” and that waiting too long for a rate hike would be
“unwise.” Fed tea-leaf readers took that as an indication that the Fed is
leaving the door open for a potential rate hike in March.
In business news, food conglomerate
Kraft Heinz Co. (NASDAQ: KHC)
announced a bid to take over Anglo-Dutch consumer products giant
Unilever Plc (NYSE: UL)
with a US$50 cash/share bid worth about US$143 billion, representing an 18%
premium over Unilever’s Thursday closing price. Unilever has rejected the
bid, saying it fundamentally undervalues the company and that there is no
basis for further discussions. However, as Kraft Heinz is backed by Warren
Berkshire Hathaway Inc. (NYSE: BRK.A)
and run by Buffett-favorite Brazilian-based 3G Capital, this is very likely
only the opening salvo in the merger bid. Incidentally, Berkshire Hathaway
A shares passed a milestone last week, crossing the US$250,000 per share
mark, and touching a record high of US$251,610.
In Canada, pipeline major
TransCanada Corp. (TSX: TRP)
has been on something of a comeback trail since last November as it filed
an application last week with the State of Nebraska to continue work on the
much-delayed Keystone XL pipeline. TRP’s share price has climbed 33% from a
52-week low of $46.81 set in November, touching a 52-week high of $65.24 in
January, and closing the week at $62.22. The company reported a net loss of
$358 million ($0.43 per share) in the fourth quarter ended Dec. 31,
compared to a net loss of $2.5 billion ($3.47 per share) for the same
period in 2015. For the year ended Dec. 31, 2016, net income attributable
to common shares was $124 million ($0.16 per share) compared to a net loss
of $1.2 billion ($1.75 per share) in 2015.
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