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Statistics Canada says the population of the country reached an estimated 41,288,599 on July 1.
The agency says the total means 250,229 people were added in the second quarter of the year for a growth of 0.6 per cent.
The growth rate was slower than the same quarter of 2023 which saw a 0.8 per cent increase and the 0.7 per cent increase in the second quarter of 2022.
The increase in the population was almost entirely due to international migration which added 240,303 people.
The Bank of Canada is well into a cycle of interest-rate cuts, with the U.S. Fed expected to join it this week. In Canada we have had three reductions in the central bank rate since June. In the United States, the markets are pricing in a nearly 50-per-cent probability of a half-percentage-point cut on Wednesday with a total two-percentage-point reduction by March of next year. Lower interest rates weaken the underlying currency and strengthen the price of gold in that currency. In this environment, gold keeps setting new highs but are the gold stocks following? Let’s look at what are the stockcalc models are telling us for valuations here.
We used stockcalc’s screener to select the top 10 listed gold mining companies by market capitalization on the TSX. We then used stockcalc’s valuation tools to calculate fundamental (or intrinsic) valuation for each stock to see if it is undervalued or overvalued compared with its price.
Overview of the techniques used:
Stockcalc is a fundamental valuation platform with tools to calculate and report on value per share for thousands of public companies listed on major North American stock exchanges. Stockcalc also contains numerous tools to understand what the stocks you are investing in are worth. Globe Unlimited subscribers can subscribe to stockcalc using the promo code “Globe30,” which offers a 30-day free trial and special pricing for the second month.
https://www.theglobeandmail.com/investing/investment-ideas/number-cruncher/article-hunting-for-value-in-gold-stocks-as-bullion-hits-record-highs/
You can see in the accompanying table the percentage difference between each stocks recent close price and its intrinsic value. The “stockcalc valuation” column is a weighted calculation derived from our models and analyst target data if used.
We expect gold stocks to have a high correlation to the price of gold. I wanted to look at this in more detail so I ran the correlation coefficients – or r2, a measure of fit ranging between minus-1 (no fit) and plus-1 {perfect fit) – between close price and the price of gold over the prior 60 months. Five of the 10 companies (AEM-T +0.65%increase, AGI-T +2.13%increase, K-T +2.23%increase, WPM-T +0.54%increase, LUG-T +1.60%increase) had correlations well above 0.8, meaning 80 per cent of the stock price movements are explained by the underlying movement in the price of gold. Two stocks (ABX-T +0.94%increase, DV-T) had limited correlations (0.2 range) and three (BTO-T +0.22%increase, FNV-T -0.07%decrease and NGT-T +1.71%increase ) were negative, telling us their stock prices and the price of gold were actually moving somewhat in opposite directions. I will go into more detail on BTO-T (B2Gold Corp.) below.
All stocks on this list are dividend payers, which is uncommon for any of the industries in the basic-materials sector. I see all of our adjusted book valuations are below current price, indicating historic price-to-book ratios were lower than today’s values (i.e. P/B ratios are rising for this group). Let’s look at a few of these companies:
Shares of B2Gold Corp. (BTO-T) moved up 20 per cent last week on the announcement they have agreed to terms with the state of Mali with respect to the continuing operation and governance of the Fekola Complex, which includes the Fekola Mine. The share price of B2Gold had diverged from the rising price of gold over the past 12 months on the back of lower-than-expected earnings, reduced guidance and uncertainty around Fekola. As noted above we saw a negative correlation between BTO-T stock price and the price of gold owng to these factors. Our models see a bit more upside in BTO-T after that 20-per-cent jump last week.
Kinross Gold Corp. (K-T) shareholders have been well rewarded in the past 12 months with the price of K-T doubling over the period. Kinross is a Canadian-based global senior gold mining company with operations and projects in the United States, Brazil, Mauritania, Chile and Canada. In its most recent quarterly report, the miner said: “Robust margins and significant free cash flow enable $200-million debt repayment.” Our models are showing Kinross with a bit more upside from here, with analyst consensus showing another 15-per-cent growth in share price expected. From our regression analysis above, Kinross has a 0.93 r2, indicting a very high correlation to the underlying price of gold.
Investing involves risk. Stockcalc accepts no liability whatsoever for any loss or damage arising from the use of this analysis. Brian Donovan, CBV, is the president of stockcalc, a Canadian fintech based in Miramichi, N.B.Mr. Donovan holds positions in WPM, BTO and EDV-T +1.95%increase.
Monday September 23
Japan markets closed
Euro zone PMI
(8:30 a.m. ET) Canada’s new housing price index for August. Estimate is a rise of 0.1 per cent from July and 0.1 per cent year-over-year.
(9:30 a.m. ET) U.S. S&P Global PMIs for September.
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Tuesday September 24
Japan PMI
Germany business climate
(8:30 a.m. ET) Canadian manufacturing sales for August.
(9 a.m. ET) U.S. S&P CoreLogic Case-Shiller Home Price Index (20 city) for July. The Street expects an increase of 0.4 per cent from June and up 6.0 per cent year-over-year.
(9 a.m. ET) U.S. FHFA House Price Index for July. Consensus is a rise of 0.2 per cent month-over-month and 4.5 per cent year-over-year.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for September.
(1:10 p.m. ET) Bank of Canada governor Tiff Macklem holds a fireside chat at the IIF/CBA Canada Forum in Toronto.
Earnings include: AutoZone Inc.
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Wednesday September 25
Germany retail sales
(8:30 a.m. ET) Canada’s population estimates for Q1.
(10 a.m. ET) U.S. new home sales for August. Consensus is an annualized rate decline of 5.8 per cent.
Earnings include: AGF Management Ltd. Cintas Corp.; Micro Technology Inc.; Paychex Inc.
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Thursday September 26
Japan machine tool orders
Germany consumer confidence
(8:30 a.m. ET) Canada’s payroll survey for June.
(8:30 a.m. ET) Canadian wholesale trade for August.
(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 21. Estimate is 225,000, up 6,000 from the previous week.
(8:30 a.m. ET) U.S. real GDP and price index for Q2. The Street expects annualized rate rises of 2.9 per cent and 2.5 per cent, respectively.
(8:30 a.m. ET) U.S. durable orders for August. Consensus is a decline of 2.7 per cent from July with core orders rising 0.1 per cent.
(9:20 a.m. ET) U.S. Fed chair Jerome Powell gives opening remarks at Treasury Conference.
(10 a.m. ET) U.S. pending home sales for August.
Earnings include: Accenture PLC; BlackBerry Ltd.; Carnival Corp.; Costco Wholesale Corp.
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Friday September 27
China industrial profits
Japan CPI
Euro zone economic and consumer confidence
Germany employment
(8:30 a.m. ET) Canada’s monthly real GDP for July. The Street is forecasting a rise of 0.1 per cent from June.
(8:30 a.m. ET) U.S. personal spending and income for August. Consensus is month-over-month increases of 0.3 per cent and 0.4 per cent, respectively.
(8:30 a.m. ET) U.S. core PCE price index for August. Consensus is a rise of 0.2 per cent from July and up 2.7 per cent year-over-year.
(8:30 a.m. ET) U.S. goods trade deficit for August.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index for September.
Also: Ottawa’s budget balance for July.
Earnings include: Aritzia Inc.
Statistics Canada says retail sales rose 0.9 per cent to $66.4-billion in July, helped by stronger new car sales.
The agency says sales were higher in seven of the nine subsectors it tracks with sales at motor vehicle and parts dealers up 2.2 per cent, boosted by a 2.3 per cent increase in sales at new car dealers.
Sales at gasoline stations and fuel vendors fell 0.6 per cent for the month as sales for the subsector in volume terms fell 1.7 per cent.
Core retail sales – which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers – rose 0.6 per cent in July.
In volume terms, Statistics Canada says retail sales increased 1.0 per cent in July.
Looking forward, the agency says its preliminary estimate for retail sales in August pointed to a gain of 0.5 per cent for the month, thought it cautioned the figure will be revised.
The Federal Reserve on Wednesday announced a long-awaited interest rate cut, lowering the benchmark rate by 50 basis points from what was the highest level in 23 years as the central bank eased borrowing costs following progress in the fight against inflation.
The Fed’s first interest rate cut since March 2020 lowers the benchmark federal funds rate to a range of 4.75% to 5%.
Interest rates had been at a range of 5.25% to 5.5% since July 2023, the highest level since 2001, as the central bank monitored economic data for signs that stubborn inflation was trending toward its 2% target.
Recent months delivered signs of progress that inflation is heading toward the Fed’s target, although the latest data showed it isn’t quite there yet. Inflation slowed to 2.5% on an annual basis in August, down from 2.9% the month before and well below this inflationary cycle’s peak of 9.1% in June 2022.
Federal Reserve Chair Jerome Powell said in a press conference following the announcement that the central bank is focused on “achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.”
“Our economy is strong overall and has made significant progress toward our goals over the past two years,” Powell said. “This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%.”
“I would say, we don’t think we’re behind. We think this is timely, but I think you could take this as a sign of our commitment not to get behind,” Powell said of the decision to go with a 50-basis-point cut.
The chairman emphasized that the Fed will make decisions on a meeting-by-meeting basis going forward based on economic data and said, “We can go quicker if that’s appropriate, we can go slower if that’s appropriate, we can pause if that’s appropriate. That’s what we’re contemplating.”
He was also asked about the political implications of the interest rate cut given Election Day is less than two months away. Powell said the Fed’s policymakers focus on how to best “support the economy on behalf of the American people” and noted that the Fed’s actions mostly impact economic conditions with a lag after policy changes.
“I don’t see anything in the economy right now that suggests that the likelihood… of a downturn – is elevated,” Powell said in response to a question about whether the economy is vulnerable to recession. “I don’t see that. You see growth at a solid rate, you see inflation coming down, and you see a labor market that’s still at very solid levels.”
Powell previously signaled that the central bank didn’t plan to wait for inflation to reach 2% to cut interest rates.
He explained in July that “if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%.”
A slowdown in hiring has raised concerns about the labor market and the economy potentially slipping into a recession, prompting speculation that the Fed could opt for a 50 basis point cut to interest rates.
FED’S ACTIONS SPOKE LOUDER THAN WORDS TO MARKETS IN FIGHT AGAINST INFLATION, RESEARCH FINDS
The central bank typically chooses to move forward with a smaller 25-basis-point cut at the start of a rate-cutting cycle, though it has made larger cuts when there is a higher degree of economic uncertainty.
It most recently opted for larger 50-basis-point cuts in March 2020 as the COVID-19 pandemic began, as well as in September 2007 amid the housing crisis and in January 2001 when the dot-com bubble burst.
Markets fully priced in a 25-basis-point rate reduction ahead of the Fed’s decision on Wednesday, although traders increasingly expected the Fed to cut rates by 50 basis points in the lead up to the announcement.
According to the CME FedWatch tool, the probability of a 50-basis-point cut rose from 25% a month ago to 64% the day before the Fed’s decision.
Wednesday’s rate cut decision is expected to be the first in a series of moves to lower interest rates. Prior to the Fed’s announcement, markets expected the Fed to announce further rate cuts at its meetings in the months ahead, as the CME FedWatch tool sees a slightly more than 50% probability rates will be lowered to a range of 4.5% to 4.75% in November.
“The markets got what they wanted – a big first cut by the Fed,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. “Beyond how hot or cold the economy runs, that may largely depend on what the Fed has to say about how fast and far it sees rates dropping from here.”
Stocks responded favorably to the Fed’s rate cut decision, with both the Dow Jones Industrial Average and the S&P 500 hitting all-time highs in the immediate aftermath of the announcement prior to Powell’s press conference.
The Federal Reserve’s next policy meeting will be held Nov. 6-7, right after Election Day on Nov. 5, while the final meeting of the year will be held Dec. 17-18.
Canada Mortgage and Housing Corp. says the annual pace of housing starts in August slowed 22 per cent compared with July.
The national housing agency says the seasonally adjusted annual rate of housing starts came in at 217,405 units in August, down from 279,804 a month earlier.
The drop came as the annual pace of urban starts fell 24 per cent to 199,478 units compared with 261,043 in July.
The annual rate of starts of multi-unit urban projects such as apartments, condominiums and townhouses dropped 29 per cent to 154,290 units, while the rate of single-detached urban starts rose three per cent to 45,188.
The annual pace of rural starts was estimated at 17,927 units.
CMHC says the six-month moving average of the seasonally adjusted annual rate of housing starts was 248,480 units in August, down 2.9 per cent from 255,794 in July.
Canada’s annual inflation rate(opens in a new tab) reached the central bank’s target in August at it cooled to 2 per cent, its lowest level since February 2021, data showed on Tuesday.
The closely watched core price measures also cooled to their lowest level in 40 months while month-on-month consumer prices deflated by 0.2 per cent, Statistics Canada said.
Analysts polled by Reuters had forecast the consumer price index (CPI) to cool to 2.1 per cent from 2.5 per cent in July on an annual basis, and expected it to be unchanged on a monthly basis.
The Canadian dollar weakened on the news, dipping 0.2 per cent to $1.1361 to the U.S. dollar, or 73.45 U.S. cents.
The easing of price pressures was primarily helped by a drop in prices of gasoline, telephone services and clothing and footwear, while shelter costs – mortgage and rents – continued to cool at a tepid pace as rents continued their relentless rise.
At the Bank of Canada’s monetary policy decision announcement earlier this month Governor Tiff Macklem said the bank had to increasingly guard against the risk that inflation could fall below its target as economic growth was weak.
The BoC has reduced its key policy rate three times in a row from June, cutting by a cumulative 75 basis point to 4.25 per cent.
Money markets are fully pricing in 25 basis point rate cuts twice in as many monetary policy meetings remaining in the year. Expectations of a jumbo 50 basis point cut next month rose to 47.5 per cent from 46 per cent before the data were released.
The BoC had predicted annual inflation to be at 2.6 per cent this year and fall to 2.4 per cent next year before coming down to its mid-point of the target range of 1-3 per cent in 2026.
CPI-median – or the price change located in the middle of the CPI basket – slowed to 2.3 per cent in August from 2.4 per cent in July annually. CPI-trim – which excludes the most and the least volatile price items – cooled to 2.4 per cent from 2.7 per cent.
Gasoline prices, which contributed the most to the fall in inflation, fell by 5.1 per cent and clothing and footwear fell by 4.4 per cent.
Shelter costs, which accounts for close to 30 per cent of the CPI basket, rose by 5.2 per cent in August, from 5.7 per cent in July, primarily led by rents which rose by 8.9 per cent from 8.5 per cent in July.
Monday September 16
China and Japan markets closed
China industrial production, retail sales and fixed asset investment
Euro zone trade surplus and labour costs
(8:30 a.m. ET) Canada’s manufacturing sales and new orders for July. The Street expects month-over-month increases of 1.0 per cent for both.
(8:30 a.m. ET) Canadian new motor vehicle sales for July. Estimate is a year-over-year rise of 11.0 per cent.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for September.
(9 a.m. ET) Canada’s new existing home sales and average prices for August. Estimates are year-over-year declines of 2.0 per cent and 0.5 per cent, respectively.
(9 a.m. ET) Canada’s MLS Home Price Index for August. Estimate is a drop of 4.0 per cent year-over-year.
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Tuesday September 17
China markets closed
(8:15 a.m. ET) Canadian housing starts for August. Estimate is a decline of 3.4 per cent on an annualized rate basis.
(8:30 a.m. ET) Canadian CPI for August. The Street is expecting an increase of 0.1 per cent from Jyuly and up 2.1 per cent year-over-year.
(8:30 a.m. ET) U.S. retail sales for August. Consensus is a decline of 0.2 per cent from July.
(9:15 a.m. ET) U.S. industrial production for August. The Street is projecting a rise of 0.1 per cent month-over-month with capacity utilization up 0.1 per cent to 77.9 per cent.
(10 a.m. ET) U.S. NAHB Housing Market Index for September.
(10 a.m. ET) U.S. business inventories for July.
(6 p.m. ET) Bank of Canada deputy governor Carolyn Rogers speaks in Toronto.
Also: U.S. Fed meeting begins in Washington
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Wednesday September 18
Japan trade deficit and core machine orders
Euro zone and U.K. CPI
(8:30 a.m. ET) Canadian construction spending for July.
(8:30 a.m. ET) Canada’s international securities transactions for July.
(8:30 a.m. ET) U.S. housing starts for August. Consensus is an annualized rate rise of 5.9 per cent.
(8:30 a.m. ET) U.S. building permits for August. Consensus is a rise of 0.3 per cent on an annualized rate basis.
(1:30 p.m. ET) Bank of Canada’s summary of deliberation for Sept. 4 decision is released.
(2 p.m. ET) U.S. Fed announcement and summary of economic projections (with chair Jerome Powell’s press conference to follow).
Earnings include: General Mills Inc.
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Thursday September 19
Bank of Japan monetary policy meeting (through Friday)
Bank of England monetary announcement
(8:30 a.m. ET) Canada’s household and mortgage credit for July.
(8:30 a.m. ET) U.S. initial jobless claims for week of Sept. 14. Estimate is 233,000, up 3,000 from the previous week.
(8:30 a.m. ET) U.S. current account deficit for Q2.
(8:30 a.m. ET) U.S. Philadelphia Fed Index for September.
(10 a.m. ET) U.S. existing home sales for August.
(10 a.m. ET) U.S. leading indicator for August. Consensus is a month-over-month decline of 0.3 per cent.
Earnings include: Darden Restaurants Inc.; FedEx Corp.; Lennar Corp.
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Friday September 20
Japan CPI
Euro zone consumer confidence
(8:15 a.m. ET) Bank of Canada governor Tiff Macklem speaks at the NBER “Economics of AI” conference in Toronto.
(8:30 a.m. ET) Canadian retail sales for July. The Street is projecting a rise of 0.4 per cent frim the previous month.
(8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for August. Estimates are month-over-month declines of 0.1 per cent and 1.0 per cent, respectively.
Published: 9/13/2024 3:18 PM ET |
Oil futures gave up early gains and drifted lower on Friday on reports crude oil production resumed in several facilities along the U.S. Gulf of Mexico.
Concerns about the outlook for oil demand from China weighed as well on oil prices.
On Thursday, the International Energy Agency (IEA) lowered its oil demand growth forecast for the year and warned the oil market could face a surplus next year even if the OPEC+ alliance keeps its voluntary oil output cuts in place
West Texas Intermediate Crude oil futures for October ended down $0.32 or about 0.46% at $68.65 a barrel.
Brent crude futures were down $0.09 at $71.88 a barrel a little while ago.
Oil prices had surged higher in the previous two sessions as oil facilities along the U.S. Gulf of Mexico were shut down due Hurricane Francine.
About 42% percent of the current oil production and 53% of the natural gas output in the Gulf of Mexico had been shut in, the U.S. Bureau of Safety and Environmental Enforcement said in a report on Thursday.
Gulf of Mexico production makes up around 15% of total U.S. crude oil output, or nearly 2 million barrels of oil per day.
A report from Baker Hughes today said the oil and gas rig count in the U.S. rose by eight in the week to September 13, to 590. While oil rigs rose by five to 488, gas rigs rose by three to 97.
