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Msg  70695 of 70971  at  11/26/2021 11:07:07 AM  by

carswell


The Launch Pad

Richardson Wealth - Connected Wealth
Daily market commentary
The Launch Pad
November 26, 2021
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Today

Markets are getting beaten up this morning as threats of a new South African Covid variant spooked investors. WHO and scientists in South Africa are hastily working to determine how quickly the B.1.1.529 variant can spread and whether it’s resistant to vaccines. A number of European and Asian nations have suspended flights from southern Africa and the European Commission said this morning that all 27 member states should cease travel into the bloc from southern Africa. The new threat adds to the wall of worry investors are already contending with in the form of elevated inflation, monetary tightening and slowing growth. Expect it to be a very volatile trading day with a lot of U.S. trading desks on skeleton staff and U.S. markets closing at 1 pm.

Black Friday is here but cyber weekend sales gains may slow after the record growth we saw in 2020. Despite expected slower growth, rising prices and fewer promotions could help the retail industry top its forecast for a 5% gain. Retailers with larger scale and reach such as such as Amazon and Wayfair are expected to fare the best during this time of holiday spending.

Shoppers are spending, but they’re increasingly nervous about opening their wallets. Consumer confidence hit a 10-year low in November, as inflation climbed to the highest levels since the early 1990s. According to a recent poll, a record 11.5% of people plan to sit out this holiday season by not spending anything on presents, gift cards or other items for entertaining. For many consumers, the pandemic has meant a lost job while for others it simply meant a change of venue from the company office to the home office. The lucky workers who were able to keep their jobs socked away savings from canceled vacations, summer camps and other activities, as the value of their portfolios grew. Many economists predict that these wealthy consumers will mask the fact that many others are sitting out this holiday season.

Investors have poured almost $900 billion into equity ETFs and long-only funds in 2021, beating the combined total of the past 19 years. The rally has left U.S. stocks at record valuations and even some Wall Street analysts (usually bullish) are turning bearish. Investors have pulled money from stock funds only twice this year, with the second time being in the past week. These recent sales are showing that there are some signs of skittishness in the market as markets continue to reach new highs.

Help wanted. There are now one million job openings in Canada, a sign that employers are having difficulty finding workers. This represents about 6% of all jobs, a vacancy rate that’s up from as low as 3% last December. As expected, employers in high-contact industries like food services and hotels had the highest proportion of unfilled positions, at 14.4%. According to data compiled at the University of Waterloo, there are now 0.8 vacancies for every job seeker in the country - the highest proportion in data back to 2015 and twice the average of 0.4 over that period. Still, Canada continues to lag the U.S., which has 1.4 job vacancies for every searcher.

Diversion: At least this year’s Macy’s parade went a little better than what happened in 1997.

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Company news

After torrential rain, flooding and landslides that began on Nov. 14, Canadian National Railway Co. reported it is still unable to reopen its Kamloops-Vancouver corridor because of new weather-related problems. However, CN’s link to the Port of Prince Rupert and its adjacent facilities continue to be fully operational and has not been impacted by the extreme weather. In a positive note, rival CP Railway Ltd. said it had resumed some service between Kamloops and Vancouver yesterday, with cars loaded with grain and fuel having arrived in the city.

BCE Inc. urged the CRTC to reject Rogers Communications Inc.'s $26-billion proposed takeover of Shaw Communications Inc. on Thursday, while independent operators have called for more safeguards. Speaking at the second-last day of hearings in Gatineau, Que. this week - which are focused the broadcasting implications of the deal - BCE representatives echoed concerns raised by broadcasters, producers and distributors about the market dominance Rogers would have if the deal were to be approved.


Commodities

Oil prices are getting pummeled with benchmarks down over 5% as a new Covid-19 strain sparked fears about a decrease in travel and potential new lockdowns, both of which could hit demand, come just as supply is about to increase. OPEC+ is set to meet on Dec. 2 to discuss production policy for January and beyond. At the time of writing, NYM WTI Crude futures are down –5.40% to US$74.15/bbl and ICE Brent Crude futures are down –5.11% to US$78.05/bbl.

Gold is higher on concerns about a hit to the global economic recovery drove investors to the safety of bullion. The yellow metal is heading for its worst week since Aug. 6 on increased expectations that the Fed could taper its asset purchases and raise interest rates at a faster pace. Gold Spot is up +1.00% to US$1,806.90/oz this morning.



Fixed income and economics

Consumption traditionally accounts for 70% of economic output. And what better time to remind us all of that as Black Friday and Cyber Monday are hoping to be the salvo that helps turn market sentiment around on this red post-U.S. Thanksgiving shortened trading session. October personal income and spending data in the U.S. both remained fervent despite higher prices with the former seeing a +0.5% monthly increase to best expectations for +0.2% growth. Personal consumption more than doubled with a +1.3% acceleration from +0.6% previously with real personal spending rising by +0.7% (digest that you inflation purists). Spending by Americans has also been more interminable lately too --- durable goods orders (those meant to last for at least three years) accounted for 13% of total consumer spending. That’s above the 2019 average of 10% with the portion attributable to goods clocking in at 35% and more than in the prior two years (recall that purchases of goods is viewed as a better indicator of organic growth versus services). And what better time for the Black Friday and Cyber Monday sales to make an appearance as e-commerce sales have already seen $76 billion worth of receipts thus far in November, surpassing last year's $63 billion in revenue generated during the same period. They say the best part of online shopping is that you can fill up your cart and leave without having to put any of the items back. Let’s hope we see more of the former and less of the latter over the next few days.

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


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