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Msg  70463 of 70741  at  10/8/2021 9:15:09 AM  by

carswell


The Launch Pad

Richardson Wealth - Connected Wealth
Daily market commentary
The Launch Pad
October 8, 2021
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Today

It’s good north of the border, but no one will care. The U.S. economy created jobs at a much slower than expected pace in September, a sign that we are still not out of the clear as the pandemic persists while investors continue to face higher inflation. After a lackluster print in August, economists were expecting some positive jobs numbers for September, but the U.S. certainly missed the mark. A sturdy payrolls gain would set up a Fed taper announcement next month, but it is likely that will be delayed now. Adding to these disappointing numbers, uncertainty around the debt ceiling has been a headwind for the market as well as accelerating inflation and rising rates, with the 10-year Treasury yield sitting around 1.57% yesterday.

The U.S. debt default was averted after the senate passed legislation late on Thursday to raise the debt ceiling by $480 billion bringing the total debt limit to $28.9 trillion. This is a temporary measure as the funds should run out by early December, at which point another partisan standoff is expected just in time for the holidays. Before the bill was signed, news of the compromise between the Republicans (minus Ted Cruz et al.) and the democrats helped to ease some of the tension in the markets as the S&P 500 ended the day up 0.8%.

Nearly all Americans agree that the rampant spread of misinformation is a problem. Most also think social media companies, and the people that use them, bear a good deal of blame for the situation. But few are very concerned that they themselves might be responsible, according to a new poll. Ninety-five percent of Americans identified misinformation as a problem when they’re trying to access important information and about half put a great deal of blame on the U.S. government, and about three-quarters point to social media users and tech companies. Yet only 2 in 10 Americans say they're very concerned that they have personally spread misinformation.

The hit from China’s energy crunch is starting to ripple throughout the globe, hurting everyone from Toyota to Australian sheep farmers and makers of cardboard boxes. The extreme electricity shortage caused by soaring prices of coal in the world’s largest exporter is set to hurt China’s own growth, and the knock-on impact to supply chains could crimp a global economy struggling to emerge from the pandemic.

Whether you are getting in a last round of golf, or attending a Thanksgiving Day dinner, we hope you don’t have to travel too far to get to your destination as gas prices in Canada hit a record national average - just in time for the Thanksgiving Day long week-end. The average national price in Canada reached $1.45, 40 cents more than it was this time last year. Perhaps you can save on the cost of gas, stay-in and binge-watch Squid Game instead this long week-end.

Diversion: Not Canadian Thanksgiving – just Thanksgiving as explained by “Brittlestar” to our American neighbours. Happy Thanksgiving!

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Company news

Sundial Growers shares are up 19% in US premarket after the Canadian cannabis producer said it will buy liquor and pot retailer Alcanna (CLIQ) for $276m in stock, building on a vertical-integration strategy of acquiring stores. Alcanna’s network includes 171 alcohol shops. Alcanna also owns a majority stake in Nova Cannabis (NOVC), the weed product retailer, which seems like a better vertical fit for Sundial.

Tesla is moving its headquarters to Texas. This might have something to do with it. New York and California are losing corporate headquarters at a pretty good clip. We generally point to the bottom line and tax differentials as being the decisive factor, but political hostility might play a part.


Commodities

Oil prices rose this morning to trade 4% up on the week, buoyed by a global energy crunch that has helped gas prices to record highs and prompted China to demand increased coal production. Energy markets have tightened in the face of improved fuel demand as economic activity rebounds and coronavirus restrictions ease, with further pressure from fears that a cold winter could add to the strain on gas supplies. At the time of writing, NYM WTI Crude futures are up +0.64% to US$78.80/bbl and ICE Brent Crude futures are down up +0.46% to US$82.33/bbl.

Gold prices edged higher this morning as the dollar eased slightly, while investors focus on the U.S. labour market data, considered key to the Fed’s schedule for tapering monetary stimulus. Gold Spot is up +0.36% to US$1,761.54/oz this morning.



Fixed income and economics

The first major economic release of Q4 is upon markets with a dual labour report in North America today. And unfortunately, it looks like the Bureau of Labor Statistics decided to give us an early Halloween spook with the announcement of just +194K gains to nonfarm payrolls. That marked the fewest hires in America since last December and is once again bringing into question how the survey could be so wrong with a half million jobs expected. There must have been some counting/technical error with not even the lowest estimate amongst those polled coming in below the headline number (for those wondering the Bloomberg economics team was the most bullish calling for a +750K increase). Diving into the details, the report is soft on virtually all fronts beginning with just +317K adds in the private sector and the weakest in months (take that ADP!). Education and health shed -7K workers for its first decline this year, manufacturing posted a +26K uptick for the lowest tally since April, and leisure/hospitality saw a +74K increase (but that’s a far cry from the over +300K figures being pulled in during Q2 and the summer). The biggest culprit to the downside surprise was a -123K decline in public sector work with the Labor Department citing seasonal adjustments resulting in lower than typical hiring. The national unemployment rate managed to tick down slightly to 4.8% but that was wholly attributed to participation coming down as well. All in, this is as poor a release as you can get and will certainly push back the hawkish rhetoric from the FOMC by at least another month. Jobs

Released simultaneously, StatsCan announced that +157.1K Canadians found work during the month of September. Contrary to our southern neighbors, that more than doubled the survey estimate for +60.0K gains and also improved from the +90.2K print prior. Full-time hiring soared by +193.6K (most in over a year) and offset by a -36.5K decline in part-time work. Our nation has now officially recouped all of the losses that came from the pandemic so it’s nice to put that in the rear window and hopefully put the worst of the economic damage behind us. Within the details, we see the service sector contributing +142.4K jobs, manufacturing posting its biggest increase in a half-year with +22.1K new workers, and education up +21.3K (naturally with kids going back to school). The cherry on top of the cake in all this is that overall joblessness in Canada ticked down to 6.9% from 7.1% while seeing an increase in participation by four-tenths of a percentage point (take that America!). As such, the loonie is rallying on the release to above 1.2515 versus the greenback and lending confidence for the BoC to start their tapering program.


Chart of the day

Markets

Quote of the day

Be thankful for what you have; you'll end up having more. If you concentrate on what you don't have, you will never, ever have enough.
Oprah

Contributors: A. Innis, A. Nguyen, P. Kwon, D.Mak, J. Price



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