Hacking, a plunge in gold and lots of earnings

Hacking, a plunge in gold and lots of earnings
The chase by Frances Horodelski:

“How does it feel, how does it feel? To be on your own, with no direction home, Like a complete unknown, like a rolling stone.” – Bob Dylan, released July 20, 1965.

How does it feel? Especially if you are one of the 40 million users of the various Avid Life Media websites (including Ashley Madison) who may have had your private data exposed in a weekend hack. A top story today. Not just because of the details of who these users are, but again, the implications and risks associated with global hacking.

In other stories we have a plunge in gold, lots of earnings this week (Hasbro, Halliburton, Morgan Stanley, CNR and IBM today), Greek banks opening, 9 days in a row of European equity market gains, CF Industries in talks to buy assets from a Dutch fertilizer company,Lockheed Martin to buy Sikorsky helicopters from United Technologies for about $9 billion, the S&P 500 is four points away from its all-time closing high (the Nasdaq made another new highFriday with Google’s $60 billion jump).

Items of note from my reading pile –

From RBC: “We have been comfortably out of consensus on CAD for over a year (a few years actually) and expect TSX underperformance for many years. USD/CAD towards 1.4000 remains our minimum target” (71.4 U.S. cents/Canadian dollar).

From Bloomberg on Gold: “Money managers are holding the smallest net-bullish bet on gold since the U.S. government data begins in 2006.”

Also from Bloomberg: “Ontario, the world’s most indebted sub-sovereign borrower”. The province’s population is “about one third of California’s” but “its debt load is more than double that of the biggest U.S. state.”

From Arabian Money: “$2.7bn gold dump in China causes price ‘flash crash” Gold is 41% below its August 2011 high while the XAU (the Philadelphia index of gold stocks) is down 75%. From the February 2001 lows, gold is still up 338% while gold stocks are virtually flat (+14%).

From BMO Capital Markets research on telecom stocks which begin reporting earnings this week (July 23rd start with Rogers): “We expect considerable restructuring among media groups in Canada over the next two years.” With respect to the quarterly numbers, BMO notes “we expect a continuation of recent quarterly trends. That is, another set of earnings reports that favour BCE and Telus over Rogers.”

Also from BMO on Q2 from the energy names: “Lots of noise, little to cheer about.” Encana kicks things off July 24

Noel Biderman’s (CEO of Avid Life Media owner of Ashley Madison) desk sign: “Life is short, have an affair”. .

Kevin Cook, senior stock strategists, Zacks Research: “The most disturbing thing about earnings season so far is that we seem to be looking at another potential ‘revenue recession’. I'm not worried about the stock market making new all-time highs. I think that's on the way this earnings season. But I'm concerned if it's on the back of just a handful of Tech companies like Google and Netflix last week and probably Apple and Amazon this week.

From analysts: Home Capital Group upgraded to outperform at Scotiabank, PayPal initiated at BMO with an outperform (there are now 9 buys, 2 holds and 1 sell as the stock starts trading “regular way” today following its spin-off from EBay under the symbol PYPL). Barclays downgrades Yelp (to equal weight) and Zillow (to underweight). HSBC upgraded at Citi to buy and Schlumberger also a new buy at Wells Fargo. Amazon also upgraded at Wedbush.

Investor panic takes hold in China

Investor panic takes hold in China
The chase by Michael Kane:

European stock markets are up on Wednesday, encouraged by the sentiment that the situation with Greece will be resolved in a positive manner. The stock markets in London, Paris and Frankfurt have all been up in a range of 1/5th to 3/4 of one percent and it is important to note that trading volume is elevated - 30% to 50% above normal, so that tells us that money which had been taken off the table due to the uncertainty over the Greek situation and the status of the European Union as a whole - that money is now flooding back into the market. Enthusiasm would be even greater were it not for lingering concern about China where authorities are intervening in the markets to preserve some of the big gains made this year. They've been restricting trading in some companies... some companies have ordered their own shares to be halted to prevent losses.

The investment community is scratching its head over what is happening in China's financial markets. Stocks have plunged 30% since mid-June and taken commodities prices down as well. The herd mentality is taking over after unusual gains in recent months. The Shenzen stock exchange had posted gains of nearly 40% this year - the Shanghai Composite was up as much as 60% - which seasoned investors know very well is not sustainable. Profit-taking in the stock market has even spilled over to agricultural commodities like soybeans. Today China's raw materials market fell - across the board - by the maximum amount allowed by law. Market jitters now have stock index futures pointing to a sharply lower open on Wall Street.

There is a lot of commentary out there about whether Canada is in recession, and if so, how important is that. Technically speaking, a recession is characterized by two consecutive quarters of economic shrinkage. Every quarter of the year has three months and you can have an "up" month, then a "down" month - so economists broaden it out to look at quarterly data. On that basis, between January and June, Canada most likely slipped into a technical recession. Is it something to be worried about? Economists who give us context in their commentary are telling us not to push the panic button because if it is a recession, it's being caused largely by weakness in the oil industry. The fact that it is not broadly-based is of some comfort to economists looking at the bigger picture. A couple of economists - notably at TD Bank and at Desjardins Securities - are expecting the Bank of Canada to make another interest rate cut next week. But there is a lot of debate about how effective that would be.

Footwear and accessories retailer - the Sherson Group, operater of Nine West in Canada - has filed to bankruptcy protection. Nine West stores will continue to operate while the business is restructured. Sherson filed papers saying it has $32,200,000 in unpaid bills and loans, including more than $19-million owed to U.S.-based Nine West Group which licenses the brand to Sherson in Canada.

Cineplex is not changing its soft-drink prices but it is making the size of the drinks smaller. In a classic re-packaging to save money Cineplex says a large drink will assume the size of the former regular drink - 32 ounces down from 44 ounces. A regular-sized drink will be reduced to 24 ounces from 32 ounces previously. A “small” drink is unchanged at 16 ounces.