How low can commodities go?

How low can commodities go?
The chase by Marty Cej:

Commodities have slowly but surely worked their way up to the top of our priorities list. Oil is now down for a seventh straight day, the longest losing streak since December 2009, as imports to China tumbled and Europe's sovereign debt crisis simmered. Crude has broken down through several key technical barriers in the past few days but today's modest decline may indicate some reluctance on the part of traders to push it lower until they get more evidence that the U.S. economic recovery is cooling. Gold is also modestly lower and testing technical resistance as some speculators turn to the U.S. dollar as a safe haven (I know, right?).

Reluctant to stand idly by as a trade goes against it, Goldman Sachs has thrown its support behind gold this morning, reiterating a six-month price forecast for $1,840. Goldman argues that the case for gold as the currency of last resort remains in place. "Weaker US growth -- our US economists are forecasting additional monetary easing at the June 19-20 FOMC meeting -- renewed European sovereign risks and resilient physical demand are also pointing to higher gold prices," Goldman's commodity team said in a note to clients. "However, it is also increasingly apparent that already low market expectations will likely require continued deterioration in Europe or in the U.S. to trigger a sharp inflow into gold, in our view." The trading group at Goldman lost money on just one day last quarter. They do not want to go through that hell again.

There's something for everyone who likes to travel and enjoy the great outdoors today. We have earnings from Bombardier, which can wing you to your rustic destination where you jump onto a mud-splattered ATV and roar off into the woods. When you arrive at the clearing, you can set up your Canadian Tire bought tent and camp-stove, then drop your line into the lake. Then, when the grizzly comes snuffling into camp in the wee hours, you can be thankful -- in those brief moments of clarity between prayer and terror -- that you made that call to Sun Life a few months back. And once the bear leaves, you will be exceedingly grateful to Cascades, which continues to produce fine bathroom tissue. Maybe your mobile phone will pick up a signal fromManitoba Tel, maybe not, but one thing is for certain: next summer you'll save a few bucks, stay home and maybe catch a few summer blockbusters at a Cineplex theatre. We hear from each of these Canadian companies today.

Bombardier may be of particular interest today after the company reported a 16 percent drop in profit, missing revenue projections by a wide margin. The first quarter is typically the company's weakest quarter, but typically not this weak.

Political disarray in Greece continues

Political disarray in Greece continues
The chase by Marty Cej:

European stocks are slumping this morning and U.S. stock index futures are pointing to another weak start as the leader of the left-wing Syriza party in Greece struggled to form a coalition government, demanding that leaders of the more mainstream parties first send letters to the EU revoking their pledges to implement austerity measures. Syriza leader Alexis Tsipras will send a letter to the EU himself saying the rescue deal is no longer binding given the way Greeks have voted. If nothing else, the likelihood that the New Democracy and Pasok parties will continue to reject Tsipras' terms means Greeks will head back to the polls within weeks. To the north and east, European Central Bank executive board member Joerg Asmussen has said that there is no alternative to the austerity program if Greece wants to remain a member of the euro-zone, an unusual statement from an ECB official in that it suggests the possibility for a country to exit the currency union, something the bank has repeatedly refused to consider. Can the reintroduction of the drachma be far behind?

We need to stay on top of the tumble in the commodities market. Over the past five sessions, crude oil has dropped more than 8 percent, gold is down more than 4 percent -- including a slide of $35 US yesterday -- and copper has fallen almost 4 percent. We need to first answer the question "why" and then turn our attention to what it means for earnings, the Canadian stock market and the global economy. Natural gas, meanwhile, is up more than 8 percent in the last five trading days.

Telus will be a mover today after the company withdrew its proposal to dismantle its dual-share structure -- the history of which Frances can explain in great detail -- into a single common stock. Telus is backing down from the challenge by hedge fund capital, a decision that may affect other dual-class shares across the country. In Telus' words, the "empty voting trading tactics of hedge fund Mason Capital and lack of regulatory oversight of the practice make it apparent a vote to be held at TELUS' annual general and special meeting of shareholders on May 9 would not succeed. Empty voting is buying shares to vote them while simultaneously short selling shares in the same company, a troubling practice that gives a fund more votes than its economic stake warrants. In this case, Mason Capital was voting $1.9 billion worth of TELUS' common shares with only a $25 million net economic stake." We'll take a closer look.

Better-than-expected earnings from a host of big Canadian companies will struggle to lift share prices today as macroeconomic worries weigh on sentiment. Agrium, for example, blew past expectations; Sprott reported profit of 10 cents a share, double the market forecast, and Enbridge beat the average expectation by 2 cents.

Tim Horton's failed to beat expectations as higher commodity costs offset gains in same-store sales, which rose 5.2 percent in Canada and 8.5 percent in the U.S. The company said new offerings, such as espresso-based lattes, fruit smoothies and beef lasagna casserole were popular with customers. One of the more bold introductions at Tim Hortons arrived at an outlet in Windsor ON yesterday. Customer Shireen Anderson gave birth to a seven-pound, 14-ounce baby girl, assisted by employee Judy Glenn and manager Aaron Hayes. Nicknamed "Timbit," the baby girl is home and doing just fine. Interim CEO Paul House has declined to say whether Tim Hortons will offer outpatient services in coming quarters.

Other earnings we're watching today include Onex, Torstar (profit and revenue down, dividend up), Calfrac, Whistler Blackcomb. Hudbay, Linamar, Quebecor and Rona. Out of the U.S., we'll keep an eye on Macy's, Activision Blizzard, Cisco, Wynn Resorts and Newscorp.