Dow Prints Record High, But Other North American Indexes Retrace
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http://ymlp254.net/za7OSn ——————————————————————————– May 11, 2014 Week In Review… (Happy Mother`s Day!) Week In Review For May 5 to May 9, 2014 This week on AllPennyStocks.com:
* Article Published, May 6, 2014:BiOasis Technologies Transcend Platform Makes Breakthrough in RNAi Therapies (http://www.allpennystocks.com/aps_ca/special-reports/420/BiOasis-Technologies-Transcend-Platform-Makes-Breakthrough-in-RNAi-Therapies.htm) (CDN Company) * Article Published, May 7, 2014:ALR Technologies Aiming to Change the Standard of Diabetes Care and Save Billions in Healthcare Expenses (http://www.allpennystocks.com/aps_us/special-reports/444/alr-technologies-aiming-to-change-the-standard-of-diabetes-care-and-save-billions-in-healthcare-expenses.htm) (U.S. Company) * Article Published, May 9, 2014:Calmena Makes Good on Debt Payment through Divestitures (http://www.allpennystocks.com/aps_ca/special-reports/421/Calmena-Makes-Good-on-Debt-Payment-through-Divestures.htm) (CDN Company) Video charts for the week:
* May 9th Technical Video Chart For MSO.The Martha Stewart Living chart is rising from a solid support at $3.80 as part of a longer term uptrend. There is resistance right ahead at the 50 day moving average, which could stall the chart into a possible head and shoulders pattern, but a break of it could mean a new high is coming. view:
( http://www.youtube.com/watchv=isReg_0ZvDM) * May 9th Technical Video Chart For SAM:CA.The Starcore International Mines chart is sitting on the lower trend line of a six-month upward trend. The chart will meet some resistance at the 50 and 200 day moving averages around 20 cents, but a move through them could be the start of making a new high. view:
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______________________________________________________________ WEEKLY UPDATE – DOW PRINTS RECORD HIGH, BUT OTHER NORTH AMERICAN INDEXES RETRACE North American markets moved with in a non-uniform fashion this past week with the Dow Jones Industrial Average the only one of the five major indexes to close the week marginally ahead while investors again moved away from technology, biotechnology, energy, metals and momentum stocks, leaving the higher-priced, dividend paying stocks as the only thing in season. It was still a week that featured volatility, with the Dow moving triple digits intraday on four of five trading days, a sign of defensive trading as investors are fidgety at these high levels. Still, though, the Dow closed the week at an all-time high closing price.
Equities started the week moving in opposite directions as metals were hit hard on Monday, impacting the resource-rich Canadian markets as amazingly resilient US stocks shirked off concerns about escalating violence in Ukraine and weak economic data from China, the world`s second biggest economy. American indexes originally dipped, but investors continuing to rotate out of growth plays and into defensive stocks, buoyed the markets, although sparking the contention that when buying in those type of plays reaches its limit, a market correction will likely follow.
Trade balance data weighed on markets, showing weakness in the economy and resulting in economists forecasting that the government will revise its Q1 GDP data to show a contraction, rather than the paltry 0.1% growth estimated earlier this month. Some economists have predicted that we could see a contraction up to a full percentage point, with average estimates more in the range of 0.5 percent.
On that point, growth forecasts hit the wire with the Organization for Economic Co-operation and Development forecasting the global economy will grow by 3.4 percent in 2014, down 0.2 percent from its previous estimate in November. The organization lowered its 2014 growth estimate for the United States from 2.9 percent to 2.6 percent.
Canada is expected to outstrip US expansion, with a forecast of 2.75 percent this year. The revised estimates were a drag on the markets Tuesday, causing the S&P 500 to close in the red for the first Tuesday in nine weeks and only third Tuesday so far in 2014.
The TSX Composite has been critiqued as due for a pullback, unjustifiable rising towards record heights in the past few months.
Slipping metal prices and a weak report on jobs that only held the unemployment rate steady at 6.9 percent because fewer people were looking for work were just the reasons traders needed to dock recent profits in four of the five trading days last week to essentially wipe-out every penny of gains a week earlier.
In the States, any bullishness came in the name of Fed Chairwoman Janet Yellen. Yellen took center stage on Wednesday and Thursday with her testimony before the Senate Budget Committee to discuss the central bank`s fiscal and economic outlook. Yellen told Congress that she thinks growth this year will outpace the 1.9% expansion in 2013, despite the terrible start to the year, which she attributed to the bitterly cold weather. Yellen noted that attention needs to be paid to the slowing housing market and that the labor markets still aren`t close to where they need to be, but she is still optimistic on her outlook. Yellen added that a disappearing middle class and problems with student loans are impacting the housing market. That said, Yellen told Wall Street what it wanted to hear about things getting better and yet the Fed still needs a high degree of accommodative policy to help spur growth, which was interpreted as interest rates not going up any time soon. Wall Street seems to have grown comfortable with the Fed slowing its asset purchases by $10 billion every month this year, but is still very skittish about what higher interest rates could do to economic growth.
In Ukraine, fighting got worse in Slovyansk, an eastern city seized by pro-Russian separatists that Ukraine soldiers are trying to take back, raising the death count for both sides. In the Black Sea port of Odessa, pro-Russian militants stormed police headquarters to free 67 detainees from the violent riots a week earlier that killed at least 34 people, taking the tensions in the country to all new heights and putting Ukraine not only on the brink of a civil war, but increasing the likelihood of a full-blown Russian invasion.
Geopolitical tensions rose throughout the week as the Russian Defense Minister Sergei Shoigu said approximately 15,000 Ukrainian troops are assembled at the Ukraine/Russia border in response to Russian military exercises, called “massive-launch-under-attack strikes,” near the border. Russian President Vladimir Putin said he pulled his troops back, but several world leaders have questioned the accuracy of Putin`s statement. On Friday, Putin, who seems to enjoy the psychological games underscoring the conflict and toying with Ukraine and the rest of the world, flew to Crimea to participate in parades celebrating the Soviet victory over Nazi Germany in WWII, putting his stamp of approval on Crimea being part of Russia again as a sign of nationalism and supremacy of Russia. In short, he thumbed his nose at the rest of the world that has refused to acknowledge the annexation and the economic sanctions imposed on Russia for annexing Crimea.
Elsewhere overseas, the HSBC “flash” Manufacturing Index for China, a gauge of nationwide factory activity, eked ahead by only 0.1 point to 48.1 in April, missing expectations and marking the fourth straight month of contraction. Using a 100-point scale, readings above 50 indicate expansion and below 50 signals contraction. A reaction to the results were somewhat muted because the official Chinese manufacturing index reported a week earlier, which focuses more heavily on large, state-owned businesses, registered a 50.4 in April after 50.3 in March. Still, there is concern about growth in the important Chinese economy as the new export orders and employment sub indexes dropped in April, suggesting further slowing of growth momentum. China’s Consumer Price Index rose 1.8 percent year-over-year in April, down from a 2.4-percent expansion a month earlier, missing expectation for 2.0-percent growth and lending impetus for concern.
European Central Bank chief Mario Draghi helped thwart international negativity in saying that the main bank was “comfortable with acting” next month if economic data merits additional stimulus. In June, the ECB will update its economic forecast for the year and economists will be watching for Draghi to pull the trigger on further lowering interest rates to combat stubbornly low inflation and a sluggish economy.
That`s a lot to digest for one week; imagine if there wasn`t a dearth of economic reports in the U.S. last week. Trouble in Ukraine will stay in focus this week with a referendum on sovereignty by pro-Russian separatists schedule for Sunday, but economic data will take the headlines as well in North America. Important reports on manufacturing, housing and retail sales will be coming from the US and Canada, which can definitely be market moving.
The Canadian dollar gained again against the US dollar last week as both North American currencies were strong against world counterparts.
The greenback started the week slowly, as judged by the ICE Dollar Index, which measures the dollar against six leading world currencies, which sunk to its lowest level in about two years, before staging a comeback to close at a three week high. The loonie hung on to its gains, despite a soft jobs report that cost the Canadian currency 0.6 percent against the USD on Friday. On the week, the Canadian dollar improved by 0.71%, or $0.00651, against the USD, meaning next week will begin with one Canadian dollar buying US$0.91774.
Commodity Snapshot:
* Gold futures moved forward on jitters over the deteriorating conditions in Ukraine as traders moved in defensive plays and safe haven assets, lifting gold to a three-week high on Monday. That was it for green for gold as the next four days were red closes.
Generally upbeat comments by Fed Chairwoman Janet Yellen, sent gold plunging 1.5% on Wednesday against the backdrop of a light week of economic reports to serve as any driver for gold bulls. Yellen`s testimony suggested that the Fed will hold its course of consistent tapering of stimulus. The Fed easing its asset purchases is generally viewed as an anchor on gold prices as it reduces its appeal as an inflation hedge or a safe haven asset. Not even Ukrainian troops assembling at the country`s border could give gold a boost during Yellen`s testimony. Throughout the week, June contracts were the most actively traded, falling by $13.00, or 1.00%, per ounce to $1,289.90.
* Silver futures received the same cold shoulder as gold, touching near a three-week high on Wednesday before diving after Yellen`s testimony. Subpar data from China, one of the world`s biggest users of silver for its many industrial applications, didn`t help silver either as investors fear that factory activity is grinding slower in the country. Silver ended the week just above a solid support level at $19.00. July contracts for silver were the most actively traded, carving away 36.1 cents, or 1.85%, to $19.185 per ounce.
* Copper futures were negatively impacted by the signs of contraction in manufacturing activity in China, easily the world`s biggest copper consumer. However, China played a role in rising copper prices with news that the country cut exports of the red metal to ease a short supply in its country. China not exporting as much copper raised speculation about an international short supply in the future, helping copper rebound to pare losses. Still most analysts are bullish on copper, including Edward Meir of INTL FCStone, who forecast copper prices in New York and London to average $3.03 in 2014 during the American Copper Council`s Spring Meeting. July contracts were the most actively traded on New York`s COMEX exchange during the week; contracting by 4.15 cents, or 1.33 percent, to $3.083 per pound.
* Oil futures felt early-week pressure by the negative Chinese data, as well as the European Central Bank again discussing worries over deflation underscored by sluggish growth and high unemployment. In the favor of oil prices, escalating tensions in the Ukraine continue to raise worries about war and a supply chain disruption. Adding to matters, rebels still controlling two ports in Libya indicated last week that they`re not budging and won`t work with the nation`s Prime Minister. Elsewhere in the energy space, With concerns that Russia, Europe`s largest natural gas supplier, will chop its exports in response to economic sanctions by the US and other countries, Iran Oil Minister Bijan Namdar Zanganeh said that his country will cover any potential shortcomings, if necessary. June contracts for West Texas Intermediate Crude were the most actively traded; advancing $0.23, or 0.23%, to $99.99 per barrel.
Equity Market Snapshot:
(All percentages on a weekly basis unless otherwise noted) * Major gold miners were a drag on the Toronto markets. Agnico-Eagle Mines (TSX:AEM, -0.42%), Goldcorp (TSX:G, -2.41%), Kinross Gold (TSX:K, -2.65%), Barrick Gold (TSX:ABX, -1.83%) and Yamana Gold (TSX:YRI, -3.91%) slid lower.
* Major energy plays leaned towards the bearish side of things.
Exxon Mobil (NYSE:XOM, +0.62%), Talisman Energy (NYSE:TLM, +0.39%) and Chevron Corp. (NYSE:CVX, +0.25%) logged small gains, but Suncor Energy (NYSE:SU, -1.70%), Imperial Oil Ltd. (NYSE:IMO, -0.64%), Cenovus Energy (NYSE:CVE, -3.71%) and Canadian Natural Resources (NYSE:CNQ, -3.84%) all posted losses. XLE, the Energy Select Sector SPDR, edged down 0.05 percent.
* Encana (TSX:ECA, -3.01%) jumped initially upon saying that it is almost doubling its oil output by acquiring producing assets in the Eagle Ford shale field in Texas from Freeport-McMoRan Copper & Gold (NYSE:FCX, -2.22%) for $3.1 billion. The Eagle Ford assets include 45,500 net acres and net reserves of 59 million barrels of oil equivalent. The wells produced 53,000 barrels of oil equivalent per day in the first quarter.
* The biggest of banks in the US took a drubbing. Wells Fargo & Co.
(NYSE:WFC, -0.30%), UBS AG (NYSE:UBS, -1.34%), Goldman Sachs Group (NYSE:GS, -1.06%), JPMorgan Chase (NYSE:JPM, -2.82%), Citigroup (NYSE:C, -1.55%) and Bank of America (NYSE:BAC, -3.34%) all lost ground. XLF (NYSE:XLF, -0.27%), the financial select sector SPDR that tracks the financial stocks in the S&P 500 took back the week prior`s gains.
* JP Morgan weighed on investment banks upon forecasting that it expects revenue from equities trading and fixed income to sink 20 percent in the second quarter.
* It wasn`t much prettier for Canada`s biggest banks, the most heavily weighted component of the TSX Composite. National Bank of Canada (TSX:NA, +0.24%) nipped up, while Bank of Montreal (TSX:BMO, -0.40%), Canadian Imperial Bank of Commerce (TSX:CM, -0.80%), Royal Bank of Canada (TSX:RY, -0.14%), Toronto-Dominion Bank (TSX:TD, -0.38%) and Bank of Nova Scotia (TSX:BNS, -0.25%) closed lower.
* Merck & Co. (NYSE:MRK, -5.17%) agreed to sell its consumer-care business, including the popular allergy medication Claritin and nasal decongestant Afrin, to Bayer AG (OTCQX:BAYRY, -0.55%) for $14.2 billion. Bayer said that the acquisition makes them the biggest seller of over-the-counter products in the US and second-biggest in the world. The deal also includes a collaboration agreement between Merck and Bayer to develop new therapies for cardiovascular disease.
* Shares of Apple, Inc. (NASDAQ:AAPL, -0.64%) broke $600 per share early in the week, marking the first time that the tech giant breached that level since October 2012 as investors kept piling in after the company recently announced a 7-for-1 forward stock split. Later in the week, rumors that Apple is in discussions to buy Dr. Dre`s headphone and music-sharing company Beats Electronics LLC for $3.2 billion were sharply criticized as unnecessary and overpriced.
* Energy services company Shawcor Ltd. (TSX:SCL, +0.22%) reported that it has agreed to acquire all of the outstanding shares of Desert NDT LLC for a total consideration of approximately $260 million.
Desert is a Houston-based provider of non-destructive testing services for new oil and gas gathering pipelines and infrastructure integrity management services, operating through 18 branches located in major U.S. oil and gas basins. Its trailing twelve month EBITDA is in excess of $33 million with operating income of approximately $22 million.
* WestJet Airlines (TSX:WJA, -2.79%) came up short of expectations in reporting $89.3 million, or 69 cents per share, in profits during the first quarter, down from $91.1 million, or 68 cents per share, in earnings in the year prior quarter. Excluding a one-time tax gain, earnings were only 58 cents per share in Q1, beneath the 63 cents per share that analysts expected. WestJet placated investors to a degree by announcing a plan to repurchase 2 million of its outstanding shares, worth roughly $50 million, over the next 12 months.
* Speaking of airline repurchase plans, Delta Air Lines (NYSE:DAL, +1.34%) moved higher after unveiling a plan to buy-back $2 billion worth of its stock by the end of 2016. Further, Delta boosted its dividend (starting in the Sept. 2014 quarter) by 50 percent to 9 cents per share. The new plans are expected to return $2.75 billion to shareholders through 2016.
* Shares of Twitter, Inc. (NYSE:TWTR, -17.86%) sunk as early investors started unloading shares with the expiration of a lock-up period for shares. Securities law prohibits insiders from selling shares for six months following an initial public offering. Shares are still above the IPO price of $26, but far from their high of $74.73 hit in December.
* Office Depot (NYSE:ODP, +23.29%) saw shares leap ahead by topping analysts expectations with adjusted profits of 7 cents per share in Q1 – up 111% from the year prior quarter. Revenue swelled to $4.4 billion from $2.7 billion. Analysts were calling for earnings of 3 cents per share on sales of $4.3 billion. The company also announced that it will be closing 400 stores.
* The proposed $35-billion merger between Omnicom (NYSE:OMC, +0.86%) and France-based Publicis to create the world`s biggest advertising agency has been canceled after the two firms just couldn`t come to terms since announcing the deal last July.
* Value-added frozen seafood company High Liner Foods Incorporated (TSX:HLF, +0.27%) said that first quarter sales improved by 10% to $302.6 million from $275.2 million in Q1 2013. Adjusted net income rose $4.0 million to $13.8 million, or 88 cents per share, versus 63 cents per share a year earlier. The board also approved an 11% dividend rise to 21 cents per share, marking the fourth dividend increase in the past six quarters.
* Target Inc. (NYSE:TGT, -4.64%) shares fell sharply after the retailer said that CEO Gregg Steinhafel was resigning, effective immediately, after 35 years with the company, including six years as the top executive. Steinhafel`s reign received a big black eye in recent months with soft holiday sales and a massive credit and debit card data breach. CFO John Mulligan is taking the role as interim CEO.
* Telecom and media giant BCE Inc. (TSX:BCE, +0.29%) reported 3.7% growth in sales to $5.1 billion in the first quarter, as compared to the 2013 quarter, although that was modestly short of the $5.12 analysts expected. Net income rose 8.7% year-over-year to $615 million, or 81 cents per share, topping predictions of 76 cents per share in profits.
* Valeant Pharmaceuticals Intl. (TSX:VRX, -4.60%) expressed its frustration with Allergan Inc. (NYSE:AGN, -5.07%) not yet entering negotiations regarding Valeant`s $46-billion bid to buy the maker of Botox. Valeant warned that it will call for the removal of members of Allergan`s board of directors, if necessary, as part of more aggressive measures to move along discussions, shifting the acquisition from a friendly one to a more hostile situation.
Weekly Indices Results:
The S&P TSX Composite Index found a definite resistance at 14,765, losing momentum and snapping its winning streak at three weeks by back stepping 231.09 points, or 1.57%, to 14,534.06. The TSX-Venture Composite Index erased three weeks` worth of gains and then some, sinking by 25.13 points, or 2.48%, to 989.29.
In the States, the Dow Jones Industrial Average set a new all-time high closing price last week, rising 70.45 points, or 0.43%, to 16,583.34. The much-broader S&P 500 didn`t have the same luck, slipping 2.66 points, or 0.14%, to close at 1,878.48. The tech-rich NASDAQ Composite struggled again for traction, closing in the red for the third time in five weeks, losing 52.03 points, or 1.26%, to 4,071.87.
Canadian Economic Data:
* Canada`s merchandise exports declined 1.4% in March, while imports edged up 0.4%, according to Statistics Canada. As a result, Canada`s trade surplus with the world narrowed from $847 million in February to $79 million in March. Energy products (-7.9%) were the main contributor to the overall decline in exports. Regarding imports, increases in basic and industrial chemical, plastic and rubber products (+6.3%) as well as consumer goods (+1.7%) were largely offset by declines in electronic and electrical equipment and parts (-3.7%) as well as energy products (-2.6%). Exports to the United States declined 2.5% to $32.2 billion, on lower values of energy products, while imports from the United States rose 1.0% to $28.5 billion.
Consequently, Canada`s trade surplus with the United States narrowed from $4.9 billion in February to $3.8 billion in March.
* The Richard Ivey School of Business said that its Purchasing Managers` Index slipped to 54.1 in April from a 55.2 reading in March, indicating business spending expanded in Canada last month, but a slower pace than the month prior. Analysts expected the Ivey PMI to drop to 54.0.
* Stats Can said that contractors took out $6.0 billion worth of building permits in March, down 3.0% from February. The March decline followed an 11.3% decrease the previous month. Lower construction intentions in the non-residential sector (-8.8%) in six provinces, led by Ontario, more than offset a gain in the residential sector (+1.0%).
The value of permits for the volatile category of multi-family dwellings rose 7.9% to $1.6 billion in March, following a 30.7% decrease the previous month. Canadian municipalities issued $467 million worth of institutional building permits in March, down 31.3% from February.
* Canada Mortgage and Housing Corp. reported that housing starts accelerated more than expected in April, supporting the idea that the nation`s housing market is stabilizing. The seasonally adjusted annualized rate of housing starts increased to 194,809 in April from 156,592 in March, topping economist predictions of a 175,000-unit pace. Starts on single-detached urban homes rose to 59,180 units and groundbreaking on multi-family units increased to a 117,612-units rate.
* In its monthly report on jobs, Stats Can said that employment decreased by 29,000 in April, and the unemployment rate was unchanged at 6.9% as the number of people participating in the labour market edged down (-0.4% to 66.1%). There has been little overall employment growth in Canada since August 2013. On a year-over-year basis, the number of people working rose by 0.8% or 149,000, evenly split between part-time and full-time work. In April, employment was down in Quebec (-32,000), New Brunswick (-5,400), Newfoundland and Labrador (-3,300) and in Prince Edward Island (-1,200), while it increased in Saskatchewan (+3,000). The number of hours worked fell 1.1% on a year-over-year basis, driven by a decline in April 2014 as Good Friday fell in the survey reference week and a number of workers took extra vacation time that week.
This week, major economic data reports will include CREAstats/MLS sales and the Monthly Survey of Manufacturing on Thursday; and Canada`s International Transactions in Securities on Friday.
U.S. Economic Data:
* The Commerce Department reported that the U.S. trade deficit narrowed by 3.6 percent to $40.4 billion in March, compared to $41.9 billion in February, essentially in line with the $40.0 billion shortfall economists expected. Total exports rose to $193.9 billion from $190.0 billion and total imports increased from $231.8 billion to $234.3 billion. Leading the way in rising exports were gas, oil and commercial aircraft. Exports to Canada (as well as Germany and South Korea) hit a record high in March. For imports, food and non-petroleum imports hit record levels.
* The Labor Department said in its weekly report that initial jobless claims, a proxy of new layoffs, dropped to its lowest level in a month with a decline of 26,000 to 319,000 filings during the week ending May 3. Economists expected claims to decline to 325,000. The four-week moving average, regarded as a better measure of labor trends because it flattens weekly volatility, rose by 4,500 to 324,750, but continues to hover near a post-recession low.
This week, data in the States will include Retail Sales on Tuesday; PPI-FD on Wednesday; Initial Jobless Claims, Consumer Price Index, Industrial Production and Philadelphia Fed Survey on Thursday; and Housing Starts on Friday.
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