The Week of July 28th to August 3rd, 2012
Following an orderly trading week that saw the major North American markets advance for a second consecutive week by posting yet another late week rally on the back of enough adequate domestic corporate and economic reports and encouraging comments by European leaders that they will indeed do whatever it takes to get their economic house in order, the weekend media reported that – As the never cry wolf brokers and traders walked away from their mostly green screens at market close last Friday, July 27th, they were somewhat skeptical that the European leaders would be able to carry through on their line in the sand remarks, but were also encouraged in that for the 30th week of 2012, the Dow Jones Industrial Average was up by another 1.97%, with the S&P 500 Index ahead on the week by 1.69% and the NASDAQ Exchange up on the week by 1.13%. To the drenched in summer north, the TSX Composite Index returned a weekly gain of 1.23% while the TSX Venture Exchange managed to reduce its weekly loss to just 0.5%.
Some of the 48 new TSX 52-week trading highs established last Friday include AutoCanada Inc. (ACQ-T) at $14.00, Bauer Performance Sports (BAU-T) at $9.65, Canadian Pacific Railway (CP-T) at $83.57, Enbridge Inc. (ENB-T) at $42.23, Franco-Nevada (FNV-T) at $49.42, Hardwoods Distribution (HWD-T) at $5.24, InterRent REIT (IIP.UN-T) at $5.45, Metro Inc. (MRU-T) at $55.44, Norbord Inc. (NBD-T) at $14.80, Paladin Labs (PLB-T) at $51.05, Rogers Sugar (RSI-T) at $6.45, SIR Royalty Income Fund (SRV.UN-T) at $12.50 and TransCanada Corp. (TRP-T) at $45.24, while some of the 18 new 52-week trading lows were Baja Mining (BAJ-T) at $0.06, COGECO Inc. (CGO-T) at $31.99, Electrovaya Inc. (EFL-T) at $0.45, Gran Tierra Exchangeco (GTX-T) at $4.14, Intermap Technologies (IMP-T) at $0.10, Longview Oil (LNV-T) at $6.52, Newmont Mining (NMC-T) at $46.70, Open Text (OTC-T) at $45.81, Resolute Forest Products (RFP-T) at $9.31, Treasury Metals (TML-T) at $0.60, Western Copper & Gold (WRN-T) at $0.59 and Xtra-Gold Resources (XTG-T) at $0.90.
BNY Mellon Wealth Management – “The reason the mark did so well is we have another round of supportive rhetoric coming out of Europe. The U.S. Fed continues to be in the news but it should be clear to most investors and market participants that the Fed alone cannot restore confidence, cannot create jobs and cannot determine tax policy.”
After Friday‟s close Standard & Poor\’s rating agency downgraded seven Canadian financial institutions, including three of the six major banks, from \”stable‟ to \”negative‟ because – “A prolonged run-up in housing prices and consumer indebtedness is contributing to growing imbalances and Canada\’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks.”
Progress Energy (PRQ-T) shares rose by $2.77 or 13.79% to $22.85 last Friday when Malaysia\’s state oil company, PETRONAS increases its take-over price for the Canadian explorer to $22.00-a-share.
And the shareholders of AuthenTec (AUTH-Q) were pleased to see their investment surge up by $3.35 or 66.07% to US$8.42 on word that Apple Inc. (AAPL-Q) was purchasing the fingerprint authentication company in a cash deal worth some US$356-million.
Meanwhile, the shares of Coinstar (CSTR-Q) fell by $8.06 or13.61% to US$51.16 when the Redbox coin operated DVD-rental company forecast a slower rate of growth going forward.
Hunter Harrison – “A lot of us don‟t like change, and people that don\’t like change are probably going to be in the wrong place because there is going to be some of it.”
And then on Monday, July 30th –
Gwyn Morgan on the politics of the proposed Gateway Pipeline – “The reality is that the pipeline industry\’s self-inflicted wounds, along with complete failure by the Alberta government and oil sands producers to understand the realpolitik of British Columbia have made B.C. Premier Clark‟s stance on Gateway inevitable. Those who criticize her would be wise to heed the alternative, made clear last week by B.C.\’s New Democratic Party Leader Adrian Dix: “We remain serene and determined to reject this pipeline.”
The shares of Acura Pharmaceuticals (ACUR-Q) plunge by $1.08 or 35.05% to US$2.00 on word that Pfizer (PFE-N) was terminating its use of three of the specialty pharma company\’s tamper-resistant technologies.
Goldquest Mining (GQC-V) shares surge by $0.36 or 35.64% to $1.37 when the mineral explorer reports a second encouraging drill hole gold/copper intercept from its Romero project in the Dominican Republic.
The shareholders of Shaw Group (SHAW-N) were pleased to see their investment gain $14.80 or 55.45% to US$41.49 on word the construction/engineering firm had agreed to a US$1.9- billion buyout from rival Chicago Bridge & Iron (CBI-N).
Meanwhile, the shareholders of Western Wind Energy (WND-V) had mixed feelings when they saw their investment rise by $0.59 or 49.58% to $1.78 when North America\’s largest independent alternative energy company unexpectedly announces it is putting itself up for sale.
Natural gas climbs by another $0.19 to close at a new 6-month high of US$3.20 per-million-cubic-feet (mcf).
Charlie McCormick – “Fear knocked at the door; faith answered, and no one was there.”
Tuesday, July 31st –
Monday\’s market pullback from last Friday‟s triple digit rally leaves Canaccord\’s Morning Coffee to report 28 new 52-week trading highs to go along with 22 new lows. A few of the new highs of interest include Element Financial (EFN-T) at $6.02, First Asset Canadian REIT IF (RIT.UN-T) at $12.63, HealthLease Properties REIT (HLP.UN-T) at $11.47and Tricon Capital Group (TCN-T) at $5.41, while some of the new lows of note were Arsenal Energy (AEI-T) at $0.40, Bannerman Resources (BAN-T) at $0.12, Curis Resources (CUV-T) at $0.40, Exall Energy (EE-T) at $0.60, Intrepid Mines (KDX-T) at $1.12, Lupaka Gold (LPK-T) at $0.65, Maple Leaf Foods (MFI-T) at $9.88, Oando Energy (OER-T) at $1.00, Postmedia Canada (PNC.A-T) at $0.69, Resinco Capital Partners (RIN-T) at $0.03, Western Potash (WPX-T) at $0.69 and Zazu Metals (ZAZ-T) at $0.72.
Edward Jones – “There\’s little question that the wind behind the markets right now is on improved optimism around the potential for the ECB to do more, to put in initial policy stimulus.”
Canaccord\’s Junior Mining Weekly – “Since February of 2012, the TSX Venture Index has dropped approximately 30%. Weekly TSX Venture Index trading volumes have consistently remained below the critical threshold of 200-million shares, which continues to be demonstrating a lack of speculative capital flowing into junior miners.”
Under the heading of „Winners and Losers – The Bank of Nova Scotia on the drought on the American plains – “From the perspective of Canadian farmers, it is actually a positive. This fall, we may have a crop of oilseeds and grains which is a record in terms of revenue, provided the weather holds.”
Statistics Canada reports the country\’s Gross Domestic Product or GDP increased in May by a less than expected 0.1%.
CIBC World Markets – “Perhaps this is as well as we can expect to do when growth in our major trading partners is either lacklustre as it is in the U.S. or non-existent as it is in Europe.”
The S&P/CaseShiller Composite-20 Index of American house prices increased in May by an unexpected 2.2%.
Under the heading of \”Who Turned Off The lights?‟ – High temperatures coinciding with poor weather push northern India into an electrical blackout affecting a record 67-million people.
Coach (COH-N) shares plunge by $11.25 or 18.57% to US$49.33 when the luxury leather goods maker failed to meet the streets expectations for its growth prospects going forward.
The shares of Dendreon (DNDN-Q) fall by $1.42 or 22.98% to US $4.76 when the drug maker announces it will reduce staff levels by more than 600 individuals in an effort to help reduce overall costs.
The shareholder‟ of RONA Inc. (RON-T) were shocked to watch their investment surge up by $2.39 or 19.75% to $14.49 when the Quebec based home improvement company receives an unsolicited $14.50 per share takeover offer from American giant Lowes Companies (LOW-N).
Gandhi – “Be the change you wish to see in the world.”
Wednesday, August 1st –
Yesterda\’‟s waiting on the Fed market pullback leaves the TSX to report 34 new 52-week trading highs and 22 new lows. A mix of the new highs of interest includes Avigilon Corp. (AVO-T) at $7.10, Brookfield Renewable Energy (BEP.UN-T) at $29.94, Cervus Equipment (CVL-T) at $19.34, Franco-Nevada (FNV-T) at $50.13, Huntington Capital (HNT-T) at $12.25, Neptune Tech & Bioresources (NTB-T) at $5.05, RONA Inc. (RON-T) at $14.49, Temple REIT (TR.UN-T) at $6.44 and Utility Corp. (UTC.C-T) at $22.74, while a few of the notable new lows were Akela Pharma (AKL-T) at $0.06, Ballard Power Systems (BLD-T) at $1.03, Capital Power (CPX-T) at $21.41, DragonWave (DWI-T) at $2.33, EcoSynthetix Inc. (Eco-T) at $3.55, Mawson West (MWE-T)at $0.54, NexJ Systems (NXJ-T)at $4.49, Olympus Pacific Minerals OYM-T) at $0.21, Strateco Resources (RSC-T) at $0.28 and Transat A.T. (TRZ.A-T) at $3.05.
David Rea Ltd. – “If the U.S. FOMC just barely meet expectations by doing something typical and not overly aggressive then the equity markets are vulnerable to some profit taking.”
Wells Fargo Securities – “Individuals are hoarding cash to continue to build a protective layer in case the economy and their personal situation turns negative.”
Technical analysts Ron Meisels & Olaf Sztaba – “The plethora of economic, political and Europe an problems is fuelling the near-mad bearishness among investors. The market, however, begs to disagree! Almost every new call for an inevitable market collapse is met with a strong rebuttal from the equally hungry-for-more-gains bulls.”
The shares of DreamWorks Animation SKG (DWA-Q) fall by $1.21 or 6.30% to US$17.99 when the filmmaker\’s 2nd quarter financials failed to live up to analysts expectations.
Similarly, Energizer Holdings (ENR-T) shares drop by $9.37 or 12.05% to US$68.40 when the pink bunny battery maker came up short of the streets expectations with its 3rd quarter financials.
Intrepid Mines (IAU-T) shares gain $0.08 or 31.25% to $0.32 when the Indonesian mineral explorer arranges a large financing with a prominent local businessman.
The shares of Talisman Energy (TLM-T) gain $0.91 or 7.34% to $13.31 when the beleaguered energy company finally beats the street with its 2nd quarter earnings.
The June meeting of the U.S. Federal Open Market Committee (FOMC) says among other things that – Growth in employment has been slow in recent months, and unemployment remains elevated and – Strains in global financial markets continue to pose significant downside risks to the economic outlook and – they will keep the target range for federal funds rate at 0 to 1/4% and – they will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in the labor market in a context of price stability.
Harvey Mackay – “Sometimes struggles are exactly what we need in our lives.”
Thursday, August 2nd –
Wednesday\’s thanks to the Fed continued market losses leaves the TSX to report 24new52-week trading highs to go along with 28 new trading lows. Four of the new highs of note includes COM DEV Int‟l. (CDV-T) at $3.23, Inter Pipeline Fund (IPL.UN-T) at $20.84, Morguard Real Estate Inv. Fund (MRT.UN-T) at $18.24, and TMX Group (X-T) at $49.95, while a number of the new lows of note include Almaden Resources (AMM-T) at $1.56, Bannerman Res. (BAN-T) at $0.11, Cargojet Inc. (CJT.A-T) at $7.05, Forbes & Manhattan Coal (FMC-T) at $0.75, GWR Global Water Res. (GWR-T) at $2.69, Helix BioPharma (HBP-T) at $1.14, IBI Group (IBG-T) at $9.58, Jaguar Financial (JFC-T) at $0.03, Katanga Mining (KAT-T) at $0.45, Marret Resource (MAR-T) at $4.25, Newcrest Mining (NM-T) at $23.50, Oncolytics Biotech (ONC-T) at $3.03, Peregrine Diamonds (PGD-T) at $0.40, Rare Element Res. (RES-T) at $3.07 and Village Farms Int‟l. (VFF-T) at $0.70.
CIBC – “In sum, the U.S. FOMC said nothing new here, which is what we expected so early in its current term extension program, and we lean slightly towards December rather than September for the adoption of a third round of quantitative easing.”
Green Mountain Coffee (GMCR-Q) shares jump up by $4.75 or 26.51% to US$22.66 when the individual serving coffee producer beats analysts expectations with its 3rd quarter financials.
The board of directors of underperforming Kinross Gold (K-T), shake the tree by replacing incumbent CEO Tye Burt with VP of Corporate Development Paul Rollinson.
Deutsche Bank – “We interpret that lack of capital discipline and stock underperformance has reached a breaking point in the mining sector and we expect further management changes to come.”
And the shareholders of Knight Capital Group (KCG-N) watch in shock as their investment plunges by $4.36 or 62.82% to US$2.58 when the market making company announces trading errors of some…US$440-million.
The shares of Petrominerales Ltd. (PMG-T) plunge by $1.69 or 18.33% to $7.53 when the South American oil company reports declining 2nd quarter production and disappointing exploration results.
The markets nosedive when the European Central Bank (ECB) fails to announce an expected detailed plan to buy sovereign bonds and control interest rates.
Natural gas drops by $0.25 to once again fall below $3.00 to close at US$2.92/mcf.
Donald Cooper – “Refiners and improvers are people who take existing innovations to the next level. They make them more functional, or more attractive, and build brands and businesses around them. They generally make far more money than most true innovators.”
Friday, August 3rd, Short Strokes –
Yesterday\’s European lack of action enhanced continued market pullback leaves the TSX with a reduced 18 new 52-week trading highs and 30 new low. Some of the notable new highs were Andrew Peller (ADW.B-T) at $11.00, Cervus Equipment (CVL-T) at $19.60, Horizon North Logistics (HNL-T) at $6.66, Intertape Polymer Group (ITP-T) at $8.65, Kingsway Linked ROC Trust (KSP.UN-T) at $17.85, QLT Inc. (QLT-T) at 8.62, Trimac Transportation (TMA-T) at $4.97, Vanguard Cdn Short-Term ETF (VSB-T) at $25.21 and WesternOne Equity Income Fund (WEQ.UN-T) at $8.23, while some of the notable new lows include AEterna Zentaris (AEZ-T) at $0.39, Discovery Air (DA.A-T) at $3.13, Gryphon Gold (GCN-T) at $0.11, IBI Group (IBG-T) at $9.43, Marathon Gold (MOZ-T) at 40.64, Orbit Garant Drilling (OGD-T) at $3.99, Petrominerales Ltd. (PMG-T) at $7.53, Ritchies Bros Auctioneers (RBA-T) at $17.90, Skope Energy (SKL-T) at $0.08, TransAlta Corp. (TA-T) at $15.01 and Wildcat Silver (WS-T) at $0.68.
BMO Capital Markets – “The ECB disappointed the markets once again after President Mario Draghi‟s earlier comments pumped up expectations. With inflation expected to fall below 2% in 2013 and downside growth risks, the ECB‟s lack of bold action to boost the crisis racked region borders on irresponsible.”
The U.S. Labor Department reports their economy added a greater than expected 163,000 new jobs in July.
The Canadian mining industry estimates it must replace half of its current workforce over the next 10-years.
Banks and resource companies account for 3/4s of TSX Composite Index listings.
Under the heading of \”Millions of Millionaires‟ – Hurun Report and GroupM reports that the number of Chinese millionaires rose by 6.3% in the past year to 1.02-million.
Bank of America Merrill Lynch reports its Sell Side Consensus Indicator that tracks market optimism fell by 5.5% in July to a 27-year low of 43.9.
Under the heading of \”Stuffed In A Mattress‟ – The Globe & Mail reports that about 35-million Americans don\’t or won\’t use their country\’s banking system.
Canadians nor their corporations paid no income tax until 1917, but have been paying the \”temporary‟ war tax ever since.
Canaccord\’s Debbie Lewis – “The sole purpose of a child\’s middle name…is so he can tell when he\’s really in trouble.”
And Finally –
For 1.49 euros-per-minute, frustrated Germans can now phone up a new \”Schimpf-los„ swearing hotline that has operators standing by for the individuals to jeer at and encourage them to get it all out in that – “We don\’t judge people who are angry. It happens. It\’s natural.
For the Week–
The DJIA gained 20-points to 13,096, the S&P 500 gained 5-points to 1,391, the TSX lost 104-points to 11,662, the NASDAQ gained 10-points at 2,968 and the JVX lost 3-point to 1,187.
Gold lost $20.90 to $1,606.10, Silver lost $0.03 to $27.69, Crude Oil gained $1.11 to $91.23, Natural Gas lost $0.15 to $2.88 and Copper lost $0.07 at $3.36.
The CRB Commodities Index followed crude oil higher to gain 1.09-points to once again climb above 300 and to end the week at 300.69.
The Canadian dollar gained 0.30-cents against its American counterpart to close the week at US $0.9984 and the Euro gained .70-cents against the greenback to end the week at US $1.2377.
And Finally –
For 1.49 euros-per-minute, frustrated Germans can now phone up a new „Schimpf-los„ swearing hotline that has operators standing by for the individuals to jeer at and encourage them to get it all out in that – “We don\’t judge people who are angry. It happens. It\’s natural. With us you can blow off steam no strings attached.” ( Now, what\’s that phone number…..).
Interesting Times…………………………and thanks
Rod Blake, AScT Jason Tomkinson, BA (Econ)
Investment Advisor Senior Investment Advisor
T: 604.643.7567 T: 604.661.7845
Investment Advisor Assistant
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Sources: Bloomberg, Thomson Reuters, MarketWatch, Globe & Mail, Wall Street Journal, Dow Jones, Financial Times, National Post, Briefing.com, Credit Suisse, and StreetAccount.
Disclaimer: This publication is a general market commentary and for informational purposes only, it does not constitute a research report and does not contain investment advice. This commentary has been prepared using sources believed to be accurate and true. This material is not complete information respecting any security and therefore is not a sufficient basis on which to base an investment decision.
The information contained in this commentary is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does Rod Blake, Jason Tomkinson, Canaccord Genuity Corp. or its subsidiaries, or affiliated companies, assume any liability. This information is current as of the date appearing in this commentary, and neither Canaccord Genuity Corp. nor Rod Blake nor Jason Tomkinson assume any obligation to update the information or advise on further developments relating to these securities. This commentary is intended for distribution in those jurisdictions where Canaccord Genuity Corp. Rod Blake and Jason Tomkinson are registered as advisors or dealers in securities. Any distribution or dissemination of this commentary in any other jurisdiction is strictly prohibited. The information does not constitute an offer or solicitation in any jurisdiction in which such an offer or solicitation is not authorized, or to any person to whom it is unlawful to make such an offer or solicitation. Canaccord Genuity Corp. and holdings of its respective directors, officers and employees and their associations, from time to time may buy or sell any securities mentioned herein. This message is intended only for the use of the individual or entity to which it is addressed and may contain information which is privileged, confidential or subject to copyright. Internet communications cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, arrive late or contain viruses. Canaccord Wealth Management is a division of Canaccord Genuity Corp., a Member of the Canadian Investor Protection Fund.
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