Syria Tensions Subside, US Stocks Roar As Commodities Shake CDN Markets
allpennystocks Newsletter
You can read the original version online:
http://ymlp298.net/zFIdZ4 ——————————————————————————– September 15, 2013 Week In Review…
Week In Review For September 9 to September 13, 2013 Spotlight Companies Mentioned This Week:
* Sphere Resources Inc. (TSX-Venture:SPH.H) * Alabama Graphite Corp. (CNSX:ALP) This week on AllPennyStocks.com:
* Article Published, September 9, 2013: Adamis Pharmaceuticals Announces Positive Results with HSV Therapy (http://www.allpennystocks.com/aps_us/special-reports/386/Adamis-Pharmaceuticals-Announces-Positive-Results-with-HSV-Therapy.htm) (U.S. Company) * Article Published, September 10, 2013: Naturally Splendid Utilizing Encapsulation Technology to Deliver Foods Packed in Nutrients (http://www.allpennystocks.com/aps_ca/special-reports/371/Naturally-Splendid-Utilizing-Encapsulation-Technology-to-Deliver-Foods-Packed-in-Nutrients..htm) (CDN / U.S Companies) * Article Published, September 13, 2013: Meritage Adds Two More Wendys Restaurants to Portfolio (http://www.allpennystocks.com/aps_us/special-reports/388/Meritage-Adds-Two-More-Wendys-Restaurants-to-Portfolio.htm) (U.S. Company) Video charts for the week:
* September 12th Technical Video Chart For IPCI. The Intellipharmaceutics International chart is holding a solid support level around $1.80 and giving early signs that upward pressure could come again similar to a push last month that saw the stock rise to $2.39. A break of that and there`s no real resistance in sight until over $3.00. view:
( http://www.youtube.com/watchv=UDZ0ZMLz2iI ).
* September 12th Technical Video Chart For TV:CA. The Trevali Resources chart has formed a pennant pattern and is holding just above the 50 day moving average. No clear signs are given yet for a breakout, but technical traders will be looking for upward pressure to see if the pattern can be broken for a run at resistance at 80 cents.
view: ( http://www.youtube.com/watchv=RGfPw9FFV5w ).
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WEEKLY UPDATE – SYRIA TENSIONS SUBSIDE, US STOCKS ROAR AS COMMODITIES SHAKE TSX EXCHANGES In a week that was somewhat thin in economic data, the North American markets had their eyes firmly fixed on Syria and the upcoming meeting of the Federal Open Market Committee, sending US and Canadian equities in opposite directions. Two weeks ago, a military strike led by the United States on Syria seemed imminent after the country had used chemical weapons on its own citizens, killing 1,400 civilians.
Developments this past week, however, have quelled those concerns to a degree, causing a pullback in commodities and the resource-heavy Canadian markets along with them. The US markets rallied around the lessened tensions in the Middle East, pushing the Dow Jones Industrial Average and S&P 500 back near all-time highs and the Nasdaq to its highest level since late in 2000, in spite of the strong possibility that the Federal Reserve will announce this week that it is going to begin tapering its monetary stimulus package. All-in-all, it was the best week for the Dow since January and the S&P 500 posted its best week since July, fueled by a seven-day green streak (that was snapped on Thursday).
Syria seemed to play the lead role as market catalyst with the fear of the Fed taking its foot off the gas in QE3, its policy of buying $85 billion every month in Treasuries and mortgage-backed securities while keeping interest rates at historic lows, is generally viewed as putting negative pressure on equities.
US President Barack Obama had spent the last two weeks trying to rally support around a plan to launch a military strike against the regime of Syrian President Bashar al-Assad. Obama was not only looking for support domestically from Congress, but also internationally, although without glowing success, including a disagreement with Russian President Vladimir Putin who vowed to continue to lend support to Syria. News from Russia was well received by the markets early in the week when Foreign Minister Sergei Lavrov said that his country had called on Syria to surrender its chemical weapons stockpile if that would help avert a strike by US forces. The US said that it is taking a “hard look” at the proposal of a diplomatic alternative to a strike.
The negotiations are moving slowly, but have also widened to also include talks about how to end the civil war in Syria. To that end, analysts are expecting the negotiations to carry on for weeks, ebbing any concerns of an immediate attack.
On Wednesday, the Associated Press reported that Syria would agree to relinquish its chemical weapons and place them under international control where they would be destroyed. As discussions continue, questions have arisen as to whether Assad was truly on board with the plan or if the commentary was simply a stall tactic to avoid a strike.
Meanwhile, nearly 100 people were reported dead across Syria on Thursday with shelling from military jet attacks ongoing as part of the Syrian civil war.
US Secretary of State John Kerry and a team of experts are in Russia trying to draw a blueprint to receive the chemical weapons and end the war. He says that the possibility of a strike is still on the table and that this “is not a game,” warning that Syria will face serious consequences if they don`t live up to commitments. It has also been reported that US-funded weapons are now being supplied to Syrian rebels.
Syria is not a major oil producer, but the idea that a military strike could spill over into other Middle East countries and choke supply routes was driving crude prices higher recently. International conflict also generally bolsters appetite for less risky assets, like gold and silver. Oil is Canada`s top export and the country is chock-full of miners, so the turmoil has actually benefited the TSX markets to a degree.
Back stateside, all eyes are now turning to the meeting of the Federal Open Market Committee being held Tuesday and Wednesday. Economic data that could potentially sway the Fed`s decision was minimal this past week and included a huge drop in first-time filings for jobless claims, although it was clearly stated that the data was not complete, essentially taking that info out of the equation. The common consensus is that tapering is highly probable, with most economists believing that the Fed will scale back its asset purchases by about $10 billion per month and see how the economy reacts. The asset purchases were designed to support an economy still healing from the Great Recession a few years ago and have been largely attributed to the markets hitting record highs early in August.
Overseas, economic data had little impact given the priorities of Syria and the FOMC. China reported the prior weekend that its trade surplus widened in August to $28.6 billion from $17.8 billion in July, topping expectations by about 40 percent. Exports surged 7.2 percent compared to August 2012 after rising 5.1 percent year-over-year in July, lending to the idea that the nation`s economy was stabilizing after only posting 7.5 percent GDP growth in the second quarter, the smallest expansion in two decades.
The summer doldrums appear to be ending with traders getting back to their desks, but volume is still low and likely will remain low this week at least until the FOMC announcement Wednesday afternoon and barring any surprising actions regarding Syria. This week features a slew of economic data in both the US and Canada that also has potential to impact the markets. Further, Congress is back in session now after a vacation and the debt ceiling will soon become a topic of debate as well as President Obama expected to name a replacement for Fed Chairman Ben Bernanke in coming weeks. August was horrendous for the US markets, but September has kicked-off with two up weeks, leaving the Dow and S&P 500 within 2 percent of record highs. While it seems like the momentum has shifted back in favor of the bulls, there`s a lot on the plate this week, so investors need to stay sharp and perhaps prepared for some late-week volatility.
The Canadian dollar strengthened against the US dollar for the second straight week as optimistic housing data helped the loonie and receding fears over war between the US and Syria curbed investors` appetite for the greenback. The US dollar fell against 15 of its 16 most-traded peers during the week. The Canadian dollar started gaining strength against the USD the week prior after a strong jobs report and hasn`t let up much yet, as shown through the net number of shorts betting the loonie will continue to weaken against the USD decreasing last week (although the number of shorts still outweighs the number of calls). On the week, the Canadian dollar gained 0.54%, or $0.00516, meaning next week will begin with one Canadian dollar buying US$0.96608.
Commodity Snapshot:
* Gold futures accelerated mild losses from the week prior, dropping in four of five sessions last week, including a more than 2-percent plunge on Thursday and a further drop on Friday that took gold to its lowest closing level since August 8 and through a key support level around $1,350. A better than expected labor report for the week prior (although jaded, see below) hurt gold prices as investors see it as highly likely next week that the Fed is going to announce tapering of stimulus has begun. Further, talks of a strike not happening on Syria by the US dulled gold`s luster as a safe haven asset. In a strange twist early Thursday morning, a large sell order of gold futures was responsible from tripping a circuit breaker that shut down trading on Globex for 20 seconds in what data service company Nanex commented was the “longest halt we have recorded in a widely traded futures contract.” December contracts were the most actively traded for the week, shedding $77.90, or 5.62%, to $1,308.60.
* Silver futures certainly weren`t immune to the metal sell-off last week as investors continued to dock profits from a strong August and jump back into equities that were posting triple-digit gains. After briefly breaking $25 per ounce in the waning days of August, silver has collapsed with Friday`s action taking the white metal back down to August 14 levels. December contracts for silver were the most actively traded, unloading $2.171, or 9.09 percent, to $21.72 per ounce.
* Copper futures got a lift to start the week on the trade surplus data from China, the world`s top copper consumer, but that was about it for bullish pressure. A large drop on Thursday with other metals as investors started turning their attention to the upcoming meeting of the Federal Open Market Committee helped take copper to a five-week low on fears that Fed tapering will cause a lull in manufacturing, thus copper demand, as it has countless uses in industrial applications. December contracts were the most actively traded on New York`s COMEX exchange during the week; sliding 5.8 cents, or 1.78%, to $3.2035 per pound.
* Oil futures faded to have their worst weekly performance since July mainly because investors scaled back expectations of a missile strike by the United States on Syria that could possibly threaten the supply chain. Optimistic economic data from China provided some support that one of the world`s biggest oil importer`s economy was stabilizing after an unimpressive second quarter. Also helping crude pare losses was the International Energy Agency saying that it expects global oil demand to rise by 1.1 million barrels per day to 92 million barrels a day in 2014, but the Middle East and potential actions of the Federal Reserve were the clear drivers of commodities this past week. October contracts for West Texas Intermediate crude were the most actively traded; dropping $2.32, or 2.10%, to $108.21 per barrel.
Equity Market Snapshot:
(All percentages on a weekly basis unless otherwise noted) * Major gold miners were hit hard with diving bullion prices.
Kinross Gold (TSX:K, -6.94%), Yamana Gold (TSX:YRI, -7.43%), Barrick Gold (TSX:ABX, -7.75%), Agnico-Eagle Mines (TSX:AEM, -10.13%), Newmont Mining (TSX:NMC, -8.56%) and Goldcorp (TSX:G, -10.47%) all notched losses.
* Major energy plays were stronger than oil prices suggested.
Canadian Natural Resources (NYSE:CNQ, +2.30%), Imperial Oil Ltd.
(NYSE:IMO, +1.08%), Cenovus Energy (NYSE:CVE, +0.30%), Exxon Mobil (NYSE:XOM, +1.32%) and Suncor Energy (NYSE:SU, +2.64%) all rose, while Talisman Energy (NYSE:TLM, -2.23%) slipped downward. XLE, the Energy Select Sector SPDR, climbed 1.29 percent.
* Key Canadian pipeline companies agreed to a plan that could resolve an ongoing dispute over how key infrastructure is shared in the Toronto region. In a joint announcement, TransCanada Pipelines (TSX:TRP, -0.40%), Enbridge (TSX:ENB, -2.47%), Gaz Metro and Union Gas agreed in principle to a revised framework for tolls on TransCanada`s mainline and the proposed Kings North project to meet the changing needs of the area.
* Shares of Gabriel Resources Ltd. (TSX:GBU, -36.73%) plunged after disclosing that it has put in an urgent request for the Romanian government to clarify its stance to possibly block debate on draft legislation affecting its Rosia Montana gold project. For years now, Gabriel has been facing opposition to the projects based upon concerns of environmental impact. At one point, shares were down a whopping 72 percent last week.
* The biggest of banks in the US helped guide markets higher. Wells Fargo & Co. (NYSE:WFC, +1.83%), Bank of America (NYSE:BAC, +0.91%), UBS AG (NYSE:UBS, +5.08%), Citigroup (NYSE:C, +2.58%), JPMorgan Chase (NYSE:JPM, +0.06%) and Goldman Sachs Group (NYSE:GS, +4.69%) appreciated in value. XLF (NYSE:XLF, +1.00%), the financials select sector SPDR that tracks the financial stocks in the S&P 500, climbed for the second straight week.
* Canada`s biggest banks didn`t fare as well as US counterparts.
Only National Bank of Canada (TSX:NA, +0.99%) advanced. Bank of Montreal (TSX:BMO, 0.95%), Toronto-Dominion Bank (TSX:TD, -1.36%), Canadian Imperial Bank of Commerce (TSX:CM, -1.60%), Royal Bank of Canada (TSX:RY, -1.89%) and Bank of Nova Scotia (TSX:BNS, -1.22%) gave up points.
* Apple Inc. (NASDAQ:AAPL, -6.69%) had its worst week since April, despite billionaire investor Carl Icahn saying he upped his stake in the company and debuting two new iPhones. Shares have been rising for two months leading into the unveiling of the iPhone 5S and less-expensive 5C, which is designed to try and penetrate the Asian markets that have been elusive to Apple. Analysts questioned the price tag of the 5C as possibly still being too expensive, which prompted a series of rating downgrades by big banks. Apple got the “go ahead” to run iPhones on China Mobile`s (NYSE:CHL, +0.66%) exclusive network, the latest hint that a deal between Apple and China Mobile may be in the works.
* ViroPharma Inc. (NASDAQ:VPHM, +27.54%) shares galloped ahead after reports that Sanofi (NYSE:SNY, -1.64%) and Shire PLC (NASDAQ:SHPG, +4.27%) are considering making offers to buy the biotech. ViroPharma has hired Goldman Sachs to engineer a potential deal with the news raising the value of the company about $500 million in one day.
* BlackBerry (TSX:BB, -6.02%) had a volatile week, running up 6 percent on a rumor that Canadian investor Prem Watsa was near buying the struggling smartphone maker and later falling on rumors that a deal wasn`t as close as people first thought.
* It was a week of some all-time highs for household names. Netflix (NASDAQ:NFLX, +4.84%) hit a record at $314.18, although pulled back some after analysts at Morgan Stanley and BTIG downgraded their ratings on NFLX, citing concerns about trading at 90x 2014 earnings forecast.
* Nike (NYSE:NKE, +4.51%) printed all-time highs at $68.90.
Starbucks Corp. (NASDAQ:SBUX, +5.59%) also made a record high, hitting $75.91. Facebook (NASDAQ:FB, +0.82%) set a new record for itself at $45.62, finally eclipsing its old high set on its IPO May 18, 2012.
* Speaking of Nike, the company was part of the biggest Dow component shakeup in nearly a decade. Nike is bumping Alcoa (NYSE:AA, +2.02%) from the 30-component Dow, while Goldman Sachs Group Inc. is replacing Bank of America and Hewlett-Packard Co. (NYSE:HPQ, -0.92%) is being replaced by Visa, Inc. (NYSE:V, +6.98%). The changes will be effective on Monday, September 23 and won’t have any impact on the level of the Dow because the divisor used to calculate the index from its component’s prices on their respective home exchange will be changed prior to that date.
* Shares of Montreal-based travel company Transat A.T. Inc.
(TSX:TRZ.B, +20.80%) leapt ahead after beating expectations by reporting record results for the third quarter on higher transatlantic selling prices, reduced capacity and cost-cutting initiatives. Net income surged to $41.1 million from $9.4 million a year earlier.
* Electronic component maker Molex Inc. (NASDAQ:MOLX, +31.73%) agreed to be purchased for $7.2 billion by Koch Industries Inc., the holding company run by the billionaire Koch brothers. Molex is best known for supplying essential parts of Apple`s iPhone.
* Private investors Ares Management and the Canada Pension Plan Investment Board confirmed that they plan to buy Neiman Marcus Group for $6 billion with both companies owning a equal portion of the luxury retailer.
* Dell (NASDAQ:DELL, +0.07%) rose modestly after activist hedge fund manager Carl Icahn quit in his fight for control of the computer maker. Subsequently, it became official that Dell was going private with the approval of a buyout by founder Michael Dell and his partners at Silver Lake for $13.88 per share in cash and an 8 cents per share dividend for the third quarter for a total buyout price of $24.9 billion.
* Networking giant Cisco Systems Inc. (NASDAQ:CSCO, +3.27%) agreed to pay $415 million in cash, plus retention-based incentives, to buy Whiptail, an upstart firm that makes scalable, solid-state memory systems to manage flash storage in the cloud.
* Delta Air Lines Inc. (NYSE:DAL, +12.97%) advanced after it was reported to be joining the S&P 500, taking the place of BMC Software (NASDAQ:BMC, +0.04%), which is being taken private.
* Discount retailer Dollarama Inc. (TSX:DOL, +7.75%) got a lift by topping analysts with a 20-percent jump in second-quarter profit, earning 82 cents per share, compared to 66 cents per share in last year`s quarter. Revenue increased 16 percent to $511.3 million.
* Verizon (NYSE:VZ, +3.06%) announced a record $49-billion bond sale to help fund its purchase of the remaining stake in Verizon Wireless from U.K. telecom Vodafone that was recently announced.
* Twitter grabbed investors attention by appropriately tweeting that it had issued a confidential filing with the SEC for a planned IPO. A confidential filing is available to companies with revenue less that $1 billion, although Twitter has not offered any information yet on sales, profits or any other key information. Analysts are expecting the IPO to happen by the end of the year and for the stock to be explosive out of the gate.
Weekly Indices Results:
The S&P TSX Composite Index continues to battle resistance near 12,900, falling back 97.52 points, or 0.76%, to 12,723.40. The TSX-Venture Composite Index also lost some traction, carving off 13.42 points, or 1.41%, to 941.50.
In the States, the Dow Jones Industrial Average had a stellar week, climbing 453.56 points, or 3.04%, to 15,376.06. The much-broader S&P 500 rose for the second straight week; advancing 32.82 points, or 1.98%, to close at 1,687.99. The tech-rich NASDAQ Composite swelled to 13-year highs; tacking on 62.17 points, or 1.70%, to 3,722.18.
Canadian Economic Data:
* Statistics Canada reported that building permits improved 20.7 percent in July to a record $8 billion, sizzling passed expectations of a 3.5-percent increase. The gain was paced by a 45.5-percent surge in permits for commercial construction. The total value of building permits has now risen in six out of the past seven months.
* Also in the construction space, housing starts posted their biggest decline in seven months during August on a drop in multi-unit projects. Starts totaled 180,291, down 6.6 percent from July, according to Canada Mortgage and Housing Corp. Single-home starts dropped 0.9 percent and multi-unit starts, such as apartments and condos, decreased 8.4 percent. So far in 2013, total starts have averaged 183,161, down significantly from 215,050 last year.
* The cost of a new home continues to rise, though, according to Stats Can. The New Housing Price Index rose 0.2 percent in July, with the biggest gains recorded in Toronto (+0.3%) and Calgary (+0.6%).
Economists expected a climb in the NHPI of 0.1 percent.
This week, major economic data will include International Transactions in Securities and CREA stats/MLS sales on Monday; the Monthly Survey of Manufacturing on Tuesday; Wholesale Trade and Employment Insurance on Thursday; and the Consumer Price Index on Friday.
U.S. Economic Data:
* The Labor Department said that initial jobless claims for the week ended September 7 plunged by 31,000 to 292,000 from an unrevised 323,000 the week prior, marking the lowest level since April 2006.
The caveat was that two unidentified states were updating their computer systems and were unable to process the full set of applications, likely meaning that upward revisions will be coming next week upon a complete set of data. Economists anticipated a slight rise to 330,000 for the week. The four-week moving average declined by 7,500 to 321,250, equating to the lowest figure since October 2007.
* Retail sales rose less than expected in August, according to a report from the Commerce Department, signaling that Americans are keeping their spending in check in the second half of 2013. Retail sales increased 0.2 percent in August from July to $426.6 billion, against economist expectations of a 0.4-percent rise and representing the smallest gain in four months. “Core” retail sales, which exclude autos, gasoline and building materials, rose 0.2 percent in August from July, in line with expectations.
* The Labor Department reported that the Producer Price Index, which measures prices paid to factories, refineries and farms, increased by 0.3 percent in August from July, following no change from June to July, indicating that inflation remains benign. Economists expected a 0.2-percent increase. “Core” PPI, which excludes energy and food, was flat in August from July, breaking a string of nine consecutive monthly advances and missing expectations of a 0.1-percent rise.
This week, data in the States will include Industrial Production on Monday; the Consumer Price Index on Tuesday; Housing Starts and the FOMC Meeting Announcement on Wednesday; and Initial Jobless Claims, Existing Home Sales and the Philadelphia Fed Survey on Thursday.
Company Spotlight News:
In spotlight news, Alabama Graphite Corp. (CNSX:ALP)(OTC:ABGPF) announced that it is in the process of soliciting bids for airborne geophysical surveys for both its Alabama and Ontario exploration projects. Exploration at the Coosa Project in Alabama has focused on testing areas where surface sampling has indicated significant quantities of graphitic carbon (Cg). Drilling in the Fall of 2012 produced the resource estimate released late last month. In addition, recent fieldwork has confirmed that additional horizons of graphitic schist are present within mineral leases held by the Company including the Fixico Prospect. At the recently acquired Hearst Prospect in Ontario, surface magnetometer and horizontal loop electromagnetic surveys conducted in the 1980s have indicated promising targets. More information on Alabama Graphite Corp. (CNSX:ALP)(OTC:ABGPF) can be found here: (http://www.allpennystocks.com/aps_ca/company_spotlights/archives/alp.asp).
Another Company on our radar screens that seems to have hit the radar of Canada`s biggest all business TV Network and has seen its share price rise dramatically over the last couple of weeks is Sphere Resources Inc. (TSX-Venture: SPH.H). A guest on BNN discussed some top picks on TV, with Sphere being one of those picks. Click here:
( https://www.investorstockguide.com/show_info.phppage_id ) to view the video clip of the recommendation. For further informaton on SPH.H, click here: (http://www.allpennystocks.com/aps_ca/company_spotlights/archives/sph_h.asp).
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