CalPERS returns ‘likely to be flat’ in current fiscal year

SAN FRANCISCO (Reuters) – California Public Employees’ Retirement System Chief Investment Officer Ted Eliopoulos on Monday described the pension fund’s current fiscal year performance as “likely to…

Consumer confidence edges higher as more Canadians put faith in blisteringly hot housing market

Consumer confidence hit a fresh high this year as the number of Canadians expecting a decline in real-estate prices dropped, telephone polling shows.

The Bloomberg Nanos Canadian Confidence Index rose to 57.9 from 57.8 a week earlier, reaching the highest level since November. The gain was driven by increased housing optimism: the difference between the share of those expecting a price increase over six months and those expecting a decrease rose to 30.2 per cent, the widest gap since October 2014.

The figures come after Bank of Canada Governor Stephen Poloz warned last week of housing overvaluation in the country’s two biggest markets, Toronto and Vancouver. The federal government announced tighter mortgage rules in December, but bank executives said this month that further steps are needed to cool surging prices.

“Perceptions related to the value of real estate continue to be a key driver of positive consumer sentiment in Canada, with positive sentiment noticeably above the 2016 average,” said pollster Nik Nanos, chairman of Ottawa-based Nanos Research Group.

All told, 44.6 per cent of respondents now expect an increase in the value of real estate in their neighbourhood over the next six months — well above the 2016 average of 37 — while just 14.4 per cent expect a decrease, the lowest share since November.

Pocketbook, Expectations

Overall sentiment remained steady across Canada’s major regions, stabilizing in particular in the energy-rich prairies, where the commodities downturn has sapped confidence. The Nanos index score in the prairies has now held at above 49 for three weeks after bottoming out at a record low of 41.4 in February.

Nationally, the pocketbook sub-index — measuring personal finances and job security — sunk to 58.8 from 59.1 a week earlier. The expectations sub-index — measuring sentiment for housing and the economy overall — rose to 57 from 56.5.

The share of those who described their jobs as not at all secure fell to 6.4 per cent, the lowest since February, from 7.2 per cent a week earlier. Amid growing uncertainty, the overall share for those with a positive outlook on their job security fell to 67.7 from 68.2 a week earlier, remaining below the 2016 average of 68.5.

On the Canadian economy, the share of those expecting it to weaken in the next six months fell to 26.3 per cent from 27.6 per cent a week earlier. The share of those expecting an increase edged up to 24.1 from 24 a week earlier.

The Bloomberg Nanos Canadian Confidence Index is based on 1,000 responses from a four-week rolling average of telephone polling. It’s considered accurate within 3.1 percentage points, 19 times out of 20, with larger margins of error for regional breakdowns. The latest round of polling ended June 10, 2016.

Bloomberg News

Dominion Diamond Corp downgraded at RBC

Dominion Diamond Corp. was cut to sector perform from outperform at RBC Capital Markets due to the challenging outlook for its Jay Project and the lacklustre diamond market.

Analyst Des Kilalea noted that while a feasibility study for Jay (an expansion of the Ekati Diamond Mine) could be ready by mid-July, achieving the company’s minimum 15 per cent internal rate of return appears to be proving difficult.

He suggested that delaying the project for a year or more, and using the benefits of deferred mine rehabilitation liabilities at Ekati, may help Dominion bridge the gap. However, the analyst pointed out that the company will still likely need rough diamond prices to rise.

“On the rough market, our view is that prices will soften in the summer with, hopefully, slight firming later in the year,” Kilalea told clients. “But with a leading bank looking to pull back further from mid-stream funding, risks remain.”

The analyst also noted that with the Misery Southwest Extension at Ekati now commercially commissioned, he’s changing his price target methodology to match that of other producers such as Petra Diamonds Ltd., Gem Diamonds Ltd. and Lucara Diamond Corp.

That resulted in a price target cut to $11 per share from $13 on Dominion, as well as the downgrade.

“With Misery now completed, and ahead of time, focus will swing to the prospects for Q2 and progress on building Jay, as well as the diamond market,” he said.

Public pension funds seek infrastructure as market heats up

SAN FRANCISCO (Reuters) – The California Public Employees’ Retirement System recently bought a stake in a private Indiana toll road with a troubled history, one sign of how popular infrastructure…

Turquoise Hill surges 14 per cent on report Rio Tinto may take copper-gold miner private

Turquoise Hill Resources Ltd. soared after the Sunday Times reported that its controlling shareholder Rio Tinto Group is preparing for a commodity price recovery by increasing its stake in the company.

Shares in the Vancouver-based company, whose Oyu Tolgoi copper and gold mine in Mongolia is more than doubling output, rose as much as 19 per cent on Monday, the biggest intraday gain since October 2011. The stock was up 14.30 per cent at 3:19 p.m.

The Sunday Times reported that Rio Tinto hired Goldman Sachs Group Inc. as part of a proposal to take Turquoise Hill private, without saying where it got the information. Under the plan, Rio Tinto would increase its 51 per cent stake slightly and hopes a single company or consortium would buy the rest, the newspaper reported on its website.

Both Rio Tinto and Turquoise Hill declined to comment on the story.

Turquoise Hill will begin work on an underground mine at Oyu Tolgoi later this year. The project would expand annual capacity to more than 500,000 metric tons of copper by 2027. Turquoise Hill owns 66 per cent of the deposit.

A dangerous journey along Afghanistan’s highways

Fewer checkpoints along Afghanistan’s highways in recent months have made road travel in the country increasingly dangerous, with insurgents capitalizing on the reduced security. Deborah Lutterbeck reports

Caracas bakery looted amid food shortages

Newly released video images show looting in a bakery in the Venezuelan capital amid widespread shortages and increasing violence. Rough Cut – Subtitled (no reporter narration).

Trump calls for increased military response after Orlando shooting

WASHINGTON (Reuters) – Donald Trump on Monday said the United States needs to increase its military response against Islamic State in the wake of the Orlando nightclub shooting over the weekend, including additional bombings.