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The Week of October 22nd to October 28th, 2018 “A Brief Look Back Into Tomorrow”

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The Week of October 22nd to October 28th, 2018 “A Brief Look Back Into Tomorrow”






The North American trading week began on Monday, October 22nd with some investors fully aware that the markets were seemingly being repulsed by the record highs of a few weeks ago, while others were more than happy that recreational cannabis was finally legal in Canada.



Ford Motor Co. ‘F-N’ announced that the Trump induced metals tariffs had already affected the iconic car maker’s bottom line profits by about US$2-billion.



The price of Sabina Gold & Silver ‘SBB-T’ rose by almost 3% to $1.47 after the company reported encouraging drill hole gold assays from its Back River project in Nunavut, Canada.



Cannabis stocks sold off in unison after Canada’s DBRS Ltd. credit ratings agency gave the sector an initial lower than expected grade B non-investment rating.



Tuesday, October 23rd saw 3M Company ‘MMM-N’ shares’ fall by over 4% to US$192.55 after the packaging company reported 3rd-quarter financials that were below analysts’ expectations.



B2Gold Corp. ‘BTO-T’ stock rose by almost 4% to $3.59 after the intermediate gold miner released an enhanced expansion report for its key El Limon mine in Nicaragua.



The price of Caterpillar Inc. ‘CAT-N’ shares dropped by over 7.5% to US$118.98 after the worlds’ largest heavy equipment company failed to raise its 4th-quarter earnings guidance.



Trevali Mining Corp. ‘TV-T’ stock plunged by over 17% to $0.52 after the zinc miner lowered its production guidance for the rest of the year for its flagship Caribou mine in northern New Brunswick.



The Bank of Canada did what was expected on Wednesday, October 24th and raised the country’s key benchmark interest rate by another 0.25% to 1.75%.



Aerospace giant Boeing Co. ‘BA-N’ reported 3rd-quarter earnings that were well ahead on analysts’ expectations.



Marijuana stocks continued to trade lower as the emotional high of the October 17th Canadian legalization of recreational use seemed to be quickly fading.



Thursday, October 25th saw the National Energy Board reported that Canadian crude oil-by-rail exports rose in August to a record 229,541 barrels-per-day.



Tesla Inc. ‘TSLA-Q’ shares’ gained 9% to US$314.86 after the world’s leading battery powered auto company reported a surprise 3rd-quarter profit.



Similarly, the price of Microsoft Co. ‘MFST-Q’ stock rose by almost 6% to US$108.30 after the world’s largest software company reported better than expected 3rd-quarter financials.



Gold stocks, led by Goldcorp Inc. ‘G-T’ sold off in unison as reports of bomb threats to prominent Americans led to a rally in the U.S. dollar.



Friday, October 26th had the U.S. Commerce Department reported their GDP softened by 0.7% in the 3rd-quarter to 3.5% while unemployment fell to a 49-year low of 3.7%.



Petroleum industry consultant Baker Hughes ‘BHGE-N’ reported that the number of active American drilling rigs rose by just 1-rig last week to 1,068 active drilling rigs. The number of Canadian active drilling rigs rose by 9-rigs to 200 active drilling rigs. Inc. ‘AMZN-Q’ shares’ plunged by almost 8% to US$1,642.81 after the giant mail order company’s 3rd-quarter financials indicated a softening in growth.



Similarly, the price of Alphabet Inc. ‘GOOG-Q’ stock dropped by almost 2% to US$1,083.75 after the world’s largest search company’s 3rd-quarter financials also indicated a deceleration of growth.



During the Week –the Dow Industrials fell to a new 3-month low of 24,583, while the S&P 500 and NASDAQ dropped to a new respective 5-month lows of 2,656 and 7,108. Meanwhile, the TSX Composite fell to a new 8-month low of 14,888 and the TSX Venture plunged to a new 21/2-year low of 641. The price of gold bullion rose to a 3-month high of US$1,237-an-ounce and the VIX reached a new 8-month high of 25.23.



Auralite Invrestments ‘AAAA-T’ at $1.80, Canlan Ice Sports ‘ICE-T’ at $5.45 and InterRent Real Estate Investment Trust ‘IIP.U-T’ at $12.58 all moved up to new TSX 52-week trading highs while Dorel Industries ‘DII.B’T at $21.50, Interfor Corporation ‘IFP-T’ at $14.80 and TORC Oil & Gas ‘TOG-T’ at $5.57 all dropped to new 52-week trading lows.



For the Week – the Dow Industrials fell by 2.97% to 24,688, with the S&P 500 off by 3.94% to 2,659 and the NASDAQ down by 3.79% to 7,167. The TSX Composite lost 3.76% to 14,888 and the TSX Venture fell by 5.57% to 644.



With Commoditiesgold bullion gained 0.57% to US$1,236, while copper fell by 1.44% to US$2.74, with crude oil down by 2.44% to US$67.59 as natural gas dropped by 4.52% to US$2.96. Overall – the CRB Spot Commodity Index was unchanged on the week at 417.



The Canadian dollar fell by 0.07% against its southern neighbor to finish the week at US$0.7628.



And the closely watched CBOE Volatility Index or VIX rose by 4.27-points to end the week at a much more nervous level of 24.16.



And Finally – So why sweat the Bank of Canada’s latest interest rate increase to 1.75%? Aren’t interest rates are still historically low? Well, maybe so but – Environics Research calculates that the last 2-years of BOC tightening is already costing the average Canadian household over $2,500-a-year or 5% of their discretionary income.



Posted October 29, 2018

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