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November 13, 2019

7 @ 7:00

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1. Gold has traded between $1,457 and $1,467 so far today…as of 7:00 am Pacific, the yellow metal is up $6 an ounce at $1,462 after a test of support yesterday around $1,450…in recent weeks, both Washington and Beijing have hinted they were making progress toward an agreement that could likely scale back some tariffs, but a lack of information is starting to perturb investors…that can only be positive for precious metals…Silver is up 12 cents at $16.85 as it begins to emerge from oversold conditions on the short-term chart…nearest support is in the $16.60’s…the bullish primary trend remains fully intact…Copper is 2 cents lower at $2.65, trading at the bottom of a 2-month up channel…Nickel has retreated 8 cents to $7.00, Zinc is off a penny at $1.13 while Cobalt remains unchanged at $16.10…in prepared remarks released 30 minutes ago, Fed Chair Jerome Powell said the path of Fed interest rates is unlikely to change as long as the economy keeps growing…“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective”…however, he cautioned that challenges such as low inflation and weakness overseas remain…Powell provides testimony on the economy today and tomorrow before congressional committees…Google will offer checking accounts next year, according to a Wall Street Journal report this morning, representing big tech’s boldest move yet into the consumer banking business as most have focused on credit cards and payment platforms…the accounts for the project will be run by Citigroup and the Stanford Federal Credit Union…as part of a project code-named Cache, the company will become the latest Silicon Valley leader to try its hand at the banking space…previous attempts by Apple and Facebook faced obstacles, with consumers growing increasingly skeptical over providing big tech companies with their personal information…

2. Tariffs are emerging as the main stumbling block in efforts by the U.S. and China to come to a limited trade deal, a month after the 2 countries called a truce in their nearly 2-year battle…the logjam centers on whether the U.S. has agreed to remove existing tariffs in the so-called “Phase 1” deal that the 2 sides have been working toward – or whether the U.S. would only cancel tariffs set to take effect December 15…President Trump, who obviously likes the leverage of tariffs, said yesterday that a “significant Phase 1 trade deal with China could happen, could happen soon”…but he added that he is prepared to increase pressure on China if the 2 sides can’t reach an agreement…“If we don’t make a deal, we’re going to substantially raise those tariffs, they’re going to be raised very substantially,” Trump said in a speech to the Economic Club of New York..much of that speech was devoted to criticizing Fed interest rate policy…

3. U.S. consumer prices rebounded more than expected in October as underlying inflation picked up…the Labor Department said this morning that its consumer price index increased 0.4% last month as households paid more for energy products, healthcare, food and a range of other goods…that was the largest gain in the CPI since March and followed an unchanged reading of 0.1% in September…in the 12 months through October, the CPI increased 1.8% after climbing 1.7% in the 12 months through September…the Fed has been hoping for a sustained pick-up in inflation which stubbornly remains below the central bank’s 2% target…Oil prices remain well below levels that could spark significant inflationary pressures…

4. “More of the same from Trudeau”…Saskatchewan Premier Scott Moe came out of a meeting yesterday with Prime Minster Trudeau “disappointed” with what he says is a lack of commitment to address Western needs highlighted by a battered Oil sector, strangled by Bill C-69 and in desperate need of new pipeline capacity…“We have provided some options for (Trudeau) to support the people of the province and today I did not hear a commitment to moving forward on those items,” said Moe who walked into the meeting with a set of demands he’d been articulating since the Liberals won a minority government: a 1-year pause on the federal carbon tax in Saskatchewan, a reworked equalization formula and more overseas Oil markets opened by completing pipelines beyond the Trans Mountain Project…Moe also said Bill C-69, the “No More Pipelines bill” which will revise the regulatory review process of major energy projects, must be viewed as a limitation to economic growth…“It will hinder our ability not only for new minds, but will hinder our ability to get our products to market,” said Moe…

5. The Dow opened down nearly 100 points but is now off just 15 points through the first 30 minutes of trading…in Toronto, the TSX has gained 18 points while the Venture has given up 3 points to 533 with cannabis stocks under renewed pressure…Martello Technologies (MTLO, TSX-V), showing fresh technical strength, is up 2 cents at 38 cents after announcing a strategic partnership with WatchGuard Technologies, a global leader in advanced security solutions…the Canadian Marijuana Index has hit a fresh 2-year low of 240…it’s possible it may have to test the 200 level or a little lower before capitulation sets in…tough times for the cannabis sector as reality continues to set in: Organigram Holdings (OGI, TSX), steady at $3.58 in early trading so far, sent more shock waves through the sector on Monday evening when the company revealed a dramatic revenue miss…Organigram now expects its quarterly sales to decline 34% compared with the previous quarter…the announcement sent the company’s shares tumbling yesterday…producers are now growing more cannabis than is being sold in legal retail stores, and wholesale price compression and product returns are starting to show up in financial statements…Organigram does not report its 4th quarter financial results until November 25, but it is expecting to announce $16.4 million in sales, down from $24.8 million the preceding quarter…the company said it shipped $20 million worth of product, but expects $3.7 million to be returned unsold…“While we have largely anticipated little to no top-line growth for upcoming Canadian LP [licensed producer] results, the magnitude of the sequential decline is unexpected,” wrote Eight Capital analyst Graeme Kreindler in a note yesterday…Organigram blamed its poor quarter in part on the low number of retail stores in Ontario, where only 24 legal stores are open…investors have put misguided faith into a sector that government plays such a critical role in…

6. First Vanadium (FVAN, TSX-V) is evaluating the potential significance of a high-grade Gold target at its Carlin Vanadium Project near Elko, Nevada…to assist the company with that effort, it has hired Dave Mathewson, a former regional exploration manager with Newmont Goldcorp (NGT, TSX; NEM, NYSE)…First Vanadium said it was Mathewson who has interpreted a Carlin-style high grade Gold target at depth on the Vanadium project which is located within Nevada’s prolific Carlin Trend…the target is largely unexplored and has been identified at depth, the company said…Mathewson was involved in a number of Gold discoveries in Nevada, both as regional exploration manager of Newmont Goldcorp, and more recently as founder of Gold Standard Ventures (GSV, TSX)…“A very real and significant gold target exists on the Carlin Vanadium Project,’’ Mathewson said…it occurs at the intersection of large structures, oriented north-south, northwest and northeast, respectively…“These structural orientations are important controls of Gold mineralization on the Carlin Gold Trend,’’ he added…Mathewson went to say that the target is coincident with a gravity high that suggests a large hydrothermal alteration system at depth, coupled with the strong possibility of favourable Gold-hosting lithologies being at a reasonable range of drill depths on the property…from a technical perspective, FVAN may have bottomed in the high teens last month…it’s up 2 pennies at 29 cents as of 7:00 am Pacific

7. A majority of the most wealthy investors around the world are bracing for a big sell-off next year, according to a UBS survey…55% of more than 3,400 high net worth investors surveyed by UBS expect a significant drop in the markets at some point in 2020…amid intensifying geopolitical risks, the super-rich have increased their cash holding to 25% of their average assets, the survey showed…“Investors see reasons to be cautious in the new year,” said UBS Global Wealth Management’s client strategy office in a note today…“Two in three global investors believe markets now are driven more by geopolitical events than business fundamentals such as profitability, revenue and growth potential”…the ultra-wealthy’s top geopolitical concerns include U.S.-China trade tensions and the 2020 U.S. elections…

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