Check back later today for “Daniel’s Den” and visit the BMR comments section throughout the day for updates and helpful information!
1. Gold has traded between $1,316 and $1,324 so far today…as of 7:00 am Pacific, bullion is flat at $1,321…the inflow into Gold ETFs during January was roughly equal to all of 2018, Commerzbank pointed out this morning…“Holdings in the Gold ETFs tracked by Bloomberg were increased by over 70 tonnes in January, which is almost equivalent to the total inflows of last year”…in a report on demand trends released yesterday, the World Gold Council said global net inflows in 2018 were 68.9 tonnes, reversing from what at one time was an outflow, as 4th-quarter inflows totalled 112.4 tonnes…Silver is steady at $16.01…Nickel continues to lead among base metals, up 7 cents at $5.67…Copper is unchanged at $2.77 while Zinc is up a penny at $1.24…Zinc inventories are at a decade low…Crude Oil has jumped 70 cents to $54.49 while the U.S. Dollar Index is off nearly one-tenth of a point at 95.48…factory activity was at its weakest in years across much of the world during January…weak Purchasing Managers Index (PMI) readings reinforce expectations that central banks will put any further interest rate hikes on hold this year…trade-focused Asia appears to be suffering the most visible loss of momentum so far, with activity shrinking in China, although European economies are stuck in low gear and many emerging markets are sputtering…manufacturing growth in the euro zone was minimal last month, at a 4-year low, and forward looking indicators suggest there will be no turnaround soon.
2. Chile’s Copper Commission ‘Cochilco’ is forecasting an average Copper price of $3.05 in 2019 amid an expected market supply deficit…while demand is seen rising 2.4% globally in 2019, half of which is from China, global production may only increase 1.6%…the estimated supply deficit for 2019 and 2020 is revised higher from forecast last year due to to lower than expected production from the Grasberg mine in Indonesia, the world’s 2nd-largest…deceleration of global growth, ongoing trade tensions between U.S. and China, and financial market volatility were highlighted as main negative factors…the price of Copper has been increasingly linked to Chinese activity data with rising correlation observed with China PMI since 2016…
3. The Trump economy continues to be a job-producing machine…job growth in January shattered expectations, with non-farm payrolls surging by 304,000 despite a partial government shutdown that was the longest in history, the Labor Department reported this morning…average hourly earnings rose 3.2%, extending a streak of relatively robust gains as employers have had to pay more to attract workers…the unemployment rate ticked slightly higher to 4% while the labor force participation rate also increased slightly to 63.2%…economists surveyed by Dow Jones had expected payrolls to rise by 170,000 and the unemployment rate to hold steady at 3.9%…meanwhile, December’s big initially reported gain of 312,000 was knocked all the way down to 222,000, while November’s rose from 176,000 to 196,000…on net, that took the 2 months down by 70,000, bringing the 3-month average to 241,000…that’s still well above the trend that would be common this far into an economic expansion dating back nearly a decade…
4. President Trump says he’ll meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal as Trump and his top trade negotiator both cited substantial progress in 2 days of high-level talks…speaking at the White House yesterday during a meeting with Chinese Vice Premier Liu He, Trump said he was optimistic that the world’s two largest economies could reach “the biggest deal ever made”…the Chinese trade delegation said in a statement that the talks made “important progress,” China’s official Xinhua news agency reported…no specific plans for a meeting with Xi were announced, but Trump said there could be more than one…U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin were invited to bring a U.S. negotiating team to Beijing around mid-February, with dates still pending…maintaining pressure on China, the White House also said in a statement that its scheduled March 2 tariff increase on $200 billion of Chinese goods was a “hard deadline” if no deal was reached by March 1…
5. The Dow has climbed 92 points through the first 30 minutes of trading….U.S. stocks rose to close out their best January in 3 decades as strong earnings and a Federal Reserve indicating it will pause rate hikes caused investors to rush back into the market following a vicious December correction…gains yesterday were driven by better-than-expected earnings from a range of companies, including Facebook (FB, NASDAQ) and General Electric (GE, NYSE)…in Toronto, the TSX is up slightly as of 7:00 am Pacific…the Bank of Canada is convinced that the the economy is poised to rebound after a “detour” (new term from the BOC) caused by lower Oil prices and a slowdown in the housing market…Canadian stocks stormed back in January with the biggest monthly advance in nearly a decade…all but 27 stocks in the S&P/TSX Composite Index finished the month in positive territory…the index itself rose by 8.5%, marking the biggest monthly gain since May 2009…the forward price-to-earnings ratio for the TSX, which fell below 13 in December, has since risen closer to its long-term average at more than 14…the Venture, which outperformed all equity markets in January (great sign), is up another 2 points at 625…marijuana stocks have helped lead the surge – Khiron Life Sciences (KHRN, TSX-V) is at a new high this morning – but strong metal plays are gaining momentum…on the CSE, Tidal Royalty Group (RLTY.U, CSE) has enjoyed a solid week and continues to look strong on high volume as it gains traction past 20 cents…meanwhile, Weekend Unlimited (YOLO, CSE) has been informed by the CSE that it has won the lottery for the trading symbol POT…“Weekend Unlimited is thrilled to add the iconic POT trading symbol to its identity,” stated Paul Chu, Weekend Unlimited President and CEO…“As a fast-growing multistate operator, Weekend Unlimited is developing lifestyle brands around recreational and wellness to help define the future of the cannabis industry. The POT symbol is a tremendous fit with our brand identity”…the CSE, collectively with the TSX, the Venture and Aeqiuitas NEO Exchange, announced the lottery for the POT symbol last month…with the symbol in high demand, many eligible issuers currently listed on any of the exchanges, or applicants which have made listing applications to the exchanges, submitted ballots for the POT symbol…
6. If Canada’s licensed cannabis producers continue ramping up production at their current exponential pace, there will be more than enough pot to meet the government’s projected demand by the end of 2019, predicts Brock University professor Michael Armstrong, a cannabis researcher who conducted an analysis of the government’s most recent information…Armstrong argues that barring any unforeseen circumstances, supply concerns will be resolved much more quickly than some observers have suggested…total legal production of cannabis began drastically increasing about 6 months before legalization, Armstrong notes, as evidenced by how quickly cannabis inventories were growing…“If you look at the data from 2017, and you compare it to pace of production right now, you can see how licensed producers were stockpiling cannabis at a hectic rate. Not only were they adding more to inventories each month, the amount they were adding was greater each month. If that continues, supply should catch up to demand by the end of this year”…
7. The Supreme Court of Canada has ruled that the trustee for a bankrupt Alberta energy company cannot simply walk away from unprofitable wells on agricultural land without having to clean up…the high court’s 5-2 ruling yesterday comes with a recommendation from Chief Justice Richard Wagner for Parliament to clarify the confusion between the federal bankruptcy law and the regulations provinces rely on to protect the environment…“Bankruptcy is not a licence to ignore rules, and insolvency professionals are bound by and must comply with valid provincial laws during bankruptcy,” Wagner wrote…the decision was highly anticipated across Alberta, where hundreds of thousands of inactive Oil and gas wells dot the landscape, and at corporate offices in Calgary where Oil and gas companies are under mounting pressure to remediate old wells…the decision means that banks will likely be more hesitant to lend money to Oil and gas companies with large environmental remediation liabilities…
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