Quadruple Witching Day...

Today is quadruple witching and may be one of the reasons we saw the huge lift in stocks yesterday as position squaring tends to happen the day before. Yesterday’s gain in the S&P 500, the best since 2011, brought the market to within 0.57% of its closing high (just two weeks ago by the way). According to S&P Capital IQ, this is the first time since August 2002 that the S&P 500 has risen 2% in two days in a row. Yesterday’s more modest gain brought the index up almost 5% in 3 trading days and the energy sector higher by 11% in the same period. Three days doesn’t make a trend and has just ameliorated the considerable oversold condition in both indices although not yet overbought.

Today’s chase list includes all things BlackBerry as the company reports its third quarter results and Amber Kanwar sits down with John Chen for an update on his strategy post this week’s introduction of the Classic. The numbers showed a continued decline in revenue (with a 15% miss versus expectations at $793 million) although BlackBerry did squeak out a one cent profit (versus the loss estimate of a nickel) and positive cash flow. The Canadian dollar will be a focus as some stabilization in the FX markets globally hasn’t stopped the bearish forecasts from continuing to come out on our currency (RBC highlights is bearish view again in a weekly report with a $1.18/$0.8475 target for year-end 2015. We’ll also be watching Nike after the company posted strong quarterly results of 74 cents versus 70 cents estimated and 21% revenue growth in China. McDonalds too is a stock to watch after its three day gain of 5.79% following rumours that Bill Ackman might have an interesting (and a 40,000 January 95 call purchase). We’ll also be following up with analysts on the announcement yesterday fromIndustry Minister Moore on the upcoming spectrum auctions, the intention to have 60% of the new spectrum (with 25% overall) allocated to new entrants and the impact on the incumbents (which were generally lower yesterday). Speaking of Ministers, John Baird, Foreign Affairs Minister, will have a major announcement today. Finally, if you’re interested in Canadian housing (and who isn’t), the new CEO of the Royal Bank of Canada, in a Bloomberg interview, talks about the potential for a drop of up to 15% drop in house prices should interest rates rise (although that would be good for the Canadian economy).

In the pre-market we’re watching names like Immunogen (down 39% on failed breast cancer drug) and Finish Line (down 7% on surprising Q3 loss). On the other hand, Red Hat is up 11% on what Citi calls a “flawless” quarter”. Also, we’ll be watching the markets as strategists generally looking for a 2015 up year for the S&P 500 with the highest target 2340 (from Canaccord), the median 2200 while the lowest target is 2100 (from Barclays and Goldman Sachs).

We a number of special presentations on BNN today including one of my favourites “Bottom Feeding” that looks at opportunities in a series of beaten up stocks as well as Story of the Year. Both can be found live or on BNN.ca.

For those following jobless claims as an economic indicator should note this comment from RBC: “The thing to keep in mind is that claims will probably become a much less valuable indicator of the jobs backdrop over the next couple of weeks. Though the numbers are indeed seasonally adjusted, the looming spike in volatility in the weeks ahead (as the retail holiday hiring cycle unwinds) could make for some messy reads up until early Feb.”

I often quote Ed Yardeni of Yardeni Research in this daily note. Today, he has distributed his 2014 movie reviews including his favourites of 2014 including Ida (a Polish movie set in the 1960s), Whiplash (about a young drummer) and St. Vincent (Bill Murray’s latest).

Got to run – just awaiting Canadian CPI and retail sales data – could have an impact on the Canadian dollar.

www.bnn.ca

Unrest and oil

Unrest and oil
The chase by Greg Bonnell:

Unrest. That’s what’s been missing from the oil story in recent weeks. We’ve been focused squarely on OPEC refusing to cut production as North American producers pump it out as fast as they can. Today, unrest re-enters the narrative – labour strife and armed conflict. That means we have conflicting drivers influencing the trade. Libya is halting output from some oilfields amid armed clashes. In Nigeria, oil workers are on strike as they push for reforms. Meanwhile, OPEC is still talking tough, apparently willing to tolerate prices as low as $40. Mix it all together and WTI is still below $58 a barrel, but it’s fluctuating in a narrow range between gains and losses.

North American futures are pointing to a solid open in the green as heavy hitters like Exxon Mobil and Chevron make gains in the pre-market. We’ll be watching the Canadian energy names carefully at the open. U.S. futures, however, did weaken a touch as the Empire manufacturing survey for December fell unexpectedly.

In Corporate News, we have a report out of Spain that Repsol’s board is meeting today to approve a bid for Talisman. TLM’s shares are up 16% in the New York pre-market. Talisman confirms, again this morning, that it’s in talks with Repsol, but also others.

With so much happening in the Energy space, BNN’s Jameson Berkow takes to the streets of Calgary to take the pulse of Canada’s energy capital. He’ll have live reports throughout the day.

And watch out for Gold. The yellow metal is under selling pressure ahead of the Fed. Bets appear to be mounting that Yellen and Co. are getting closer to raising rates after repeated vows to keep borrowing costs low for a “considerable time.” And it’s those two words that are in the spotlight ahead of Wednesday’s Fed statement. Will they be dropped from Fed speak, thus signaling a hawkish stance on rates? And what does that have to do with Gold? It’s widely accepted, but always debatable, that as rates rise you can expect to see non-income paying Gold fall.

With the precious metal down almost $12 this morning we could see some pressure on mining stocks in Toronto.

At the place where politics and stimulus meet – Japanese voters have re-elected Prime Minister Shinzo Abe’s Liberal Democrats. While that can be read as a vote in support of Abenomics, bear in mind it was a record-lower voter turnout.

Finance Minister Joe Oliver is singing the same tune on the housing market – no bubble, no crash, no dramatic moves to rein in the mortgage market, soft landing. I mention his reprise only in the context of the Bank of Canada saying our homes may be overvalued by up to 30%. That’s why Mr. Oliver is facing questions yet again about what Ottawa plans to do.

One more piece of corporate news before I run off. PetSmart has agreed to a buyout by a consortium that includes the Caisse de dépôt et placement du Québec. The deal is worth $8.3 billion, and I sincerely hope we have some footage of cute puppies to play as we tell this story.

p.s. Fear not dear note readers, my mentor and most excellent BNN newsroom desk neighbour Frances Horodelski returns this Wednesday.