The last week of July begins with the U.S major markets still at or near multiyear or record highs, with the resource heavy TSX Composite Index continuing to lag their southern counterparts, and going almost unnoticed, the TSX Venture Exchange riding a 4-week recovery rally.
Hudson’s Bay Co. (HBC-T), Canada’s and one of the world’s oldest companies (established in 1670), starts off the week by announcing on Monday, July 29th, that it had acquired high-end U.S. retailer Saks Inc. (SKS-N), along with their famous Saks Fifth Avenue stores in a friendly all-cash deal worth some US$2.9-billion.
Meanwhile, an ecstatic Energizer Resources (RGZ-) saw its share price surge up by over 163% to $0.29 when the company announced that it had achieved a very remarkable 99.9% recovery of graphitic carbon from a finished concentrate at its flagship Molo flake graphite project in Madagascar.
It was like coming home to a Dear John letter for the potash companies on Tuesday, July 30th as the share price of Potash Corporation of Saskatchewan (POT-T) plunge by some 20% to under $30 on word that Russia’s giant Uralkaki, the world’s largest potash producer, was leaving the cartel that has been keeping potash prices at about US$400-a-tonne. And with that, many analysts immediately downgraded their outlook for potash by some 25% to about US$300-a-tonne.
The reality check cutbacks in the gold industry continued with both Barrick Gold (ABX-T) and Kinross Gold Corp. (K-T) with US$2.48-billion, announcing major writedowns of non-performing assets as well as a cut in the quarterly dividend of Barrick by $0.15 to just $0.05 and in the case of Kinross, a discontinuing if the dividend entirely.
TransCanada Corp. (TRP-T) puts British Columbia, the United States and the world on notice Thursday, August 1st that the Canadian economic engine will do whatever it takes to get Canada’s number one export to tidewater, by announcing it will go forward with its massive $12-billion Energy East pipeline project that, when approved, will pump some 1.1-million barrels a day of Alberta oil sands bitumen crude oil to the deep water port of St. John, New Brunswick, and thereby negating the current need of importing some 700,000 barrels-a-day of foreign oil into Eastern Canada while exporting the excess to world markets at world prices.
The U.S. Labor Department disappointed the market somewhat on Friday, August 2nd when they reported that in July their economy created a less than expected 162,000 new jobs, while reducing their unemployment rate down by another 0.1% to 7.4%.
While on a related note, recent Gallup survey finds a very stark oddity in the United States labor market, in that while the percentage of Americans aged 50-64 who have fulltime employment has increased by some 2.5% in the past 3-years, and those 65 and older who have full-time jobs has increased by 2.2% to 8.4%, the percentage of young people 18-29 who work full time has dropped by 3.0% to 43.6% over the same time period.
The Hudson’s Bay/Saks deal put renewed interest in consumer stocks with Gildan Activewear (GIL-T) at $46.43, Shoppers Drug Mart (SC-T) at $61.77 and George Weston Ltd. (WN-T) at $89.97 all hitting new TSX 52-week trading highs, while fertilizer companies Agrium Inc. (AGU-T) at $86.05 and Potash Corp. of Saskatchewan (POT-T) at $29.67 dropping down to new TSX 52-week trading lows.
The U.S. markets continued to close at new multi-year or all-time highs last Friday, August 2nd, with the NASDAQ closing at a new 13-year high of 3,690, while the DJIA and the S&P 500 Indexes closed at new respective record highs of 15,658 and 1,710, with this being the S&P 500’s first time above 1,700 in its history.
For the Week – The Dow Jones Industrials and the S&P 500 Index ran their string of consecutive weekly gains to six, with the Dow gaining another 0.62% to 15,658 while the S&P 500 Index gained 1.05% to 1,710 and the NASDAQ Exchange advanced by another 1.77% to 3,626. To the north, the TSX Composite Index eased by 0.46% to 12,603 and the TSX Venture Exchange was off marginal 0.08% to 924.
Gold bullion lost 1.82% to US$1,307.80-an-ounce, crude oil gained a further 2.01% to US106.80-a-barrel, and he CRB Commodities Index lost 1.31-points to end the week at 283.77.
The Canadian dollar eased by 1.15% to US$0.9621.
And Finally – Under the heading of ‘Bad News – Good News’ – A recent Bank of Montreal (BMO-T) survey finds that the percentage of Canadians carrying some debt rose by 6% over the past year to 84%.The good news is that thanks to lower interest rates and longer repayment terms, the repayment bill of that debt has fallen by 13% over the same period to an average of $986-a-month.
The Week is taking next week off to extend the B.C. Day holiday into a little much needed R & R. With any luck this publication will once again come to your inbox on about Monday, August 19th.
Canaccord’s Debbie Lewis – “Someone called me lazy today. I almost replied….”
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