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1. Gold has traded between $1,462 and $1,469 so far today…as of 7:00 am Pacific, the yellow metal is off $6 an ounce at $1,462…Silver has retreated 11 cents to $16.90…Nickel is off 3 cents to $6.87…Copper is flat at $2.64, trading at the bottom of a 2-month up channel, while Zinc and Cobalt are both unchanged at $1.11 and $16.10, respectively…the U.S. and China are nearing a trade deal, but President Trump isn’t ready to sign off just yet, White House economic adviser Lawrence Kudlow said yesterday at an event held at the Council on Foreign Relations…“The mood music is pretty good,” he said, adding that Trump “likes what he sees, he’s not ready to make a commitment, he hasn’t signed off on a commitment for Phase 1, we have no agreement just yet for Phase 1“…Canada’s non-partisan Parliamentary Budget Office has downgraded its economic outlook for the country…GDP growth is now expected to top out at 1.7% in 2020, 0.3% lower than the PBO’s earlier estimate in June…GDP in 2021 is projected at 1.6%, 0.2% below its earlier projection…Trudeau insists his focus will continue to be on “climate change” and the “green economy” as he intensifies his mission to “save the planet” while chasing investment and jobs from Canada, so expect our significant under-performance vs. the United States to accelerate as the PBO’s latest numbers suggest…discovering the private sector – the New Brunswick government is looking for a private operator to take over its distribution and sales of recreational weed…Finance Minister Ernie Steeves made the announcement yesterday in Fredericton, saying heavy losses incurred by the provincial pot corporation persuaded the government it was time to turn to the private sector…“This is the best way to stop losing money at this point”, he stated…Steeves added that the previous Liberal government went with a bad business model that stuck the province with expensive leases on 20 stores across the province…he also said Health Canada regulations “make it hard to be successful”…U.S. retail sales rebounded more than expected in October…the Commerce Department said this morning that retail sales increased 0.3% last month, reversing September’s unrevised 0.3% drop which was the first decline in 7 months.
2. The U.S. budget gap grew 34% in the 1st month of the fiscal year as federal spending outpaced revenue growth, pushing the 12-month deficit past $1 trillion for the first time since February 2013…the government ran a $134 billion budget deficit in October, the Treasury Department reported…federal outlays totalled $380 billion, an 8% increase from a year earlier and a record for the month, driven by higher spending on the military, health care and Social Security…receipts last month totalled $246 billion, a 3% decline from last year, which the Treasury attributed in large part to a shift in the timing of certain payments…over the past 12 months, the government collected $3.4 trillion in revenue and spent $4.4 trillion, bringing the total deficit to just over $1 trillion, or 4.8% of GDP….after briefly eclipsing $1 trillion in August, the U.S. budget deficit came in just shy of $1 trillion for the 2019 fiscal year which ended September 30, thanks to a late surge in corporate tax revenue…annual deficits have been climbing since 2016, despite a period of low unemployment and sturdy economic growth, as tax cuts enacted in 2017 weighed on federal revenue collection and a bipartisan budget deal boosted federal spending levels…
3. The way U.S. bond markets have responded to recent Federal Reserve interest rate cuts could be “bullish” for the economy, St. Louis Federal Reserve President James Bullard said yesterday, adding he’d like to see rates kept on hold for a while to gauge the effectiveness of the recent cuts…“The Fed has made a major move in 2019 and it makes sense to wait and see how the economy responds during the 4th quarter and into 2020,” with growth possibly exceeding 2% next year as the full impact of the Fed’s rate cuts is felt, said Bullard…as businesses adjust to global trade policy disruptions and the fallout of the U.S.-China trade dispute, Bullard said, growth next year could also get an unexpected bump…“If you think that trade policy uncertainty has caused a year or more of adjustment – if we get through that whole process – I would call that success. The FOMC has taken actions that have changed the outlook for shorter-term U.S. interest rates considerably over the last 12 months, ultimately providing more accommodation to the economy. Key measures of the U.S. Treasury yield curve have now returned to a more normal, positive slope, possibly a bullish factor for 2020,” which now shows markets and the Fed in closer alignment about appropriate monetary policy, Bullard added…
4. The Dow is up 77 points through the first 30 minutes on fresh trade optimism…Wall Street also continues to relish in how the far-left House Democrats are digging their own grave over their sham impeachment hearings…the Dow, S&P 500 and the NASDAQ have all hit new record highs this morning…in Toronto, the TSX has inched 11 points higher while the Venture is flat at 527…precious metal streaming company Wheaton Precious Metals (WPM, TSX) is pushing higher after posting adjusted net earnings of $72.7 million, up 107% from the same period a year ago…net earnings were 16 cents per share…Wheaton generated $142 million in operating cash flow in the 3rd quarter of 2019, leading to a reduction in net debt of $146 million…the company also updated its guidance…Probe Metals (PRB, TSX-V) has increased the size of its previously announced bought deal private placement to $17 million (flow-through and non-flow-through)…Canada Cobalt (CCW, TSX-V), one of the most successful juniors in keeping share dilution to a minimum, has closed an over-subscribed hard dollar private placement for $1.4 million at 35 cents per unit…CCW has strategically positioned itself with multiple revenue streams entering 2020, highlighted by its recently announced acquisition of the PolyMet facility in the town of Cobalt…that transaction is expected to close shortly…meanwhile, 45 underground drill holes have been completed in an ongoing program at the Castle mine, while crews are preparing to follow up on a high-grade discovery at depth at Castle East…the cannabis sector continues to get pummelled with the Canadian Marijuana Index plunging to a fresh 2-year low of 211 at the open…that’s a 70% drop from the 2019 high in March…the Index will need to test support at 200, so more weakness is yet to come…
5. Aurora Cannabis (ACB, TSX, NYSE) posted a 24% fall in Q1 revenue yesterday as the once-booming sector turns to bust just a year after recreational cannabis was legalized…Aurora dropped 31 cents to close at $4.38 yesterday, and tumbled as low as $3.59 in early trading today…the entire sector is suffering amid a months-long sell-off in pot stocks and weak financials…cannabis growers are already having to downsize operations and rethink expansion, as access to capital has dried up and consumers are proving reluctant to switch over from the black market…producers complain about an uneven legal rollout across Canada…in Ontario, for instance, there are just 24 legal stores, and provincial wholesalers across the country are placing fewer purchase orders because of a buildup of unsold inventory…Aurora also announced yesterday that it is deferring “for the foreseeable future” the completion of a 1.6-million sq. foot growing facility in Medicine Hat and is halting construction work on a greenhouse in Denmark…the company said it expects to save $190 million over the next year by reducing capital expenditures…
6. Canopy Growth (WEED, TSX; CGC, NYSE) is also hurting after another earnings miss yesterday…Canopy closed down more than 14% after posting a net loss of $374.6 million for its fiscal 2nd quarter, and shares are now trading at levels not seen since December 2017…an 8-month-long bear market that has not yet featured capitulation has seen the Canadian Marijuana Index lose more than two-thirds of its value..“The last 2 quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations and Cannabis 2.0 products are yet to come to market,” stated Canopy Growth CEO Mark Zekulin…“However, we believe these conditions are a short-term headwind in what is a brand new industry, and Canopy continues to be best positioned with cash on hand, a world-class infrastructure and a portfolio of intellectual property to deliver sustained, long-term market leadership”…
7. Quebec, the spoiled child of Confederation, has loved taking welfare from the rest of Canada in the form of equalization payments (mostly wealth generated from the West to help support Quebec’s inefficient and corruption-infested provincial economy) but now it’s time for the West to stand up and say “Enough is Enough” and stop the money flow (and maybe the Oil flow, too)…Bloc Quebecois Leader Yves-Francois Blanchet, a separatist, socialist and naive Oil Demand Denier, continues to sow the seeds of Western alienation with this comment Wednesday after a meeting with Trudeau: “If they were attempting to create a green state in Western Canada, I might be tempted to help them. If they are trying to create an Oil state in western Canada, they cannot expect any help from us” (meanwhile, of course, Quebec still imports Oil from Saudi Arabia)…Alberta Premier Jason Kenney rightfully shot back, “You cannot have your cake and eat it too. Pick a lane. Either you can say as Quebec that you no longer are going to take the energy and equalization resources that come from Western Canada’s Oil and gas industry, or you can do what we do as Canadians, coming together to support each other”…the bottom line is that liberals, socialists and separatists (all of whom are climate change alarmists because pushing that scam has helped them gain power and grow government) are going to spark both a national unity crisis and an economic crisis in this country – only then will Canada come to its senses and get back on the right track…
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Looks like Crystal Lake has given up an semblance of trying to make money for its shareholders by blowing up its share structure at minimal prices. Sixty million more potential shares being dropped on an already bombed-out stock. The warrant overhang will be huge and enduring, keeping a lid on this stock as far as the eye can see. I guess I should have been suspicious when they stopped talking about their last project and did a quick pivot, to great fanfare.
Comment by Tad — November 15, 2019 @ 2:08 pm
Tad, agree with your thoughts on this one. This one will be a loss for me but that’s part of the process when you play these speculative stocks. I was a little surprised that the first big PP (.225 I believe) was done at prices below the 52 week low, that seemed a little desperate to me. However I felt better when McEwen came on board with $500,000 at .30, goes to show having influential people come in doesn’t guarantee success. This was heavily promoted and didn’t live up to the hype but I think we all know that finding deposits that are economic is hard.
Comment by Danny — November 16, 2019 @ 7:50 am
Danny,
I can forgive them for failing to find enough fast enough to keep the share price high. But I cannot forgive this reckless dilution. It is irresponsible, and leaves investors with very long odds.
Comment by Twaver — November 16, 2019 @ 1:10 pm
I just wrote a very strongly worded letter to Mr. Maurizio Napoli, CEO of CLM, urging him and the Board to reconsider the decision to go ahead with the latest PP at $0.10. I totally agree with the above comments that it is a tragic dilution for existing shareholders. It is also a slap in the face to so many of us who have invested at much high prices. For other frustrated investors, I encourage you to send an email to them. Let them know how you feel. It isn’t a fait accompli yet. Perhaps if there is enough letters and emails they will reconsider. I am a big believe in speaking up and not just sitting back. It’s your hard earned money. Let them know how you feel!
Comment by Bryan — November 16, 2019 @ 5:57 pm
Twaver, no question this dilution will really delay any recovery in the share price. I think anyone buying CLM now will have to have a long term time horizon. We are in the middle of tax loss selling so hard to guess where it might bottom out. At some point it might be a good buy for the patient speculator.
Comment by Danny — November 16, 2019 @ 10:14 pm