Author: Consultant

Published: 3/9/2023 2:08 PM ET

Gold futures settled higher on Thursday, regaining ground after posting losses in the previous two sessions, as the dollar turned weak.

The dollar, which surged higher following hawkish remarks from Fed Chair Jerome Powell who said in his testimony before the congress that the central bank will likely raise interest rates to continue the fight against inflation, turned easy today.

During a second day of congressional testimony, Powell once again acknowledged that the U.S. central bank was wrong in initially thinking inflation was only the result of “transitory” factors.

The dollar index dropped to 105.15, losing about 0.5%.

Gold futures for April ended higher by $16.00 or about 0.9% at $1,834.60 an ounce.

Silver futures for May ended up $0.014 at $20.165 an ounce, while Copper futures for May settled at $4.0390 per pound, gaining $0.0120.

Data from the Labor Department showed initial jobless claims climbed to 211,000 in the week ended March 4th, an increase of 21,000 from the previous week’s unrevised level of 190,000. Economists had expected jobless claims to inch up to 195,000.

With the bigger than expected increase, jobless claims reached their highest level since hitting 223,000 in the week ended December 24th.

The data helped ease concerns about labor market tightness, which the Federal Reserve has pointed to as a reason for stubbornly elevated inflation.

Traders now look ahead to the release of the Labor Department’s more closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 203,000 jobs in February after surging by 517,000 jobs in January, while the unemployment rate is expected to hold at 3.4 percent.

“Fed Chair Powell seems to have signaled they will accelerate the tightening pace to a half-point rate rise if we get both a hot NFP and inflation reports,” said Edward Moya, senior market analyst at OANDA.

He added, “Some traders are thinking that if tomorrow delivers a not-so-hot jobs report, that we could see Fed fund futures lean towards a quarter-point rate rise for the March 22nd FOMC meeting.”

When Saudi Arabia and Iran buried the hatchet in Beijing on Friday, it was a game-changing moment both for a Middle East shaped by their decades-old rivalry, and for China’s growing influence in the oil-rich region.

The announcement was surprising yet expected. The two regional powerhouses have been in talks to re-establish diplomatic relations for nearly two years. At times, negotiators seemed to drag their feet, the deep distrust between the two countries appearing immovable.

Iran’s talks with Saudi Arabia were unfolding at the same time as negotiations between Iran and the United States to revive the 2016 nuclear deal were faltering. The outcomes of both sets of Iran talks seemed interlinked – Riyadh and Washington have long walked in lockstep on foreign policy.

https://edition.cnn.com/2023/03/11/middleeast/iran-saudi-arabia-normalization-china-analysis-intl/index.html

CNBC’s “Mad Money” host Jim Cramer is being shredded across social media after footage resurfaced of him urging viewers in February to invest in Silicon Valley Bank (SVB), which collapsed on Friday. 

SVB had been the 16th largest bank in the United States and was connected to a number of Silicon Valley industries and startups. The closure of the bank was announced by the Federal Deposit Insurance Corporation (FDIC), making it the worst U.S. financial institution failure in nearly 15 years. 

Upon the news of SVB’s collapse, a clip went viral of Cramer in February speaking positively about the bank in a list of “The Biggest Winners of 2023… So Far.”

“The ninth-best performer here today is SVB financial. Don’t yawn,” he told his viewers on Feb. 8. “This company is a merchant bank with a deposit base that Wall Street has been mistakenly concerned about!”

CNBC’s Jim Cramer of “Mad Money” talking about Silicon Valley Bank.

SILICON VALLEY BANK SHUT DOWN BY REGULATORS

He suggested in the same clip that while the stock’s recovery, a 40% rally at the time, from last year may have been lackluster, “It is a good example why these bounce back moves might be far from over. These stocks still have more room to run, especially if you think they were driven down to artificially low levels.” 

Commentators across Twitter blasted Cramer for his ill-fated financial advice. 

One financial account tweeted the video, commenting, “One month ago, Jim Cramer urged investors to buy Silicon Valley Bank stock $SIVB. Today, the bank was closed by California regulators, making it the 2nd largest banking failure in US history.”

https://edition.cnn.com/2023/03/10/economy/february-jobs-report-final/index.html

Winnipeg adviser, 39, earning $410,000, works and plays hard
‘We just bought a cottage – our plan is to rent it out, tear it down and build our retirement property’

Globe & mail March 10, 2023

Name, age: Trevor, 39

Annual income: $410,000

Debt: $200,000 mortgage

Savings: $110,000 in savings; $100,000 in TFSA; $120,000 in RRSP; $300,000 in other investments

What he does: Financial adviser

Where he lives: Winnipeg

Top financial concern: “Our 10-year vision is semi-retirement at age 50, and full retirement at 60. We just bought a cottage – our plan is to rent it out, tear it down and build our retirement property.”

Trevor is living his best life in Winnipeg. A married financial adviser with a 10-year-old daughter, he puts in 70-hour work weeks. When he’s not working, he and his family travel to places such as Hawaii and the Dominican Republic, as well as Vancouver Island and Kenora, Ont. “We go on half a dozen trips at a minimum a year,” he says. “Because we are self-employed, we can control how little and how much we work.”

Thanks to his high income, Trevor still manages to save $152,000 a year, which he divides between his savings account, his TFSA and an RRSP. He also has $300,000 invested in non-registered accounts, banking on a stock market rebound from a recent decline. “I believe in history and the market always eventually recovers,” he says. “And I’m only 39.”

Recently, he and his wife upgraded their home, a bungalow on a third of an acre of land. He estimates the home’s value is now $675,000, up from $425,000 when they bought it 12 years ago. Trevor is also a car aficionado. He owns three luxury cars including a Porsche Macan Twin Turbo GTS, a Shelby GT and a brand new Corvette. “I do a lot of rural travel to see my clients,” he says.

In his spare time, Trevor likes to fish, often chartering a plane out of Kenora, or going ice fishing more locally. Given his busy work hours, he takes advantage of the comforts a high income can provide, employing a lawn-care service, a house cleaner and a tailor who comes to his office for suit fittings.

Trevor’s current plan is to retire early to Lake of the Woods. “Our 10-year vision is semi-retirement at age 50 and full retirement at 60,” he says. “We just bought a cottage – our plan is to rent it out, tear it down and build our retirement property.”

To fund this retirement, Trevor and his wife will sell their home in Winnipeg, as well as his investment practice. “The equity in my business is $3-million,” he says.

“We’re getting the right infrastructure in place,” he says. “We feel that with our savings strategy we can retire sooner than later.”

His typical monthly expenses:
Investment and savings: $12,500

$542 to TFSA. “It’s in a mix of ETFs, stocks, mutual funds and GICs.”

$833 to RRSP. “My RRSP is also in ETFs, stocks and mutual funds.”

$10,000 to non-registered accounts. “These investments are in equities; bank stocks, tech stocks, innovation mutual funds and a greenchip all-cap equity fund.”

$1,125 to life insurance. “I have a lot of policies, valued at $7.5-million.”

Household and transportation: $4,564.84

$700 to mortgage. “My mortgage is $200,000.”

$187.50 to property tax.

$83.33 to property insurance.

$91.67 on lawn care and yard maintenance. “I have someone who cuts the grass.”

$191.67 on house cleaner. “Our house cleaner comes every three weeks.”

$20 for house alarm.

$400 on gasoline. “We live outside the city.”

$417 on car insurance.

$1,700 on car financing.

$167 on car repairs.

$60 on cellphone.

$45 on Internet.

$10 on Netflix. “I watch almost no TV.”

$300 on pets. “I have a saltwater fish tank – it’s an expensive endeavour. I love it. We have someone who comes to clean the tank every two weeks or so.”

$41.67 on child care. “This is for babysitting our daughter.”

$150 for elder care. “This is for long-term care insurance for my parents.”

Food and drink: $875

$292 on groceries. “We primarily shop at the Co-op. We’ve also been known to use HelloFresh. My wife does a lot of the cooking.”

$583 on eating out. “We like the finer establishments. We have a membership to the Manitoba Club. I’m a meatarian, for sure. I like a dry-aged rib-eye.”

$0 on alcohol. “I don’t drink.”

Miscellaneous: $10,221.17

$5,000 on taxes.

$83 on hobbies. “I love fishing. We rent a cabin in Kenora – I’ll charter a guide. I also like ice fishing.”

$83 on courses. “We also like the MasterClass online courses, such as Gordon Ramsay teaching cooking, and Mindvalley – it’s meditation and untapping your true potential.”

$25 on dental.

$333 on clothing. “I wear a suit every day. A person from Harry Rosen comes to my office every quarter.”

$42 on haircuts and cosmetic procedures. “It’s for haircuts and pedis before trips.”

$125 on gifts.

$833 to charities. “The ones we contribute to primarily are the Dream Factory and Cancer Care Manitoba.”

$2,083 on vacations. “Last year I went to Nashville, Vancouver Island, Hawaii, Ottawa, Saskatchewan and Kenora, and we’re heading to the Dominican at the end of March.”

Total: $28,161

Fri Mar 10, 3:02PM CST

Today, shares of Enghouse Systems Ltd opened at $39.36 and closed at $32.77. It traded at a low of $32.23 to a high of $39.36.

The price dipped -24.72% from the previous day’s close of $43.53.

During the day across North America, the TSX Composite closed -1.28% at 20086.72, the S&P 500 closed -1.85% at 3918.32, the Dow Jones Industrial Average closed -1.66% at 32254.86 and the Nasdaq Composite closed -2.05% at 11338.35.

Enghouse Systems Ltd has listed on the Toronto Stock Exchange (TSX) under the ticker ENGH.

Trading volume was 540,603 on 3,486 total trades, with an average volume of 149,731 over 5 days.

Trading across the entire TSX saw 747 price advancers against 4,571 declines and 81 unchanged.

During the prior 52 weeks, ENGH.TO has traded as high as $44.59 (March 06,2023) and low as $23.96 (June 13,2022). Moreover, in the last 52 weeks, Enghouse Systems Ltd’s shares have shrunken -15.49 percent, while in 2023, they have reduced -7.17%.

It announced a 0.18 dividend on December 15/22, with an February 13/23 ex-date and February 28/23 pay day.

Following today’s trading, Enghouse Systems Ltd has a market capitalization of $2.41 billion on a float of 55,250 shares outstanding. Its annual EPS is $1.70.

Enghouse Systems Ltd is a TSX Software company headquartered in Markham, CAN.

Enghouse Systems Ltd’s average recommendation is “Moderate Buy” based on 3.00 analysts according to Zacks. Currently, there are 2 buy ratings and 1 hold ratings for the stock.

Monday March 13

(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q4.

Earnings include: Alimentation Couche-Tard Inc.; Cardinal Energy Ltd.; Ivanhoe Mines Ltd.

Tuesday March 14

(8:30 a.m. ET) Canadian manufacturing sales for January. Estimate is a rise of 3.9 per cent with new orders up 4.5 per cent.

(8:30 a.m. ET) U.S. CPI for February. The Street expects an increase of 0.4 per cent from January and 6.0 per cent year-over-year. In January, CPI rose 0.5% from the previous month.

Earnings include: Terrascend Corp.

==

Wednesday March 15

China industrial production, retail sales and fixed asset investment

(8:15 a.m. ET) Canadian housing starts for February. Estimate is an annualized rate rise of 2.2 per cent.

(8:30 a.m. ET) U.S. PPI for February. Consensus is a rise of 0.3 per cent from January and up 5.4 per cent year-over-year.

(8:30 a.m. ET) U.S. retail sales for February. The Street is forecasting a rise of 0.1 per cent from January.

(9 a.m. ET) Canadian existing home sales for February. Estimate is a year-over-year decline of 37.0 per cent with average prices falling 18.5 per cent.

(10 a.m. ET) U.S. NAHB Housing Market Index for March.

Earnings include: Badger Infrastructure Solutions Ltd.; Converge Technology Solutions Corp.; Fortuna Silver Mines Inc.; Franco-Nevada Corp.; Lennar Corp.; Nexus REIT; Savaria Corp.

==

Thursday March 16

Japan trade deficit, core machine orders and industrial production

ECB Monetary Policy meeting

(8:30 a.m. ET) Canadian wholesale trade sales for January. Estimate is an increase of 0.3 per cent from December.

(8:30 a.m. ET) U.S. initial jobless claims for week of March. Estimate is 210,000, down 1,000 from the previous week.

(8:30 a.m. ET) U.S. housing starts for February. Consensus is an annualized rate rise of 0.1 per cent.

(8:30 a.m. ET) U.S. building permits for February. The Street expects an increase of 0.8 per cent on an annualized rate basis.

Earnings include: Adobe Systems Inc.; Centamin PLC; Dollar General Corp.; Canoe EIT Income Fund; Empire Company Ltd.; FedEx Corp.; North West Company Inc.; Power Corp. of Canada; Premium Brands Holdings Corp.

==

Friday March 17

Euro zone CPI

(8:30 a.m. ET) Canadian industrial product and raw materials price indexes for February. Estimates are month-over-month increases of 0.6 per cent and 0.5 per cent, respectively.

(9:15 a.m. ET) U.S. industrial production for February. The Street expects an increase of 0.5 per cent from January with capacity utilization rising 0.2 per cent to 78.5 per cent.

Earnings include: Algonquin Power & Utilities Corp.; Ballard Power Systems Inc.; Filo Mining Corp.; Lithium Americas Corp.; Orla Mining Ltd.

Wall Street’s indexes and Canada’s TSX ended down more than 1% on Friday after investors ran for the exits as they feared for the health of U.S. banks after the failure of a high-profile lender to the technology sector, overshadowing February jobs reports.

California banking regulators said they closed SVB Financial Group to protect deposits in what was the largest bank failure since the financial crisis. A capital crisis at SVB had already put pressure on bank stocks globally.

SVB had tried but failed to shore up its balance sheet through a stock sale proposed late on Wednesday. The same day, crypto-lender Silvergate Capital said it would have to wind down after huge losses from the FTX cryptocurrency exchange collapse.

“There’s concern cracks may be appearing in the financial system as a result of the Federal Reserve’s aggressive rate hikes,” said Carol Schleif, chief investment officer, BMO family office in Minneapolis. “The fear is whether it’s broader than one industry’s bank and one segment of the economy.”

While many investors looked through their bank holdings for signs of risk, Schleif said much of the weakness in regional bank stocks stemmed from a “proverbial shoot first ask questions later situation.”

The KBW regional banking index ended the session down 2.4% while the S&P 500 financials index lost 1.8%.

Schleif and other investors said they hoped regulations added to the U.S. banking system since the 2008 financial crisis would prevent a similar catastrophe.

But still “people are very nervous because they don’t want a repeat,” she said.

In Toronto, the S&P/TSX composite index ended down 311.8 points, or 1.55%, at 19,774.92, its lowest closing level since Jan. 5.

For the week, the index was down 3.9%, its biggest weekly decline since September.

Financials, the most heavily-weighted sector on the TSX, fell 2.2%, including declines for the six major bank stocks.

Information technology lost 2.5%, while energy was down 1.3% even as U.S. crude oil futures settled 1.3% higher at $76.68 a barrel.

All ten major sectors ended lower.

The Canadian economy beat expectations by adding 21,800 jobs in February. But bond yields fell sharply as money markets nearly priced out any further rate hikes by the Bank of Canada this year. The turmoil in the banking sector played into that, as did some disinflationary signs contained in the U.S. jobs report.

By late afternoon, the U.S. 10-year bond was yielding 3.70%, down 22 basis points for the day. The Canada 5-year bond was yielding 3.22%, down 14 basis points and its lowest level in about a month.

The Dow Jones Industrial Average fell 345.22 points, or 1.07%, to 31,909.64, the S&P 500 lost 56.73 points, or 1.45%, to 3,861.59 and the Nasdaq Composite dropped 199.47 points, or 1.76%, to 11,138.89.

All 11 S&P 500 industry sectors lost ground. Real estate , down 3.3%, led declines while consumer staples the top performer, fell just 0.5%.

For the week, the S&P lost 4.6% in its biggest weekly percentage decline since September but was clinging to a tiny year-to-date gain of 0.6%. The Dow fell 4.4% for the week and was down more than 3% year-to-date while the Nasdaq declined 4.7% this week but was up more than 6% for 2023.

The Cboe Volatility Index, an options-based indicator that reflects demand for protection against stock market declines, closed at a 3-month high, up 2.19 points at 24.9 after touching a roughly five-month high during the session.

Investors had expected to end the week with most of their focus on economic data rather than banks.

Before the market opened, the closely monitored U.S. non-farm payrolls report showed the U.S. economy added more jobs than expected in February while average hourly earnings rose at a slower 0.2% last month after versus 0.3% in January while unemployment rose to 3.6%.

The data had eased some concerns that the Fed could raise rates by 50 basis points at its March meeting after hawkish remarks from Fed Chair Powell this week.

But investors were more focused on uncertainties around the bank system, said John Praveen, managing director & Co-CIO at Paleo Leon in Princeton, New Jersey.

“Whatever positive vibes came out of the labour market report were upstaged by negative vibes from the SVB situation,” Praveen said.

The S&P 500′s bank subsector closed down 0.5% with a boost from JPMorgan Chase, which closed up 2.5% and Wells Fargo , which closed up 0.6% while the rest of the index lost ground.

The biggest decliners were Silvergate cryto-bank peer Signature Bank, which tumbled 22.9% and regional bank First Republic, which finished down 14.8%.

In individual stocks, Gap Inc lost 6.3% after the apparel retailer posted a bigger-than-expected fourth-quarter loss and forecast full-year sales below Wall Street estimates.

Oracle Corp slid 3% after the software firm missed third-quarter revenue estimates.

In Toronto, shares of Enghouse Systems tumbled 24.7% after the company’s quarterly earnings missed estimates.

Declining issues outnumbered advancing ones on the NYSE by a 4.75-to-1 ratio; on Nasdaq, a 4.31-to-1 ratio favored decliners. The S&P 500 posted no new 52-week highs and 40 new lows; the Nasdaq Composite recorded 25 new highs and 493 new lows. On U.S. exchanges 15.17 billion shares changed hands, well above the 11.13 billion average for the last 20 sessions.

The expected price tag of the Trans Mountain pipeline expansion has increased once again, now projected to hit almost $31-billion.

The latest estimate of $30.9-billion, released by Trans Mountain Corp. on Friday, is an increase of more than 300 per cent from the initial $7.4-billion that former owner Kinder Morgan Canada Inc. laid out in 2017. Now close to 80-per-cent complete, the pipeline is expected to come into service in the first quarter of 2024.

In a statement Friday, the Crown corporation attributed the cost increase to high global inflation and supply chain challenges, unprecedented floods in British Columbia, unexpected water disposal costs and the challenging terrain between Merritt and Hope, B.C.

Earthquake standards in the Burnaby Mountain tunnel and “significant cost increases associated with building major infrastructure in densely populated areas from Sumas to Burnaby” also played a role, it said.

Ottawa’s Trans Mountain purchase no longer projected to be profitable, PBO says

So, too, did unexpected and significant archeological discoveries throughout sacred spaces in the Lower Mainland, which resulted in more than 83,000 artifacts being returned to Indigenous communities for cultural protection.

The existing Trans Mountain pipeline carries 300,000 barrels of oil per day, and is Canada’s only pipeline system transporting oil from Alberta to the West Coast. It was bought by the federal government for $4.5-billion in 2018. The expansion will raise daily output to 890,000 barrels.

The Crown corporation took over the pipeline when Ottawa bought it from Kinder Morgan in 2018, after the company threatened to scrap the expansion project in the face of environmentalist opposition.

In 2020, the expected price of the expansion jumped to $12.6-billion.

Last year, the federal government said that no more public funds would be spent on the project after the cost ballooned once again, to $21.4-billion, and completion was delayed until late 2023.

Finance Minister Chrystia Freeland told media at the time that instead of public cash, Trans Mountain would secure the funding necessary to complete the project through third-party financing, either in public debt markets or from financial institutions.

Trans Mountain said Friday it is in the process of securing external financing to fund the remaining cost of the project.

Eighty per cent of capacity on the expanded pipeline has been spoken for by a mix of 11 Canadian and international producers and refiners under long-term, take-or-pay transportation contracts for 15 and 20 years. The remaining 20 per cent will be available through market mechanisms.

Trans Mountain said it plans to deliver oil to its Westridge Marine Terminal in Burnaby during the first quarter of 2024.

The Alberta portion of the project is complete, as well as all pump stations across both provinces.

The bank run that killed SVB Financial Group this week is sending a warning to investors who have flocked to some of the larger financial firms – including Canada’s biggest banks – in search of stability and dividends. Bank shareholders are now wondering: Is this the place to be if another financial crisis is brewing?

The good news is that many observers believe that the threat of a bigger financial crisis is being overstated. The bad news is that the stock market doesn’t believe them, if the sharp downturn in bank stocks is any indication.

The KBW Nasdaq Bank Index, which tracks 24 U.S. stocks including Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., fell 7.7 per cent on Thursday, wiping out US$52-billion of value among the four largest banks and marking the index’s most severe one-day decline in nearly three years.

The fireworks continued on Friday, with the index down 3.1 per cent.

The scary part here for Canadian investors is that their beloved Big Six bank stocks, hugely profitable and widely held for their rich dividends, were caught in the selloff. Canadian bank stocks, on average, fell 1.9 per cent on Thursday and another 2.1 per cent on Friday.

Investors are now mulling the possibility that one troubled corner of the financial universe – that would be SVB Financial, a Silicon Valley lender based in Santa Clara, Calif. – could emerge as a source of contagion to the broader financial system, at a time when investors are already worried about a looming recession as central banks raise interest rates to tame stubbornly high inflation.

SVB suffered a run on its deposits amid withering confidence among its customers. The lender disclosed on Wednesday that it had sold US$21-billion in bonds – at a significant loss – to shore up its finances. It was also attempting to raise capital through additional share issuance, but on Friday became the second-biggest bank failure in U.S. history.

The fear is that the drama will emanate to other lenders, the way that Bear Stearns’s failure in 2008 exacerbated the U.S. subprime mortgage crisis, kneecapped lenders worldwide and contributed to a full-blown financial crisis.

The initial response from a number of observers is that investors are overreacting. They believe that SVB’s problems are specific to the lender and the impact is largely tied to the venture capital ecosystem; the broader banking sector has sufficient funds, or liquidity, to absorb losses.

“We want to be very clear here,” Morgan Stanley analysts said in a note on Friday morning. “We do not believe there is a liquidity crunch facing the banking industry, and most banks in our coverage have ample access to liquidity.”

Bank of America analysts said that big banks remained safe bets because of their large cash reserves, diversified revenue streams and strong credit profiles.

Gerard Cassidy, a U.S. bank analyst at RBC Dominion Securities, pointed out that SVB’s balance sheet was unusual among U.S. lenders: Its particular mix of longer-dated bonds and large variable-rate deposits in a rising interest rate environment – where bonds fall in value and deposits become costlier – “is toxic.”

“SVB’s deposit and asset mix differs significantly from that of all the other top 20 banks, which in our view implies that other banks are not expected to experience anything similar to SVB,” Mr. Cassidy said in a note.

Still, the lender’s difficulties this week highlight the concern that rising interest rates are not only weighing on economic activity. Higher rates might also be exposing problems in areas that had looked healthy. Consider that, as recently as Tuesday, SVB’s share price was up 16 per cent in 2023 (prior to the failure).

The stock market may now be pricing in a riskier environment, especially if the Federal Reserve maintains a bias toward hiking interest rates even more. The Fed’s actions have driven up short-term bond yields above longer-term bond yields, in what is known as an inverted yield curve, and offering a warning to investors.

“As it has done often in the past, the inverted yield curve has been signalling since last summer that something could break in the financial system if the Fed continues to tighten monetary policy,” Ed Yardeni, of Yardeni Research, said in a note.

Meanwhile, near-cash investments such as money market funds look more appealing than flailing stocks, offering yields that rival bank dividends.

Rising risks don’t have to be bad, of course. Investors who can stomach volatility can buy cheaper bank stocks with bigger dividend yields, and simply hold on until things settle down. But the holding-on part could be challenging.