Real Estate

RBC: Toronto Condo Listings Grow 6x Faster Than Vancouver

Canadian real estate sales have been impacted by the pandemic in an unexpected way. RBC Economics recently unpacked a trend of rising condo apartment listings. Dense cities filled with condo apartments, are seeing sellers flood the market. Meanwhile, mostly detached suburban markets are seeing inventory heading in the opposite direction.

Toronto Condo Listings Rise 134% In The City

Greater Toronto real estate is seeing a lot of condo sellers hit the market, especially in the City. The City has 134% more condo listings in September, when compared to last year. To contrast, detached home listings are down 12% over the same period. The 905 suburbs saw a similar trend, with condo listings rising 82%, and detached listings falling 34%. Not quite as extreme, but the suburbs are seeing more condo sellers as well…CLICK for complete article

Holiday Spending Already Soaring Amid Pandemic

f Joe Biden is elected, “Carson City will become a ghost town and the Christmas season will be canceled,” U.S. President Donald Trump said earlier this month at a rally, but new retail sales figures and holiday spending estimates tell a different story.

There are obvious flaws in the president’s proclamation, starting with the fact that  if elected, Biden would not take office until January 20th, well after the Christmas season and more feasibly into the “gift return” season.

But the biggest flaw was this: It seems that nothing and no one can ruin the holiday season for Americans. Not a pandemic, millions of lost jobs, bankruptcies, a struggling economy, social distancing or even a lockdown can crack the holiday spirit. Or more importantly, it can’t ruin holiday spending, which is already breaking new records.

As retailers encourage customers to shift to online shopping in order to avoid crowds during the pandemic, online sales are set to reach $189 billion this holiday shopping season.

According to Adobe Analytics, that is an increase of 33% from last year’s holiday spending.

Black Friday online sales are set to reach ?$10 billion, up 39% from 2019, while Cyber Monday will hit  $12.7 billion, an increase of 35%, the report found.

“This year is unlike any in the past, and for the first time we are no longer referring to peak holiday sales as Cyber Week — it’s now Cyber Month,” the analysis said.

They also estimate that a fresh stimulus package from the government would increase the holiday online sales by another $11 billion.

With cases of COVID-19 rising across the country, medical experts have warned that coronavirus cases could spike if people travel out of town and celebrate indoors….CLICK for complete article

We are pleased to announce that Ryan Irvine and Aaron Dunn of Keystone Financial will be hosting another of their fantastic live webinars to help you get better returns from your portfolio. On the evening of November 10th & November 17th they will use a case study approach to detail practical steps and tips to building (or repair) any stock portfolio at key stages of an investor’s life including:
1. Retired or Close to Retirement (60 to 80+)
2. Middle Stage Investors (35 to 60)
3. Early Stage Investors (20 to 35)
CLICK HERE to Reserve Your Tickets

Webinar Special Topics Include:
1. FAANG Stocks – BUY/SELL or HOLD? Analysis on FaceBook, Apple, Amazon, Netflix, Alphabet (Google) & Microsoft at today’s prices.
2. Renewable Energy – top opportunities in hydro, geothermal, solar or wind energy stocks,
3. Telemedicine & new healthcare opportunities – where valuations are in this hot segment and where the long-term winners could be found.
4. Are gold stocks right for your portfolio?
5. And why dividend growth stocks crush the market.
Plus
5-6 stock picks (Starter Portfolio) to begin building your portfolio today including:
1. The best value in renewable energy stocks in Canada with a 6% yield, growth trading at a 49% discount to our fair value.
2. The highest yielding gold related stock in Canada.
3. An unknown, growth-by-acquisition home healthcare stock.
4. A cloud computing giant.
5. And more…

Debt Growth vs. Gold and Silver

While precious metals can’t be produced out of thin air, U.S. debt can be financed through central bank money creation. In fact, U.S. debt has skyrocketed in recent years under both Democrat and Republican administrations.

This infographic from Texas Precious Metals compares the increase in public debt to the value of gold and silver coin production during U.S. presidencies.

We used U.S. public debt in our calculations, a measure of debt owed to third parties such as foreign governments, corporations, and individuals, while excluding intragovernmental holdings. To derive the value of U.S. minted gold and silver coins, we multiplied new ounces produced by the average closing price of gold or silver in each respective year.

Here’s how debt growth stacks up against gold and silver coin production during recent U.S. presidencies:  Read More

Schachter’s Eye on Energy – Oct. 28th

Josef is concerned about there being more downside ahead with a large increase in US crude inventories it pummeled the crude price 6% on Wednesday and WTI down nearly US$5/b over the last week.

Each week Josef Schachter will give you his insights into global events, price forecasts and the fundamentals of the energy sector. Josef offers a twice monthly Black Gold newsletter covering the general energy market and 27 energy and energy service companies with regular updates. He holds quarterly subscriber webinars and provides Action BUY and SELL Alerts for paid subscribers. Learn more and subscribe

EIA Weekly Data:. The EIA data on Wednesday October 28th showed commercial stocks rising by a whopping 4.3Mb versus an estimate of a rise of 1.2Mb. There would have been an even larger inventory build (an additional 3Mb to 7.3Mb) if not for net exports rising by 424Kb/d, or by 3.0Mb on the week. US crude production recovered from Hurricane Delta as facilities were restarted in the Gulf. US oil production rose 1.2Mb/d to 11.1Mb/d as production recovered. However Hurricane Zeta (the 27th Atlantic Hurricane this year) will hit land shortly and already the industry has closed in 300Kb/d of offshore crude. Gasoline inventories fell by 0.9Mb/d as demand increased last week after a major decline the prior week due to the weather issues. Refinery runs rose 1.7 points to 74.6% from 72.9% in the prior week. US Production is now down 1.5Mb/d or 12% from 12.6Mb/d last year. Commercial stocks are up 12.2% above last year (53.60Mb) at 438.9Mb. Total stocks remain high at 120.7Mb above last year or 9.5% above the 1.27Bb in storage at this time last year. Cushing oil inventories fell by a modest 400Kb to 60.0Mb compared to 46.0Mb last year at this time. These data points highlight the downside risk to crude prices.

Total product demand rose last week by 1.52Mb to 19.6Mb as demand rose once the last Hurricane’s effects had passed and recovery began again. While a nice recovery, this level is still 2.0Mb or 9.3% below last year’s consumption level of 21.6Mb/d. Gasoline demand rose last week by 256Kb/d to 8.55b/d. However, it is down 1.24Mb/d or 12.7% from last year’s level of 9.78Mb/d of consumption. Jet fuel remains the weakest area. Consumption last week was 1.01Mb/d up a modest 39Kb/d on the week. It remains 816Kb/d or 45% below last year’s level of 1.83Mb/d.

Baker Hughes Rig Data: Last week Friday the Baker Hughes rig survey showed an increase in the US land rig count. The US rig count rose by six rigs (up 13 rigs in the prior week) to 287 rigs working, but remains down 65% from 830 rigs working a year ago. The Permian saw the largest increases at three rigs (no increase in the prior week) to 133 rigs. The Permian rig count remains 68% below a year ago’s level of 417 rigs. The US oil rig count rose by six rigs (up 12 rigs last week)  to 211 rigs, but is down 70% from 696 rigs working last year. If we are right about crude oil prices falling as demand wanes during a pick up in the pandemic, we may start to see a reversal of this positive trend and start to see a decline again in the US rig count.

Canada saw an increase of three rigs last week (none the prior week) to 83 rigs working. The rig increase now has activity down only 44% from a year ago when 147 rigs were working. In the breakdown the most encouraging data point was rigs working for natural gas which was at 41 rigs versus 45 rigs working last year. Natural gas stocks have held up better than oily names during the correction over the last few months as it is expected that we will see stronger AECO prices this winter as storage in Canada is below normal and drilling activity has not replaced demand. Most companies are likely to show declining production in Q3 versus the prior year and many could show declines from their Q2/20 volumes.

Natural gas prices are at very profitable prices now with AECO at $3.34/mcf while NYMEX is at US$3.03/mcf. We expect much higher prices once the depths of winter arrive next month.

Conclusion: As we write this, WTI for December is at US$37.18/b, down US$2.39/b on the day (and nearly US$6/b on the week) as the market did not like today’s EIA report. With such a large inventory build and the pandemic rising across Europe causing more lockdowns, the fear is that the case rise in the US may indicate that Wave Two is here with a vengeance and that caseloads, will rise rapidly, hospital beds will fill up to capacity and death rates may rise materially.

Positives for crude prices:

  • US Gulf Coast production is being shut in again due to Hurricane Zeta (the eleventh Hurricane this year to hit Gulf Coast production. The Gulf produces 17% of US crude production and 5% of natural gas production.
  • OPEC is talking about not bringing back on 2Mb/d of shut-in production in January as they are wary of weakening crude oil demand as economies face rising Covid-19 caseloads and increasing lockdowns.
  • Winter is coming and demand usually rises worldwide by 1.5-2.0Mb/d.

Negatives for crude prices:

  • Germany, UK, France, Italy, Russia and Austria are reporting record increases in case loads. The Czech Republic has the worst outbreak in Europe and is in lockdown once again. Ireland has initiated a six week lockdown across the country to halt the disease. Tracing is becoming tougher to do in those countries. Energy demand is falling across Europe.
  • In 41 US states and Washington DC the number of new cases has increased. In some they are at record levels and some states have hospitals that are at max on their ICU beds.
  • Libya is reopening its exports now that the civil war is over. Before the agreement they produced 156Kb/d in September. Last week’s production was at 500Kb/d as more ports  reopened. Additional fields should lift production to 800Kb/d in two weeks time and to over 1.0Mb/d in a month. This is much faster than markets had expected. Total production potential is 1.2Mb/d.

Downside pressure is expected in the coming weeks as the pandemic caseload rises lowering world energy demand and as production in Libya and then the US increases. A critical breach level is US$36.63/b and we see this occurring in the coming weeks. We have been range bound between US$41.90/b at the high end and US$36.63/b at the low end over the last few weeks. Once US offshore and Libyan production returns to 1.0Mb/d and if Wave Two caseloads and lockdowns get much worse, we should see the breach of the US$36.63/b level, We now see  revised downside for WTI crude oil to the US$28-32/b level.

Most energy and energy service stocks have significant downside risk. The most vulnerable companies are energy and energy service companies with high debt loads, high operating costs, declining production, current balance sheet debt maturities of some materiality within the next 12 months and those that produce heavier crude barrels. Results for Q3/20 have started and will continue through the end of November. Most results will not be investor friendly.

Hold cash and remain patient for the next low risk BUY window expected during tax loss selling season during Q4/20. 

Energy Stock Market: The S&P/TSX Energy Index has fallen from the June high at 96.07 to the current level today of 63.87 (last week it was at 65.85). Overall the index is now down by 34% in under four months. We see much more downside over the coming months as unfavourable Q3/20 results impact the stocks even more. We will be watching to see how companies discuss their debt loads and lender support. Companies with pessimistic views about their reserve base lending, cutbacks in lines of credit and potential additional impairment write-downs will face significant stock price pressure. The next support for the S&P/TSX Energy Index is at 60.38 (the low four weeks ago). Further lows are likely in Q4/20 as tax loss selling is likely to be very nasty this year. We see the likelihood that the final low for the index could be in the 32-36 area during tax loss selling season. We expect to see a very attractive BUY signal generated during Q4/20 and will recommend new ideas as well as highlight our favourite Table Pounding BUYS which should trade at much lower levels than now.

Please become subscribers before the November 26th webinar as we will be discussing the best ideas to invest in during the tax loss selling season. In addition during the 90 minute webinar we will discuss the third quarter results (those that did well and those that did not perform) of the 27 companies we cover. 

Subscribe to the Schachter Energy Report and receive access to our two monthly reports, all archived Webinars, Action Alerts, TOP PICK recommendations when the next BUY signal occurs, as well as our Quality Scoring System review of the 27 companies that we cover. We go over the markets in much more detail and highlight individual companies in our reports. If you are interested in the energy industry this should be of interest to you.

Tomorrow we will release our October Monthly SER and we cover the general stock market’s erosion and downside risk. As well we review the only company that reported Q3/20 results before our research cut-off of Friday November 20th. The company was an energy service company that reported EBITDA ahead of our forecast and showed an improvement in their balance sheet during these tough times for the energy service sector.  

To get access to our research go to  https://bit.ly/3jjCPgH to subscribe.

 

 

DOW Plunges Amid WInter COVID-19 Surge Fears

The Dow Jones Industrial Average traded as much as 800 points lower today before paring a small portion of those losses after the U.S. hit a record number of daily coronavirus cases over the weekend.

On the worst day since the “Black Monday” market crash in 1987, in mid-March, DOW dropped nearly 3,000 points, when President Donald Trump said the worst of the outbreak could last until August.

August is now long gone, and the U.S. has reported more than 83,000 daily new infections in the past two days, surpassing the July record of 77,300 new daily cases. Nearly half of the states have reported their daily record high of COVID-19 cases in the month of October alone.

On the national level, hospitalizations have also been rising with more than 41,753 people admitted as of Sunday, compared to 36,428 the Sunday before.

Today is the biggest one-day tumble since early September when the Dow plunged 800 points.

Compared to the Dow’s previous close at 28,533.57 on Friday, it closed today 650 points down, at 27,685.38. CLICK for complete article