The Santa Continues Rally

Last week’s wild ride saw five-and-a half-year lows for oil prices and a five-year record for weekly gains on the TSX. This week might just be quieter (although let’s not make any bets), with markets in North America and Europe closed for Christmas and Boxing Day, and more closures next week for New Year’s.

 The Day Ahead

The TSX had a big week: Three straight days of three-digit gains pushed the TSX/S&P Composite Index to its biggest weekly gain in five years – 6.3 per cent. Energy stocks in particular pushed the rise. The swell is part of a global rally in the wake of the U.S. Fed’s statement last week that it would be “patient” with an interest rate hike, expected next year. Markets in New York also closed Friday higher, with the S&P up 0.5 per cent, and markets in Asia and Europe have had a strong morning.

A bounce in oil prices on Friday also helped fuel markets, after hitting new five-and-a-half year lows on Thursday. Oil is up so far this morning, with West Texas Intermediate perched comfortably above $55 at US$57.71, while Brent is at US$62.13. The bounce comes from mixed statements by the Saudi oil minister that the price rout is “temporary,” although yesterday the same minister blamed the drop on non-OPEC countries, saying the country had no plans to cut production.
The loonie closed down Friday, at 86.15, following unspectacular inflation and retail numbers released Friday.

Payroll, GDP numbers out from Stats Canada. Today will see non-farm payrolls for October, and tomorrow will see GDP numbers per industry for October. Payrolls were little changed from August to September, but the 12 months to September saw a 3.4 per cent increase in wages.  Real GDP was up in September by 0.4 per cent, with exports and household spending leading the way. There will be more on that tomorrow.

What You Missed

Lower than expected inflation last month, according to Stats Canada. Inflation came in at 2 per cent in the 12 months to November, down from 2.4 per cent in October and slightly lower than expected. Prices for food and housing have gone up, while transportation costs have gone down, due to the falling price of oil. Retail numbers also came out for October on Friday, and there was little change – lower sales in gas and auto sectors were balanced out by more business elsewhere in the economy.

Blackberry falters on third-quarter earnings, with a US$148 million loss and lower than expected revenue. The news came a day after the smartphone maker released another phone, an update of its classic keyboard phone. Blackberry’s CEO has pushed the security of the company’s phones, and on Friday, they announced a partnership with Boeing on a secure smartphone, which apparently has the ability to self-distruct.

More trouble for Ukraine, after S&P downgraded the country to one of it’s lowest ratings, CCC, warning of a coming default if the government can’t get more emergency funding from the US and the EU. The conflict with Russia has battered the country’s economy, and S&P warned they do not have enough money on hand to pay first-quarter debts.
A surge in oil prices… olive oil prices, that is. While central banks are eying the price of fuel, shoppers should also be looking out for a spike in the price of cooking oil, as a drought in Spain and fruit flies in Italy causes a major shortage for the world’s largest olive oil producers, pushing prices for some oil to six-year highs.