Markets close to bottom: CIBC
STEVE LADURANTAYE
Tuesday, November 11, 2008
With interbank lending showing “signs of life,” there are signs that stock markets have reached their bottom and the rest of the year will unfold without another meltdown, CIBC World Markets said in a report released Tuesday.
“With credit and liquidity fears abating somewhat, concern is rapidly shifting to one of the other key factors clouding prospects for a heavily resource-weighted TSX, the troubled global economy,” chief economist Jeff Rubin commented.
Mr. Rubin also cited China's massive stimulus package, which he said could boost the country's economic growth by up to 3 per cent over the next two years. He also pointed out the United States is poised to bring in another stimulus plan.
“We are cautiously optimistic that we can ride out the balance of the year without any further systemic shocks,” Mr. Rubin said.
Still, he said, the “building blocks” for a sustained rally in stocks are not firmly in place, even though it “seems safe to assume that a grim economic outlook is already well priced into valuations.”
“Our 12,000 target for the TSX composite next year would represent only a typically paced recovery, benchmarked to past cyclical yardsticks,” he said. “It is certainly consistent with the three-year period it has taken to fully reverse comparable percentage declines, although the rapidity of today's crash may suggest, given the speed of market reactions, a more rapid recovery when the news brightens.”
The S&P/TSX was trading around 9,415 Tuesday morning, down 2.82 per cent or 273.60 points, as oil fell near a 20-month low of $60 a barrel. The Dow Jones industrial average was off 2.78 per cent, of 246.27, to 8.624.27. The S&P 500 fell 2.81 per cent, or 25.82 points, to 893.39.
David Baskin, the Toronto-based president of Baskin Financial Services, said investors need to take a step back and realize that the last five weeks actually haven't been that terrible. The S&P/TSX closed trading on Oct. 9 at 9,600 – on Tuesday, it also opened around 9,600.
“It feels as if we've been through worse than that,” said Mr. Baskin, who manages client assets of about $400-million. “We've gone through the ups and downs, but the fact of the matter is, if you look at the numbers, it's remarkable that all of those losses were really in the first week of October.”
Mr. Baskin said the most positive development in recent weeks has been the change in the London interbank offered rate, or Libor rate. It has fallen from its highs, which means banks are lending to each other again after pulling back in light of a credit crisis that forced Lehman Brothers Holdings Inc. into bankruptcy and forced world governments to injection hundreds of billions of dollars into their economies to keep financial markets operating.
“If you look at the Libor, it's gone almost straight down for 17 days in a row,” he said. “It's been incremental, but it should provide some comfort that the banking situation is in hand, though obviously it's not quite cured yet. But at least we don't need to worry about a systematic collapse, and hopefully we've gotten past thoughts of the world coming to an end.”
Fourth-quarter earnings, Mr. Baskin said, will be disappointing when they are released in January. But, the market may have already priced in a lot of the bad news.
“Assume earnings are down 30 per cent,” he said. “The market has been down more than that. If you're a stock owner, you need to force yourself to look past the immediate negativity and discount the headlines. We are trading where we were a month ago, and to me that would indicate we've found a floor.”
Danielle Park, a Barrie, Ont.-based portfolio manager for Venable Park, pulled all of her clients out of the market in May. She's still 92 per cent in cash and bonds, but has stepped lightly back into the market.
“At the end of October, markets were heavily over-sold on our measurements and so we thought and still think a bounce of a few weeks or months may well be in order,” she said. “We are thinking that if we do see a rally take shape over the next few weeks it may be only for a trade before the indices break down again into the spring... We are tactical and watching very careful for signals as to the next phase. We think it is no time yet to make big, bold bets long or short.”
© Copyright The Globe and Mail
Wednesday, November 12, 2008
Markets close to bottom: CIBC
Tuesday, November 11, 2008
Anonymous Dumping Shares TLM+QEC+But Not In HOU Houses
Oil dips below $59
Oil dips below $59
Investors look past China's stimulus plan as economic concerns and waning demand dominate.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: November 11, 2008: 12:05 PM ET
NEW YORK (CNNMoney.com) -- The price for a barrel of crude oil fell below the psychologically important $60 level Tuesday morning as investors looked past China's massive economic stimulus plan to focus on weak global demand and a stronger dollar.
Light, sweet crude for December delivery was down $3.51 at $58.90 a barrel in New York. On Monday, oil rose $1.37 to settle at $62.41 a barrel.
The price of oil has fallen about 60% from July's all-time high above $147 a barrel on fears that global economic weakness will continue to undermine demand for gasoline and other petroleum products.
Demand concerns were briefly tempered Tuesday after the Chinese government announced a $586 billion plan to boost economic activity in one of the world's key consumers of oil. But investors now appear less optimistic about the plan, which will take time to implement, as the outlook for global economic growth remains cloudy.
"Yesterday's trade rebounded sharply higher at the open based on the Chinese stimulus package," said Tom Pawlicki, oil industry analyst at MF Global in Chicago. "In our opinion, however, the rally was too enthusiastic for the news."
Pawlicki points out that the package will provide "only" $14.6 billion in the current quarter, with the remaining amount disbursed over the next two years. He added that the plan's spending on housing and infrastructure may not provide the desired economic effect.
"The problem is that there is already a housing glut in China, and the infrastructure will likely rebuild the earthquake devastated area in Sichuan rather than create much new expansion," Pawlicki said.
Global markets: The oil market is also being pressured by falling stock prices worldwide.
Stocks in the United States were lower on recession fears. The Dow Jones industrial average was down about 3% roughly two hours into the session.
Major indexes in Europe were all lower in morning trading. Britain's FTSE 100 was down 3.2%, and France's CAC-40 was 4.5% lower. The DAX in Germany was down 5.2% as well.
The declines in Europe followed a slump in Asia, where Japan's benchmark Nikkei index dropped 3%. In Seoul, the KOSPI fell about 2%, while Hong Kong's Hang Seng index shed 4.8%.
Oil traders have closely tracked world stock markets to assess the severity of what many economists say is a looming global recession. As a result, oil prices often fall when stock prices retreat.
Dollar: The price of oil was also pushed lower by a stronger U.S. dollar, which rallied on the back of the global stock selloff.
The dollar rose 1.5% against the euro to $1.2562 in New York. Against the British pound, the greenback was up 1.2% at $1.5426.
Investors often buy oil and other commodities to hedge against a weaker dollar and sell those assets when the dollar rises. And a more robust buck makes oil, which is priced in dollars, less attractive to overseas buyers.
A grim outlook: Markets in the United States have been under pressure as rising unemployment, anemic consumer spending and weak corporate results threaten to tip the nation into a deep recession.
Last week, the U.S. Labor Department reported that the economy has lost 1.2 million jobs so far this year. As the job market deteriorates, many American households have cut back on spending.
Auto sales fell to a 25-year low in October as tight credit conditions and the weak economy kept consumers out of showrooms. At the same time, retail sales declined a larger-than-expected 0.7% in October, prompting concerns about the all-important holiday gift-buying period.
This reluctance to spend has a ripple effect on the broader economy, since consumer spending makes up more than 70% of U.S. gross domestic product.
In the third quarter, GDP declined at an annual rate of 0.3%, according to estimates released by the Bureau of Economic Analysis. That came after an increase of 2.8% in second-quarter GDP.
Many economists are predicting GDP will shrink again in the fourth quarter. Two consecutive quarters of declining GDP is one of the classic definitions of a recession.
Gasoline: Retail gas prices fell for the 55th day in a row.
The national average price for a gallon of regular gasoline came down another 2 cents overnight to $2.220, according to a daily survey by the American Automobile Association.
Tuesday's national average is down 46%, or $1.89, from the record high price of $4.114 that AAA reported on July 17. To top of page
First Published: November 11, 2008: 8:39 AM ET
Crude Oil Falls as IEA May Cut Demand Forecast a Third Month
Crude Oil Falls as IEA May Cut Demand Forecast a Third Month
By Mark Shenk
Nov. 11 (Bloomberg) -- Crude oil fell on speculation the International Energy Agency will lower its 2009 oil-demand forecast as slowing economic growth cuts fuel consumption.
The IEA, which coordinates energy policy in 28 developed countries, will reduce the estimated growth in global demand for a third month in a report tomorrow, according to four former IEA analysts. The euro-area economy will probably contract 0.7 percent next year, Morgan Stanley said in a report.
``It all comes back to the economy and how deep folks think the recession will be,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``Demand is poor and should get worse as the recession deepens.''
Crude oil for December delivery declined $2.79, or 4.5 percent, to $59.62 a barrel at 9:44 a.m. on the New York Mercantile Exchange. Prices, which have tumbled 60 percent since reaching a record $147.27 on July 11, are down 38 percent from a year ago.
``The view of the market is very pessimistic,'' said Addison Armstrong, director of market research for Tradition Energy in Stamford, Connecticut. ``The only news I foresee that can move prices higher is a cold spell, which would boost heating oil demand, and that would have only limited impact.''
The IEA already has cut its 2008 forecast about 1.3 million barrels a day in seven revisions this year. Last week, it published a summary of its annual World Energy Outlook, slashing its 2030 projection by 9.4 percent to 106 million.
OPEC Concerns
The Organization of Petroleum Exporting Countries cited falling demand for its Oct. 24 decision to reduce production by 1.5 million barrels a day. OPEC ministers will discuss the market situation when they meet next on Dec. 17 and may agree to another supply cut then, the group's president, Chakib Khelil, said on Nov. 8 in Algiers.
``This is a tough time for OPEC because of the demand picture,'' Mueller said. ``Every time they cut production they are building up spare capacity. There's also a risk that they may make cuts and prices still won't rebound.''
Global stock markets declined as Credit Suisse Group AG said developed economies are headed for the worst recession since 1945. The Standard & Poor's 500 Index declined 18.61 points, or 2 percent, to 900.60. The Dow Jones Industrial Average fell 165.43, or 1.9 percent, to 8,705.11.
``Prices are lower because of sagging global equities as well as the view that China's stimulus package is insufficient to prop oil demand in the face of a prolonged global economic slowdown,'' Armstrong said.
On Nov. 9, the Chinese government pledged spending to sustain economic growth through 2010 and switched to a ``relatively loose'' monetary policy. China is the world's fourth-biggest economy and the second-biggest consumer of oil.
U.S. Inventories
U.S. crude-oil supplies probably rose for a seventh week as imports rebounded, a Bloomberg News survey of analysts showed. Stockpiles probably increased 750,000 barrels in the week ended Nov. 7 from 311.9 million the week before, according to the median of 12 analyst estimates before an Energy Department report this week.
Gasoline stockpiles probably increased 200,000 barrels from 196.1 million barrels the week before, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, rose 1 million barrels from 127.8 barrels the week before, the survey showed.
The department is scheduled to release its weekly report on Nov. 13 at 11 a.m. in Washington. The report is being delayed by a day because of today's Veterans Day holiday.
Brent crude oil for December settlement decreased $3.06, or 5.2 percent, to $56.02 a barrel on London's ICE Futures Europe exchange. Futures touched $55.86, the lowest since Jan. 30, 2007.
