2. China is “quite serious about living up to the commitments they have made regarding North Korea,” U.S. Commerce Secretary Wilbur Ross stated this morning in an interview on CNBC…the order for mainland lenders to stop doing business with Pyongyang “is a logical next step in the sanctions, and a very important one…Chinese commercial banks had been a big route for facilitation of trade to North Korea so the fact that the PBOC has put out a taboo, that’s a very big deal,” Ross declared…serious pressure by China on North Korea is likely the only way short of military intervention to tame the rogue regime…
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 $1,298 and $1,314 so far today…as of 7:00 am Pacific, bullion is off $10 an ounce at $1,283 as the rally in the greenback continues…Silver has retreated 6 cents to $16.73…Copper is up a penny at $2.90…Nickel is down 5 cents at $4.69…Crude Oil has strengthened another 20 cents to $52.08 while the Dollar Index has added nearly half a point to 93.50…after a downtrend that has persisted for months, the Dollar Index was overdue for a significant bounce but its potential upside is capped due to the technical damage that has been inflicted this year…Ma Yellen’s speech in Cleveland yesterday tilted to the hawkish side and Fed Fund futures are now predicting a 78% chance of a rate hike in December…
3. Gold prices remained on the defensive today, extending overnight losses slightly, but have held nearest support at $1,280 after a Commerce Department report showing that orders for U.S. durable goods rose by 1.7% during August…the headline figure was modestly above consensus expectations…meanwhile, in other economic data released this morning, contracts to buy previously owned homes fell more than expected in August to their lowest level in about 1-and-a-half years as the housing market continues to be sapped by a shortage of inventory that is also pushing up home prices…
4. U.S. government data this morning showed an unexpected drop in U.S. Crude inventories…while WTI has been firming, Brent Crude has been faring even better as it’s set for a +20% gain in the 3rd quarter, its largest rise in the period between July and September since 2004…Brent futures are commanding their highest premium over U.S. Crude in more than 2 years, partly because of the quick production response by U.S. shale producers to any uptick in prices…Turkey’s repeated threat to cut Oil exports from the Kurdistan region in northern Iraq, in retaliation for an independence referendum in Iraqi Kurdistan, pushed the price of Brent close to $60 a barrel earlier this week for the first time since June 2015…a further flare-up in those regional tensions is possible with Iran continuing to meddle…
5. The Dow is up 64 points as of 7:00 am Pacific…Republicans will unveil sweeping changes to America’s tax code today in a proposal that dramatically lowers taxes on businesses and many households…as taxes in the U.S. are going down across the board, taxes in Canada are generally going in the opposite direction to fund government overspending – not a good trend for Canadian competitiveness…the TSX has gained 22 points through the first 30 minutes of trading…Bombardier (BBD, TSX) is taking a hit, down 22 cents at $2.05 after the U.S. Department of Commerce made a preliminary ruling yesterday that the company received countervailing subsidies…a hefty duty of 219.63% will be imposed on all U.S.-bound CSeries jets…the Venture has slipped 1 point to 775…one of the Venture volume leaders is AIS Resources (AIS.H, TSX-V) which is pursuing a quality Lithium project in Argentina…Decade Resources (DEC, TSX-V) and Mountain Boy Minerals (MTB, TSX-V) remain halted, pending news…
6. Cobalt Solutions (ECS, TSX) is unchanged at $1.31 in early trading after releasing results from a feasibility study on the company’s Idaho Cobalt Project (ICP), the only environmentally permitted, primary Cobalt project located in the United States…it won’t be in operation for at least 2 years, though, and it’ll do little to meet the growing demand for Cobalt…the FS is based on an underground mine with a target production rate of 800 short tons per day and a weighted average annual production of 2.4 million pounds of Cobalt, 3.3 million pounds of Copper and 3,000 ounces of Gold over a 12.5-year mine life with an estimated pre-production period of 24 months utilizing a 0.25% Cobalt cut-off grade…the economic model uses a 34% U.S. corporate tax rate and a 7.5% discount rate, resulting in an after-tax net present value of $135.8 million and an IRR of 21.3% using an average base case price of $26.65/pound for contained Cobalt in Cobalt sulphate…Paul Farquharson, President and CEO, stated, “This is a robust project that could eventually be the sole primary producer of Cobalt in the United States. The future outlook for the electric vehicle and Lithium-ion battery markets further supports sustained and long-term demand for Cobalt – a critical ingredient in the cathodes of rechargeable batteries. Our project is an important development for the battery supply chain enabling access to a secure, stable, ethically sourced and environmentally sound supply of battery grade Cobalt sulphate, mined safely and responsibly in the United States.”
7. Bring on those lower fares!…WestJet Airlines (WJA, TSX) says it will offer fares that are 40% cheaper than those currently available in Canada as it unveiled new details this morning about Swoop, the ultra-low-cost carrier (ULCC) it plans on launching next summer…the ULCC will begin selling flights in early 2018. “The name Swoop denotes exactly what we plan to do,” said WestJet Executive VP Bob Cummings. “It’s a powerful verb that demonstrates we plan to swoop in to the Canadian market with a new business model that will provide lower fares and greater opportunity for more Canadians to travel.”
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It doesn’t look like CXO will be going up anytime soon! Expecting we will see the 20s soon! Huge wall. Maybe next year!
Comment by Greg — September 28, 2017 @ 6:13 am