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S&P/TSX Composite down 4.10% to 11521 (down 1.90% year-to-date)
S&P/TSX Venture Composite down 8.79% to 1453 (up 0.95% ytd)
Dow Jones Industrial Avg down 4.00% to 10193 (down 2.30% ytd)
Nasdaq Composite down 5.00% to 2229 (up 1.80% ytd)
Oil (West Texas Intermediate) down $3.57 to $68.04 (down $11.32 ytd)
Gold (Spot USD/oz) down $56.08 to $1177.10 (up $80.15 ytd)
Managing Your Emotions Through a Correction
We simply are not ready for another big down leg on the equity markets. With most still jittery from the last sell-off which ended early last March, this latest round of fear and anxiety comes all too soon.
After watching the TSX drop about 50%, from a high of 15,154 in mid 2008 to a frightening low of 7479, the majority of investors were drained and had a hard time believing the markets were actually capable of rallying again in a meaningful way. Throughout the melee, newspaper headlines were littered with fear and loathing and the financial news channels pushed the optimistic personalities aside in favour of “doom and gloomer’s” who forecasted the end of the financial world playing out in many different scenarios. Clearly, the downside fears were overdone, sanity prevailed, and the markets moved higher over the next year and change. And as the markets pulled themselves out of their year-long funk, did you notice the rosier personalities or “bulls” begin to pop-up in your favourite news columns and re-appear on BNN and CNBC? Once the media decided it was time to go bullish again, the “dark knights” were rotated out and the world was a sunny place to be again.
Fast forward to today. The talking heads updating us on the progress of our fledgling economy or the bullish analyst looking to up his targets on a given sector are again hard to find. It was only weeks ago they were still dominating the stage only to give way to fears across to the Euro zone. And with those fears came a parade of “bears” to let us know how bad things are and how bad they are going to get. We are once-again seeing and hearing from Eric Sprott, David Rosenberg and a slew of others on a daily basis, each with their own dark version of how this latest round of turmoil is going to play out.
Let’s face it; the pain of a sell-off is much more intense than the jubilation of a rising market. We take the defeats in life much harder than we celebrate our wins. Do yourself a favour and manage your exposure to news programs and financial publications that drive hysteria, both good and bad. The media loves to pounce on momentum and go for the good read, in many cases leaving the relevant and useful stories aside. If you drink the Kool-Aid long enough you may begin to become a believer and lose your ability to step back and look at things objectively.
- Four of BC’s most prominent businessmen have been honoured with a place in the BC Hall of Fame. Rags-to-riches story Jack Diamond, development tycoon and Prospero Group head Robert H Lee, VANOC chair Jack Poole, and Thrifty Store founder Alex A Campbell. The annual affair, which was held last Wednesday at Hotel Vancouver, honours business leaders who make outstanding contributions to their community. Jack Diamond arrived from Poland at the age of 17 and turned a tiny little butcher shop into the largest meat packing operation in BC – the Pacific Meat Co. His long list of philanthropic ventures included founding the Variety Club of Vancouver, co-founding the BC Heart Foundation, and saving the 1954 Empire Games with a last-minute fund raising effort. Mr Lee has served on several foundations and received the Order of BC in 1990, while his good friend Jack Poole has been instrumental in a number of very meaningful events in BC, including the Olympics and the Molson Indy (he was also inducted into both the Order of BC and Order of Canada). Beyond Campbell’s outstanding business accomplishments, he’s extremely proud of work with the Greater Victoria Hospital Foundation and the BC Cancer Foundation.
- The BC real estate market seems to finally be cooling off, with the number of first quarter sales (-26.65%) and the value of sales (-25.83%) way off of 2009’s fourth quarter. Landcor Data Corp reported the data last week and added that while the quarter-over-quarter numbers are down substantially, the year-over-year stats still see a substantial increase with total value of sales almost double that of 2009’s Q1. The implementation of the highly controversial HST, rising interest rates and historically high real estate prices will be further obstacles for the sector to overcome as we move further into 2010.
- In direct response to the oil rig disaster in the Gulf of Mexico, the agency that regulates oil drilling off the coast of Newfoundland has put a hold on Chevron Canada’s deepsea project until the company can satisfy a series of criteria demonstrating it has taken the appropriate precautions. The project is set to be the deepest drilling program in Canadian history, at 2600 metres and has environmentalists and various industry observers asking questions in the wake of the Deepwater Horizon fire and subsequent sinking of the structure in the Gulf. Chevron will now be required to provide daily reports on their activities as well as face-to-face meetings with an oversight team every two weeks. In addition, it will be required to provide field reports regarding the rig’s blowout preventer and all associated backup equipment and provide a comprehensive summary of “lessons learned” from the Gulf of Mexico tragedy.
Marketwatch – A Look at the Week’s Newsmakers
Tim Hortons Inc (TIH) – is looking to flex its muscle outside of its Canadian comfort zone. With a build-out already underway through parts of the United States, the company is now making in-roads in Europe with 290 self-serve kiosks inside Spar convenience stores in Ireland and England. And the chain has been supporting both the Canadian and US troops setting up operations in Afghanistan, Iraq, and Fort Knox. With 3029 shops in Canada and only 567 in the US to date, Timmy Ho’s footprint is still firmly in Canada. The Canadian institution is facing increased competition from McDonald’s, which implemented an aggressive free coffee promotion to market its new premium brand, which falls right into Tim Horton’s price point. The company has not elaborated on what new countries are being targeted and is still in the due diligence phase.
Quadra FNX (QUX) – CEO’s Paul Blythe and Terry McGibbon announced the successful merger of Quadra Mining (QUA) and FNX Mining (FNX), which will lead to a new intermediate copper/nickel producer, with a deep portfolio of properties, no debt and over $600 million in cash. Quadra’s Paul Blyth will become President and CEO of the combined entity which is set to trade under the symbol QUX later this week. The firm’s diversified portfolio of producing and developmental-stage properties spans North and South America, with locations in the Sudbury Basin in Ontario and the Atacama region in northern Chile.
First Quantum Minerals Ltd (FM) – shares plunged after a corporate update stated the Supreme Court of the Democratic Republic of Congo has ruled in a manner that could see two of First Quantum’s mines lost to nationalization. The Lonshi and Frontier copper mines have been seized by local authorities and for the time being, titles have been revoked. Shares fell as much as 17.50% in Monday’s session after the news release and dealt a severe blow to the company which has seen its stock trade as high as $100.32 this year. Shares are now in the low $50 level, closing in on the $45.25 year low established last July.
“Quote of the Day”
“My mother buried three husbands, and two of them were just napping.” – Rita Rudner
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North Vancouver, British Columbia
This newsletter expresses the opinions of the writers, Marc Latta and Jamie Switzer, and not necessarily those of Raymond James Ltd. (RJL) Statistics and factual data and other information are from sources believed to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. It is not meant to provide legal, taxation, or account advice; as each situation is different, please seek advice based on your specific circumstance. RJL and its officers, directors, employees and their families may from time to time invest in the securities discussed in this newsletter. It is intended for distribution only in those jurisdictions where RJL is registered as a dealer in securities. Any distribution or dissemination of this newsletter in any other jurisdiction is strictly prohibited. This newsletter is not intended for nor should it be distributed to any person residing in the USA. Within the last 12 months, Raymond James Ltd. has undertaken an underwriting liability or has provided advice for a fee with respect to the securities of the Royal Bank of Canada. Raymond James Ltd is a member of the Canadian Investor Protection Fund.