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The Week of February 29th to March 6th, 2016 “A Brief Look Back Into Tomorrow”

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The Week of February 29th to March 6th, 2016 “A Brief Look Back Into Tomorrow”

 

 

 

 

 

The new trading week began on leap year Monday, February 29th with the markets still seemingly range bound between the bull and bear sanctions.

 

 

 

The trading day begins on a robust note after China announced a 0.5% cut to its monetary policy in an effort to stimulate further economic growth. The world’s second largest economy also announced it was laying off 15% or 1.8-million workers of its coal and steel industries in an effort to reduce current overcapacity issues.

 

 

 

This was quickly countered to the downside by Valeant Pharmaceuticals (VRX-N) whose share price plunged by almost 19% to US$65.80 after the giant pharma company announced a delay in reporting its 4th-quarter financials and worse yet – that it was under a previously undisclosed SEC investigation.

 

 

 

The shareholders of Federal-Mogul Holdings (FDMN-Q) were thrilled to see their investment surge up by over 45% to US$7.21 on word that investment magnate Carl Icahn’s Icahn Enterprises had offered to take the auto-parts company private for US$7.00-a-share.

 

 

 

To put some perspective as to how important the oil & gas sector is to the economy, the Canadian Association of Oilwell Drilling Contractors (CAODC) estimates that a single drilling rig supports 135 direct and indirect jobs.

 

 

 

On Tuesday, March 1st Statistics Canada reported the economy grew by 0.8% in the 4th-quarter of last year and by 1.2% for all of 2015.

 

 

 

Technical analysts David Tippon & Ron Meisels commented – “The market correction has already seen some sector rotation and the emergence of buying opportunities in some previously out-of-favour sectors such as Golds.” (For a copy of their complete report contact ‘rod.blake@canaccord.com’.)

 

 

 

Barclays PLC (BCS-N) shares’ fell by almost 6% to US$8.89 after the British banker reported a loss for 2015 and worse yet, cut its dividend.

 

 

 

Honeywell International (HON-N) announced it was no longer pursuing a merger with fellow manufacturer United Technologies (UTX-N).

 

 

 

With proof that size does matter – Subway announce the giant restaurant chain has taken measures to ensure that its famous ‘Footlong’ sandwiches were always at least 12-inches in length and not the 11-inches they were found to be in an 2013 Australian class action lawsuit.

 

 

 

The World Gold Council reported that global gold demand was virtually unchanged in 2015 from the year previous at 4,212-tonnes, while global supply was off by 4% to 4,258-tonnes.

Wednesday, March 2nd began with the tragic news that just one day after being indicted by a U.S. federal grand jury for allegedly rigging oil & gas lease prices – former Chesapeake Energy (CHK-N) CEO Aubrey McClendon died in a high-speed single vehicle auto crash.

 

 

 

Checkpoint Systems (CKP-N) shares’ surged up by over 29% to US$10.20 on word the anti-theft company had agreed to a US$422-million all-cash take-over by label & packaging company CCL Industries (CCL.B-T).

 

 

 

And Canadian drugstore chain Rexall agreed to a $3-billion all-cash takeover by American counterpart McKesson Corp. (MCK-N).

 

 

 

Gold bugs were shocked when the Canadian Department of Finance reported that the country has sold the last 22,000 ounces of its gold reserves – unlike other G7 countries such as the United States with its 8,133.5-tonnes, Germany with its 3,381-tonnes and France and Italy each holding about 2,000-tonnes of the world’s real currency.

 

 

 

 

Some oil & gas issues finally got some respect on Thursday, March 3rd as the share price of Baytex Energy (BTE-T) rose by almost 13% to $4,41 after the company reported 4th-quarter results that were above expectations.

 

 

 

The shareholders’ of Canadian Zinc (CZN-T) were more than pleased to see their investment surge up by 50% to $0.15 on word the company had signed agreements with Korea Zinc and Boliden to purchase lead & zinc concentrates from company’s Prairie Creek project in the Northwest Territories.

 

 

 

Nexgen Energy (NXE-V) shares’ soared up by almost 28% to $1.24 after the uranium explorer released a better than expected initial mineral resource estimate for its Arrow uranium project in northern Saskatchewan.

 

 

 

The markets finished the week on a positive note on Friday, March 4th after the U.S. Department of Labor reported their country produced a better than expected 242,000 new jobs in February and that their unemployment rate held steady at a very low 4.9%.

 

 

 

The U.S. Commerce Department reported their trade deficit rose by $1-billion in January to US$45.7-billion as a strong American dollar helped to push exports to a 5-year low of US$176-billion.

 

 

 

North of the border, Statistics Canada reported that an increase in exports helped to keep the country’s trade deficit  increasing by $24-million in January to $655-million.

 

 

 

Endeavour Mining (EDV-T) and True Gold Mining TGM-V) announce that Endeavour will take over True Gold and  its Karma gold mine in  Burkina Faso in a friendly deal of some       $240-million.

 

 

 

During the week copper rose to a new 3-month high of US$2.26-a-pound and gold bullion reached a new 1-year high of US$1,263-an-ounce while natural gas fell to a new 17-year low of US$1.67/mmbtus. The TSX Composite Index rose to a new 2016 high of 13,213 and the TSX Venture Exchange climbed to a new 6-month high of 562.

 

 

 

Kirkland Lake Gold (KGI-T) at $8.88, Maple Leaf Foods (MFI-T) at $26.82 and Stornaway Diamond (SWY-T) at $1.03 all reached new TSX 52-week trading highs, while AutoCanada Inc. (ACQ-T) at $16.06, Uranium Participation (U-T) at $4.75 and Valeant Pharmaceuticals (VRX-T) at $79.92 all fell to new 52-week trading lows.

 

 

 

For the Week – the Dow Industrials rose by 2.31% to 17,007, with the NASDAQ Exchange up by 2.77% to 4,717 and the S&P 500 Index ahead on the week by 2.66% to an even 2,000. To the north, the TSX Composite Index gained 3.24% to 13,213 and the TSX Venture Exchange rose by 4.46% to 562.

 

 

 

With commoditiesgold bullion gained 3.52% to US$1,263, with copper up by 4.63% to US$2.26, while crude oil rose by 10.49% to US$36.22 and natural gas fell by 6.70% to US$1.67. Overall, the CRB Spot Commodity Index improved by 0.26% to end the week at 386.

 

 

 

The Canadian dollar rose by 1.39% against the U.S. dollar to finish the week at US$0.7502.

 

 

 

And the closely watched CBOE Volatility Index or VIX dropped by 3.08-points to end the week at a much calmer level of 16.73.

 

 

 

And Finally – The good news from a recent VanCity survey is that 40% of millennials (those 18 – 34-years-old) expect to inherit more than $300,000 from their parents. The bad news for the millennials is that the same survey found that only 12% of their parents expect to leave an inheritance anywhere near that size.

 

Posted March 7, 2016

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