More job cuts in energy sector
The chase by Frances Horodelski:
Born on this day in 1938 – Gordon Lightfoot. A favourite: “In the early morning rain with a dollar in my hand, With an aching in my heart and my pockets full of sand, Now, I'm a long way from home and I miss my loved ones so, In the early morning rain with no place to go.
There are lots of reasons for yesterday’s big rally (continuing tomorrow) but the simplest is that stocks had been falling pretty dramatically for a week and needed a respite. Drying had dried up during the decline (4.5% from intra-day peak to intra-day low November 3 through November 13 for the S&P), slicing through two major moving averages (100 dma and 200 dma) and nearing the 50. The markets were somewhat oversold. It was an opportunity. The other reason maybe that central banks will blink (the Fed) or be even more generous with liquidity (ECB). Will it last? Is there a bond buying opportunity here as well. The bulls say yes. The bears are quiet. Today, we begin with green all around the world with the exception of mainland China markets (down modestly in Shanghai).
Our news will focus on the continuation of job cuts in the energy sector – the latest includesEnbridge’s 5% reduction. At the same time, we’ll be watching its major comparative TransCanada which is having an analyst day today where TRP will focus on its portfolio of projects and the sustainability and growth of its dividend. While the stock isn’t cheap, the 5% dividend yield will be supportive in this market environment. U.S. retail will also be in focus. Westaim is also having an investor meeting today. Scotia is hosting Air Canada and CP Rail executives (among others) at its transportation conference.
Home Depot reported a decent beat $1.35 vs $1.15 last year and expectations of $1.32 and look for $5.36 for the year (the high end of its outlook range). While apparel retailers are feeling the heat of warm weather (and let’s admit it, little in the way of must have fashion trends), Home Depot (maybe Lowes this week too) are enjoying the benefit of a very strong U.S. housing market and warm weather (except, I’m sure, for shovels). HD is higher by 2.7% this morning on the numbers. Walmart’s report slightly better than expectations with five quarters in a row of same store sale gains. Outlook narrowed for the year ($4.50-$4.65 versus the street’s $4.40-$4.60 range). The stock is up 2.4% after a 2.5% jump yesterday.
It is the persistence of decline that kills you. In 1982, that’s what it felt like with stocks as the averages made new lows and then more new lows. Gold and silver (and many other commodities) feel that way today. Silver has been down 12 of the last 13 trading sessions falling 13% and feeling bottomless. Gold has also seen a relentless sell-off, down more than $100 in a month and trolling five year lows. The day the bear ended and the markets took off in the summer of 1982, it was a surprise with lots and lots of denials. Are we there yet? Don’t think so for commodities – but to state the obvious, we’re closer than we were.
Speaking of trolling, the U.S. new low list (of large cap names) from yesterday included 10 retailing names (out of 16 new lows) such as Macys, Fossil, VF Corp., Bed Bath & Beyond, the Gap, CarMax, Urban Outfitters. In Canada, the new low list includes Rona, Aimia, Alaris Royalty, Corus and Ensign.
The economic calendar is empty in Canada. In the U.S., we have inflation, industrial production, investment flow data and some housing data. European data included lackluster inflation data in the UK and a decent ZEW survey in Germany.
BNN’s line up today includes a plethora of great things including Jameson Berkow’s continuing look at Fort McMurray. We have CEOs from Skyline REIT, Kelt Exploration, Total Energy Service, Canyon as well as the Business Development Bank of Canada. We’ll also speak to a Trillion Dollar Titan – Russ Koesterich, global chief strategist at Blackrock.
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