Briefly:

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In an economic brief, Avery Shenfeld, the CIBC’s chief economist says he expects commodities to continue to gain steam over the short-term, but he warns they may not be all that great a “buy and hold” asset.

“[Commodities] represent the stuff that economic recoveries are made of—the metals used in construction and durable goods, the rubber that hits the road when those vehicles are driven more, and the fuels that gear up activity in factories and transportation systems. So with increasing optimism that the world’s economies are on the mend, investors began to add weight late last year to positions in energy and industrial materials,” Shenfeld says. “The climb in resource prices is already looking a bit extended relative to past recoveries.

Shenfeld says metal markets are currently benefiting from demand in China and other emerging markets, where metals use per GDP exceeds the developed world.

“Government infrastructure spending, ramped up under stimulus plans in many countries, can also be materials intensive relative to the rest of the economic pie,” Shenfeld say. “Owning “stuff” — raw commodities or the related equities — looks attractive for the near term, as we expect healthy growth to persist for the first half of 2010. But we would be selling into any sharp rallies in anticipation of a cooling fever for resources later this year.”

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HSBC defensive on equities

According to HSBC’s Global Asset Management’s, Global Investment Perspective, stocks may be poised for a bit of a rollback.

Global equity markets capped off a roller coaster year with the Morgan Stanley Capital International (MSCI) World Index gaining 1.7% in December and 30.8% on the year. These gains largely reflected the ongoing signs that a recovery in economic activity was under way in both developed and emerging economies,” the report says. “The growing possibility of a withdrawal of government support measures will be a key concern in 2010. Equity valuations have moved significantly above the bargain levels in the first quarter of 2009, which means investors have less of a cushion against negative surprises.”

As a result, the HSBC team, says it favours defensive sectors like health care.

The study says investors should continue to benefit from low rates.

Within fixed income, we have held a positive view on corporate bonds for some time, both in investment grade and high-yield debt. Interest rates are still expected to remain on hold in the US and Eurozone,” HSBC says. “In Canada, we do not expect growth to pick up enough to justify interest rate hikes until the end late 2010. The consensus forecast is calling for rate hikes of 1% by the end of 2010. We forecast only 0.5% in hikes by the end of 2010.”

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Seamark and Growthworks complete merger

Matrix Asset Management says it has completed the previously announced business combination involving Matrix, SEAMARK Asset Management Ltd. and GrowthWorks Ltd.

“This business combination brings together three strong organizations with diverse and complementary products lines,” says David Levi, president and CEO of Matrix. “This is an innovative model that we believe will enhance the competitive position and opportunities for all parties involved.”

The parent company, Matrix, will have multiple sources of revenue across several asset classes, including institutional asset management, conventional and specialty mutual funds, and venture capital/private equity.

Common shares of Matrix will commence trading on the Toronto Stock Exchange today under the trading symbol “MTA”.

(01/15/10)