Stock market rout continues

Stock market rout continues

STEVE LADURANTAYE
Thursday, November 06, 2008
North American markets racked up deepening losses Thursday, as weak earnings and bleak economic data reminded investors that hard times are ahead regardless of who won the U.S. election.

“The markets seemed to shrug off the conclusion of the U.S. presidential election to continue the fickle nature of the moves we have seen recently,” said Ian Griffiths, a trader at CMC Markets. “There seems to be no respite in the volatility.”

The Dow Jones industrial average ended 4.85 per cent lower, or 443.48 points, to 8,695.79.

On Wednesday, the blue chip index posted its worst post-election session in history, plummeting by 5.1 per cent, or 486.01 points, as investors worried the financial crisis would worsen by the time President-elect Barrack Obama takes over the White House in January.

The broader S&P 500 lost 5.03 per cent, or 47.89 points, to 904.88. In Toronto, the S&P/TSX fell 3.36 per cent, or 331.79 points , to 9,555.41, as oil fell $4.53 (U.S.) to $60.77.

“Every day we are seeing wild swings in either the markets, oil or currency,” said Sloan Levett, the director of wealth management at Fuller Landau LLP in Toronto. “On any given day, at least one of those things is moving wildly.”

A slew of companies reported disappointing results, including Manulife Financial, which saw profit fall by $574-million (Canadian). In the U.S., Cisco Systems warned a soft economy could cut its sales by 10 per cent in the coming months.

Meanwhile, the European Central Bank cut its key lending rate by 50 basis points, to 3.25 per cent, while the Bank of England slashed its rate by 1.5 percentage points, to 3 per cent. Stocks temporarily rallied, but slunk back as investors continued wary of owning equities on the eve of a likely recession.

“There has been a very marked deterioration in the outlook for economic activity at home and abroad,” the Bank of England reminded investors as it cut its rate.

In economic news, new claims for unemployment insurance in the United States dropped slightly last week, the Labour Department reported Thursday morning. However, the number of people receiving benefits reached its highest level in 25 years.

Initial claims for jobless benefits dropped by 4,000 to a seasonally adjusted 481,000 for the week ending Nov. 1, above estimates of 480,000. Any figure above 400,000 is seen as recessionary. Meanwhile, 3.84-million people continued to get unemployment insurance – the highest level since 1983.

“The real juice of this report lies within the continuing claims component,” commented TD Securities economics strategist Ian Pollick. “ While we know that a regulatory-driven change in early August permanently elevated the level of the data, the massive jump from the prior week continues to suggest that it is taking much longer for people to find jobs, which does worry us.

There was some unexpected good news in Canada, as the value of building permits jumped 13.4 per cent in September, and non-residential construction rose 41.7 per cent. Economists had expected a 1 per cent drop in the value of building permits.

“Looking closely at this data, it is clear to see that the housing sector remains under pressure and it is non-residential activity that continues to prop up building activity,” TD Securities senior economics strategist Charmaine Buskas said. “As Canada's economy continues to unwind, that, too, will start to give way to weaker activity. But for now, building activity will remain resilient, thanks to the lopsided additions suggested by non-residential permitting activity.”

© Copyright The Globe and Mail

CONNACHER OIL AND GAS CLL News

CONNACHER OIL AND GAS
(T-CLL)
$1.84 -0.02
Somehow I thought this day might have seen a little
joy, maybe even some celebration...not hiding in a bun-
ker wondering how many 400 point down days the Dow
and TSX might have for us and worry if oil even has a
future!

We are referring to the long, anticipated final an-
nouncement by the Alberta’s Cabinet that Connacher’s
Algar SAGD project has been given the go-ahead. Esti-
mates suggest that $120 million of the $350 million pro-
ject has already been spent or committed, but now they
go full-boar ahead.

Jenny Mikhareva of Macquarie Securities writes in a
report today, “Connacher now has all the necessary
regulatory approvals to proceed with construction of
Algar, it’s second 10,000 barrel a day SAGD project at
Great Divide.” \

“We expect the company to begin preparing the site
for construction immediately….and to start construction
of the plant around year end 2008.”
She writes,

“The plant should take roughly 300 days
to build and about one month to commission and then
three months for steam to be going into the ground with
first bitumen production anticipated around March
2010.”

She points out something very important given the
credit crisis, “The project is fully funded, with the com-
pany having roughly $395 million available in cash and
credit.”

Mikhareva has a $5.00 target on the stock writing,
“The company is an attractive investment due to its ex-
isting production and cashflow base; significant, well-
defined growth going forward; its risk mitigating inte-
grated strategy; and a track record of successful project
execution.”

Meanwhile, GMP Securities has a $4.50 target on
Connacher (down from $6.25) and Raymond James has
a $5.75 12-month target (down from $7.25).
Oh, please! Let one of them be right...any one of
them

David Pescod Canaccord