Author: David Pett

With more than $400-million in cash sitting on its balance sheet, DundeeWealth Inc. should consider buying back Scotiabank's roughly 20% interest in the asset manager, says Stephen Boland, GMP Securities.

"Beyond a large acquisition, another use of proceeds would be to
partner with [Dundee Corp., it's majority shareholder,] and repurchase
Scotiabank’s ownership stake," Mr. Boland said in a note to clients.
 
While discussions have reportedly occurred to strengthen the
operational partnership between Dundee and Scotiabank, Mr. Boland said
there has been little evidence that talks have resulted in much progress.

"This may be an opportune to time to retrieve this ownership stake if the partnership outlook is dim," he wrote, estimating the cost to be approximately $380-million.

Management at DundeeWealth, meanwhile, appears to have other plans for the cash burning a hole in its pocket.

On a recent earnings call, they said it would consider deploying their capital by hiring investment teams that would help diversify investor investment options.

The other option mentioned was to make acquisitions similar to DundeeWealth's deal for 60% of Aurion Capital Management in 2008, worth $26-million.

"In our opinion, neither of management’s suggested uses of capital would be large enough (alone or combined) to effectively utilize current ‘excess’ cash," Mr. Boland said.

He added that under normal circumstances, DundeeWealth could buy back shares or pay a special dividend. But with two material shareholders in Dundee Corp. and Scotiabank, that type of transaction may be too complex.  

David Pett

The Chinese economy is a financial bubble that will inevitably pop, according to Edward Chancellor, author of the classic text on financial manias, Devil Take The Hindmost. In a new report for GMO, the Boston-based money manager, Chancellor lists 10 signs of a bubble in progress. They range from “blind faith in the competence of the authorities” to “a surge in corruption” to “inappropriately low interest rates.”

Chancellor figures that the Chinese economy meets all 10 of the criteria. And he has harsh words for some of the cheerleaders for China. “Wall Street… tends to downplay the darker aspects of the Chinese demographic story,” he writes.

“China’s population is set to decline in 2015. The worker participation rate will peak this year. It’s anticipated that the number of people joining the workforce will fall off quite rapidly. Yet it’s this section of the population that tends to move to cities and has provided China with an apparently limitless supply of cheap labor.”

Chancellor figures that if China’s economy slows below Beijing’s 8% growth target, calamity will ensue. Excess capacity will stifle new investment, the real estate bubble will burst and non-performing loans will bring down the banking system.

Freelance business journalist Ian McGugan blogs for the Financial Post.

With yield curves in Canada and the U.S. already beginning to flatten, investors should start preparing for a less exuberant period of equity outperformance relative to bonds, says Vincent Delisle, strategist, Scotia Capital Markets.

"Our 2010 strategy theme has been to reverse our aggressive 2009
cyclical bias and to gradually take the risk-trade down," Mr. Delisle
said in a note to clients. "We view this ongoing tilt down in yield
curves as further indication to act."

Yield curves, which plot the spread between long and short-term bond yields, have started to flatten after reaching extremely steep levels earlier this quarter. The U.S. 10-year minus two-year slope has declined 21 basis points from its Q1/10 peak, while the comparable Canadian slope has come down 47 basis points.

Mr. Delisle expects central banks in both Canada and the U.S. to begin raising rates based on economic improvements and said yield curves, as a result, should continue to flatten through 2011.  He predicted the U.S. yield curve using 10-year and two-year yields, will smooth out another 60 to 210 basis points. 

While the strategist continues to prefer equities over Treasuries for the time being, he said his comfort level toward stocks is declining.

"Although we are projecting further 7%-10% equity upside (total return) as confidence in the global recovery solidifies, the equity risk-reward profile is no longer as
compelling as it was at the start of 2009," he said.

"Our equity recommended weight has been hovering at 68% for a year. This number will be coming down," 

He recommended sectors that are less burdened by interest rate hike fears and a weaker Euro/Yen, including industrials (capital goods), technology, discretionary (cable/media), and oil.

"Moreover, we maintain a cyclical bias in our sector strategy but have been rotating out of early cyclicals (Financials, Discretionary Retailers) and moving into Staples and Telecom since Q4/09," he said.

Geographically, Mr. Delisle said he favours North America over Europe and emerging markets.

David Pett

Osisko Mining Corp. is garnering some solid reviews from analysts, one day after the Quebec-based miner announced a friendly takeover bid for Brett Resources Inc.

On Monday, Osisko offered to acquire all of the issued and outstanding common shares of Brett Resources in a deal worth about $372-million. The acquisition is expected to provide Osisko with a second leg of growth through Brett's Hammond Reef gold project near Thunder Bay, Ontario.

"We view the potential acquisition of Brett as modestly positive, adding considerable longer‐term growth to Osisko’s production profile," said Brad Humphrey, Raymond James analyst, reiterating his Market Perform rating and $10.10 price target.

Although the Hammond project is early stage, the analyst said the transaction could add up to 6% the net asset value of Osisko. He added that permitting concerns related to the project's location near a reservoir are manageable.

"Osisko’s management team has shown that it can manage sensitive local issues (permitting the Canadian Malartic project) – providing some comfort that it will ultimately overcome the concerns presented by the project’s close proximity to a reservoir," he told clients in a note.

BMO Capital Markets analyst John Hayes also rated the deal positively and estimated Osisko could produce more than one million ounces of gold in 2015.

He left his Speculative Outperform rating unchanged.

David Pett

As a long-term stock, IBM Corp. is still one of the best picks for investors. Near term, it may not be the best bet, says a new report from RBC Capital Markets.

"We believe that prospects for an improving economy and an improving IT sector suggest that investors seek outperformance in higher-beta opportunities in the near term," said analyst Amit Daryanani in a note to clients. 

"The need for a conservative investment, such as IBM, works best when the demand is highest for such an investment – this is during periods of market dislocations."

With almost 80% of its business in services and software, IBM has the best mix of technology businesses in the enterprise sector, the analyst said. Notably, 50% of the company's revenues and 62% of its profits are earned on a recurring basis. 

As a result, IBM’s margins held up relatively well versus those of its peer group during the financial crisis, not to mention the tech bust earlier last decade.

However, based on expectations for a significant rebound in IT spending in 2010,
Mr. Daryanani thinks hardware-centric names like Hewlett-Packard Co., EMC Corp. and Dell Inc., with
greater early cycle exposure and a higher degree of earnings leverage
should outperform IBM in the near term.

He initiated coverage on IBM with a Sector Perform rating and $150 price target.

"We believe that IBM's current valuation represents a fair price for investors with a long-term perspective," he wrote.

David Pett
 

Despite the 60% rally in equity markets over the past year, or more likely because of it, Canada's best known bear remains steadfast in his pessimism towards stocks.

In his latest note to clients, David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates, says the cyclically sensitive sectors of the S&P 500 are pricing in a far too robust economic recovery.

Notably, he said U.S. homebuilder stocks are pricing in housing starts priced in a level between 800,000 and 900,000 versus 575,000 currently. At the same time they are pricing in existing home sales of 5.5 million versus 5.05 million and a NAHB housing market index at 35 compared to 15 presently.

"Arguably, this is the most expensive part of the market," he wrote.

In addition, he said consumer stocks are pricing in retail sales growth of 7.5% year-over-year compared to the pace right now of 3.9%. Meanwhile, the S&P 500 Industrials Index is pricing in an ISM figure of 61 versus 56.5.

"One really has to wonder what sort of manufacturing recovery this is when parts suppliers to the large cap industrials are going cap-in-hand for US$30-billion of TARP funds – obviously not one that can be sustained without taxpayer support."

David Pett

The Canadian dollar's 4% gain against the U.S. dollar so far this year won't end at parity, but a loonie worth more than US$1.05 would be a sure sign to take profits, says UBS analyst Andy Ji, strategist, UBS AG.

"In the coming months, we believe the very factors that have underscored our favorable outlook for the commodity currencies remain intact," he said in a note to clients. "As a result, we recommend keeping exposure to the commodity currencies against the USD."

Last July Mr. Ji initiated a recommendation in an equal-weighted basket of currencies including the loonie, the Australian and New Zealand dollar, the Norwegian krone, the Brazilian real and the South African rand. To finance his long position, he took a short position in the greenback.

At the time he expected the recovery in the global economy to be accompanied by a sustainable increase in commodity demand, which would boost the value of the so-called commodity currencies that he selected.  

He also believed the commodity currencies should benefit from his pessimistic longer-term view on the US dollar. Historically, there is negative correlation between
the greenback and commodity prices.

While he did not fully anticipate the impact to markets of China's tightening policy and Greece's sovereign debt crisis, Mr. Ji remains committed to his six currencies, which are up 12% since he made the call and 33% since last year.

"In the coming months, we believe the very factors that have underscored our favorable outlook for the commodity currencies remain intact," he wrote.

However, the UBS srategist does have a limit to his bullishness, setting sell targets for each of the currencies.

For the loonie, he recommended investors take profits once it hits US$1.05 or more accurately the U.S. dollar falls to CDN95¢.  Based on Monday's trading value for the loonie of US98¢, that represents another 7% upside for the Canadian dollar.

Notably, Mr. Ji also advised profit-taking when the Australian dollar hits US95¢, from US91.7¢ currently and the New Zealand dollar increases to US76¢ from roughly US70.5¢.

David Pett  

The U.S. Federal Reserve will end its purchases of mortgage-backed securites at the end of this month, but don't expect the exit to have much sway on bond markets.

It's a good thing, too. With rate hikes on the way and the improving U.S. economy threatening to flatten out the yield curve, investors have enough to worry about, says Larry Hatheway, economist, UBS AG.

While the Fed’s MBS program has been positive in helping stabilize markets and breed confidence following the financial crisis, Mr. Hatheway said the exit from the plan will not likely create volatility or uncertainty in markets.

"The  ‘exit’, after all, has been clearly communicated in advance," he said in a note to clients. 

The bigger challenge for bondholders is the steady recovery of the US economy and the anticipation of Fed rate hikes.

"Treasury yields are likely to be more sensitive to shifting probabilities of when and by how much the Fed might lift short rates," he wrote.

"To be sure, the Fed is likely to carefully communicate upcoming policy shifts. But, nevertheless, uncertainty is likely to be elevated, in particular
around the novel aspect of the Fed’s ‘reaction function’, namely calibrating the appropriate rate of interest to pay on bank reserves.

With the first in a series of gradual rate hikes expected in September, he predicts a modest  ‘bear’ flattening of the yield curve in the coming months.

He maintained his underweight allocation to US Treasuries and Eurozone, UK and Japanese government bonds.

He is also underweight inflation-linked government bonds and remains overweight high-yield corporate bonds, real estate  and soft commodities. He is neutral on global equity markets.

David Pett

Raymond James analyst Mandy Samols is convinced H&R Real Estate Investment Trust is not receiving fair value for its investment in The Bow, the new Calgary headquarters of EnCana Corp.

The revelation comes after Ms. Samols spent two days with management hosting institutional meetings.

“Citing the recent spinoff of BPO Properties by Brookfield at a cap rate in the mid 6s, management believes The Bow could likely fetch a cap rate in the low 6s,” she wrote, in a note to clients.

“Admittedly, we currently value The Bow utilizing a 7% cap rate. A 100 basis point decline the in the cap rate used to value The Bow would increase our net asset value by 8%.”

She has a 12-month target price of $18 on the REIT.

Ms. Samols said H&R trades at an implied cap rate of 7.8% so if H&R does sell part of the Calgary building it would be accretive to earnings, adding proceeds from any sale could be used to buy back units.

She said management confided it has has consulted with DBRS and Moody’s on financing the Bow, with $600-$800-million in debt possible.

“While many investors may view management’s decision not to lock in financing on The Bow early as cavalier, we highlight that there are merits to their approach including the complications such an action would introduce to a potential sale, the early repayment penalties on the construction facility and the cash drag on earnings such an action presents,” wrote Ms. Samols.

The analyst did not get any indication on when H&R might increase its distribution which it cut in half last year. Management did indicate once The Bow is completed it will consider a payout ratio of at least 80% of adjusted funds from operations.

Garry Marr

Faced with the prospect of stricter regulation and a huge shift in investor sentiment post financial crisis, hedge funds have realized, in true Darwinian style, that sustainability is predicated upon their ability to adapt and evolve.

Today, the investment landscape is changing as hedge funds are repackaged, repurposed and sold in a format accessible to Canadian retail investors.  As part of this shift, hedge funds are becoming subject to the same stringent regulations required of mainstream products, such as mutual funds.

Investors, traditionally focused on performance and less on risk and security, have had a dramatic wake up call after the recent financial crisis. Asset classes that had previously been perceived as uncorrelated took a synchronized nose-dive. Baby-boomers starting to retire may look back on a decade of fairly flat equity performance as the S&P/TSX Composite Index moved above the 10,000 mark for the third time in July 2009. These factors left investors reappraising their asset allocation options and reprioritizing their investment objectives, placing diversification firmly at the top of their list.

The demand for true portfolio diversification and transparency from investors is driving hedge fund heavyweights into trusted onshore formats that offer a seal of regulatory approval.

In Europe, for example, the buzzword for the last 12 months among the large alternative asset managers has been UCITS III. This EU directive has allowed certain hedge fund styles to be structured in a highly regulated format and effectively brought onshore. Similarly, in Canada we are starting to see the launch of alternative mutual fund products.

The process of ‘onshoring’ for alternative asset managers has meant engaging with regulators and working closely to overcome regulatory barriers, which have previously proved prohibitive in allowing alternatives to enter the mainstream. In particular, boosting liquidity, transparency and employing robust risk controls are central to alternative asset managers successfully registering products in local markets.

This march towards the mainstream means retail investors who were previously deterred or constrained by high minimum investments or unregulated offshore structures are being offered a real choice for the first time – a trend with the potential to further the ‘institutionalization’ of the retail investment space.

An interesting trend we are seeing in Canada is more collaboration between alternative and traditional asset managers. Mainstream players are looking for real sources of diversification, outside of traditional asset classes and geographies, to offer their clients post 2008.

Having witnessed asset classes which they had previously believed to be uncorrelated plummeting in unison, the pressure is on to develop investment solutions that offer clients true diversification.

One of the most significant developments over the next five years is likely to be a shift in the level of understanding surrounding alternative investments. As we start to see alternative asset managers move into the mainstream either by entering the mutual fund market or through approved investment dealers, retail investors will have a new range of investment styles and strategies become better acquainted with.

This will necessitate a determined education effort from alternative asset managers to ensure that investors fully understand what they are buying, which is particularly important given that not all alternative investment styles are suited or even able to fit the constraints imposed by a regulated onshore structure. Typically it is the more liquid hedge fund strategies such as trend followers, long-short equity and global macro which have the potential to be offered in a mutual fund format.

At a more basic level, these alternative investment strategies all have different performance characteristics, which are crucial for investors to understand if they want to derive the diversification benefits that an asset allocation can yield. For instance, thinking back to 2008, trend following strategies were a prime example of a strategy that acted as a major diversifier for investors, continuing to perform exceptionally as other investment styles were plummeting.

Ultimately the pace at which alternative investment products come to market will depend largely on the strength and sustainability of investor demand for diversifying their investment solutions.

In this coming of age, the ability to cope with increased regulatory scrutiny when it comes to onshore, regulated markets will be a key competitive advantage moving forward. It therefore follows that hedge funds with robust internal infrastructures and highly liquid investment strategies are best positioned to offer investors the security, liquidity and transparency they are demanding today. 

Toreigh Stuart is CEO, Man Investments Canada Corp., a subsidiary of UK-based Man Investments, one of the world's largest providers of hedge fund investments. 

Nike Inc. shares are on a nice run Thursday morning and no, it's not just because of Tiger Wood's return to golf at the Master's next month. 

Up more the 6% in brisk trading, Nike stock is getting a bounce from better-than-expected third quarter earnings announced Wednesday after market close. The results were driven by improved demand in Western Europe and China and in categories such as apparel.

"While the company remained cautious on certain geographic markets, management sounded upbeat about their overall business," said Kate McShane, analyst, Citigroup Capital Markets.

The enthusiasm, she added, is based on renewed growth in Nike apparel, momentum in North America and stronger futures growth in China & Emerging Markets. As well, average sales prices continue to rise and management' ability to manage its supply chain is improving.

At the same time, innovation continues to drive new product launches & share gains. Many analysts think Nike's new lightweight Lunar Glide running shoes and Pro Combat
football gear are expected to give a boost to future earnings. Events such as the World Cup in South
Africa and Mr. Woods' return to golf should also positively impact the company's bottom line.

One of the corporate sponsors to stick by the scandal-plagued Mr. Woods over the past few months, Nike executives did not mention the golfer's name once during Wednesday earnings call. On Tuesday the company issued the simple statement:  "We look forward to Tiger's return to the Masters and seeing him back on the course."

Ms. McShane raised her earnings estimates for Nike and increased her price target on the stock to US$80 from US$75. Her Buy rating is unchanged.

With Nike already up 22% since early February, she said the next catalyst will likely be the company's upcoming investor day on May 5.

"We would still be buyers ahead of the investor day on May 5th, which we think will focus on further growth opportunities for apparel, long term growth targets, and capital allocation.

Several other analyst also raised estimates and price targets following Nike's earnings beat. Goldman Sachs revised its price target to US$80 from US$78 and Barclay's Capital hiked its target to US$85 from US$75.

UBS analyst Michael Binetti, meanwhile, maintained his Neutral rating and US$76 target. While overall he remains positive on Nike's business, he is cautious about the recent share price appreciation.   

David Pett

Investors should back up the truck and grab a load of undervalued Churchill Corp., says Chris Blake, analyst, Blackmont Capital. 

Mr. Blake initiated coverage on the construction firm with an Outperform rating and $25 price target on Thursday.  Based on Wednesday's closing price of $20.29, that represents 23% upside over the next twelve months.

"With roughly 95% of current backlog from projects located in Alberta and B.C., Churchill is well positioned to benefit from both renewed oil sands activity and further contract wins from infrastructure related government projects in Western Canada," he said.

The analyst said Churchill also benefits from a clean balance sheet, positive free cash flow and good earnings visibility. Trading at a 10% discount to its North American peer group, Mr. Blake said Churchill's valuation multiple will eventually grow as "expected backlog, revenue and EBITDA momentum builds."  

David Pett
 

Paladin Labs Inc. had its biggest day in weeks on Wednesday, jumping almost 6% to a new 52-week high of $21.58. 

Late Tuesday night, the company announced that it has acquired a 34.99% ownership interest in Pharmaplan Ltd., a South African specialty pharma company, Paladin also committed to raising its ownership stake over time based on Pharmaplan's overall performance.

"This is a significant transaction for the company towards expanding in an emerging market territory," said Maher Yaghi, Desjardins Securities analyst. 

"We are encouraged by this opportunity given that the South African market provides the potential for respectable profit margins similar to what Paladin attains in Canada, but with stronger growth prospects."

Mr. Yaghi reiterated his Buy recommendation on the stock and left his $21.30 price target unchanged.

"We have already included in our valuation for Paladin a $2.44/share component that reflects the potential from acquisitions worth $75-million," he wrote. 

"While we do not believe the 35% ownership interest to be worth more than $75-million, we will be reviewing our acquisition potential scenarios given the more aggressive stance by management demonstrated by this new venture."

David Pett

Now that Agrium Inc. has pulled the plug on its contentious bid for CF Industries, what's next for the Canadian fertilizer giant?

Richard Kelartas, analyst at Dundee Securities, has a few ideas including greater focus in China through joint ventures.

"Agrium currently has one joint-venture with Hanfeng Evergreen in China but the company could potentially sign more," he said in a note to clients. 

"The only exclusivity in the two companies contract is for sulphur coated urea, so Agrium could partner with other conventional fertilizer producers as well."

Closer to home, Mr. Kelartas said Agrium is considering acquisitions that will help solidify its retail presence.

Agrium is by far the largest farm retailer in the US with as many outlets as its next four competitors combined," he wrote.

"Despite its size, the company only has a [roughly] 15% share of the market and is looking to make several small acquisitions in the coming years to fill gaps in its geographic coverage and further consolidate the industry."

The analyst added that Agrium would also like to expand its footprint in Canada and South America.

He reiterated his Buy rating on the stock and raised his price target to $82 from $75 on increased earnings estimates due to a higher potash price forecast.

David Pett

Of all the countries to do business in these days, Greece has got to be right at the bottom of the list for the majority of companies. After all, the eurozone country's debt troubles have been well documented in recent weeks and it remains unclear whether Greece can escape bankruptcy. 

Apparently the situation has not intimidated DragonWave Inc. Last week, the Ottawa-based company announced that Cosmoline, a WiMAX network service provider in Greece, wants to standardize their backhaul solutions with the help of DragonWave technology.

Peter Misek, Canaccord Adams analyst, said the deal is a definite positive for DragonWave, whose stock has fallen more than 25% in March. 

"This contract is for 1,000 wireless links, which we believe is worth about $10-million to DragonWave," said Mr. Misek. 

"This win also indicates that DragonWave is gaining traction with its ultra-high-capacity Quantum product."

Noting that DragonWave also announced a share buyback plan  for up to 10% of the public float, Mr. Misek reiterated his Buy recommendation and $17 price target. He views the recent pullback as a good opportunity.

"We believe this presents a solid entry point for investors looking for companies that will benefit from increased bandwidth demand on mobile networks, global 4G network deployments and the upcoming transition toward Ethernet microwave technologies," he wrote in a note to clients.

David Pett 

Inmet Corp. shares are down slightly on Tuesday, as questions arise about the financing of its 100% owned Cobre Panama copper project in Panama.

On Monday, Inmet said that
LS-Nikko, through its wholly owned subsidiary, Korea Panama Mining
Corporation, has decided to keep its option to acquire an
equity interest in Minera Panama, S.A. (MPSA), owner of the Cobre
Panama project, at the current 20% level.  An option agreement
previously announced provided KPMC
with the ability to elect to increase its option interest in the
project to 30%.

"The Korean’s staying at 20% instead of 30% does raise some financing questions for Cobre Panama, however, demand for world‐scale copper projects is increasing, in our view, and we believe management is in a favourable position to bring in a third partner for the project to share the technical and financing risk," said Raymond James analyst Tom Meyer.

He reiterated his Outperform rating and recommended investors buy on any potential pullback in shares.

UBS analyst Onno Rutten maintained his Buy rating, saying Inmet could could attract alternative funding through partnerships, project finance or royalties. He said further clarity on the financing structure will be provided once the Cobre Panama Feasibility Study is ready at the end of March.

"We believe that clarity on Cobre Panama’s financing and the anticipated ramp-up of Las Cruces in H2/2010 will support IMN after the anticipated near-term challenges," he wrote in a note to clients.

David Pett

Apocalypse 2012. That seems to be the message of a must-read New York Times article that puts together the bill that is coming due for a decade of boisterous spending on everything from private-equity deals to government spending.

For starters, the story estimates that US$700 billion in high-yield corporate debt—junk bonds, in other words—will have to be refinanced between 2012 and 2014. To put that into perspective, a mere US$21 billion of such debt is coming due this year.

Competition for savings will be intense because high-yield borrowers won’t be the only ones looking to borrow money. Investment-grade companies are expected to refinance US$1.2 trillion in loans between 2012 and 2014.

Finally, there’s the biggest single borrower of them all. The U.S. government will need to tap creditors for nearly US$2 trillion in 2012.

Given the looming demand for savings, it seems a nearly sure bet that interest rates will head much higher. Savers who are griping about the lack of decent yields in today’s market could see a dramatic reversal of the situation within two years. Companies, on the other hand, may feel the pain as the cost of borrowing soars. “An avalanche is brewing in 2012 and beyond if companies don’t get out in front of this,” says a senior officer at credit-rater Moody’s. His metaphor may be mixed, but his message is clear.

Freelance business journalist Ian McGugan blogs for the Financial Post.

Enough is enough. After watching its competitive advantage over the supermarkets dwindle in recent months, Wal-Mart Stores Inc. is ready to slash prices in order to win back customers, says new research from Citigroup Capital Markets.

"WMT’s price savings no longer outweigh the experience and convenience of shopping the supermarkets," analyst Deborah Weinswig said in a note to clients.

"As the economy improves, we expect [Wal-Mart] to fight harder to keep this customer by significantly increasing rollbacks to drive mindshare and market share."

Ms. Weinswig upgraded the giant retailer to Buy from Hold, raising her price target on the stock to US$65 from US$54. In early trading Monday, Wal-Mart shares are up 2%.

Same store sales at locations with both Clean Action Alley, the retailer's effort to tidy the main aisles once crowded with merchandise on pallets, and the Smart Network, a digital in-store advertising initiative, are outperforming the company average as well as stores with only one of these initiatives, the analyst said.

"Customers are finding it easier to navigate the store, which is leading to larger basket sizes and higher ticket, she wrote. "We believe the improved experience will draw customers back to WMT from the supermarkets and could also draw a higher income customer."

Mr. Weinswig also expects a revamped apparel management team to help Wal-Mart capitalize on the sales and margin opportunity from global sourcing as early as second half of 2010. 

David Pett

U.S. equity index futures are slightly lower this morning. S&P 500 futures recovered to down 3 points following release of the March Empire State Manufacturing Index. Consensus was a decline to 21.45 from 24.91 in February. Actual was a less than expected decline to 22.86.

Google slipped 2% on news that the company is close to exiting service in China.

Wal-Mart gained 1% after Citigroup raised its rating from Hold to Buy. Target was raised from $54 to $65. ‘Tis the season for Wal-Mart to move higher! Following is a 20 year seasonality study on Wal-Mart:

UBS raised its target price on Dupont from $39 to $41. ‘Tis the season for Dupont to move higher! Following is a 20 year seasonality chart on Dupont:

Coverage of Agrium was initiated by RBC Capital Markets with an Outperform rating. Target price is $90.

David Pett