A Weekly Recap of All Things Resources to Friday, April 1st
By Rod Blake
‘That’s a Wrap’
The North American markets began last week as most have for the past month – gyrating to and from as negative updates from the war in Ukraine were offset by strong domestic economic updates.
Gold bugs said a collective “We told you so” when blockchain project Ronin reported that – in the second largest cryptocurrency heist on record – online hackers had stolen over US$600-million of crypto tokens from its online gaming platform Axie Infinity.
U.S. President Joe Biden announced his administration would release 1-million barrels of oil a day for 6-months from the countries strategic reserves to help fight rising gasoline prices.
Canadian lumber giant Canfor Corp. ‘CFP-TSX’ announced its yards were full of product and it was cutting back shifts at its 11-mills not due to lack of sales – but because of traffic demands, the nations railways cannot provide enough rail cars to get the company’s products to market.
The United States got one step closer to federally legalizing cannabis after the House of Representatives passed ‘The Marijuana Opportunity Reinvestment and Expungement (MORE) Act’ by a vote of 220 – 204. The bill now has to be endorsed by the more critical U.S. Senate.
Thursday marked the end of the 1st-quarter which clearly highlighted the diverging performance of the TSX and S&P 500 Indexes. It was surprising to note that while the S&P 500 lost 4.9% to 4,530 in the first 3-months of the year, the TSX gained a significant 3.1% to 21,890. It was also interesting to note that while the S&P 500 was marking its first quarterly loss since 2020 – the TSX ended the quarter just a few points below the record closing high of 22,158 it established just one day earlier. This marks the first time in which the TSX has outperformed the S&P 500 on a quarterly basis since 2011, and the greatest quarterly differential in favour of the Canadian market in 13-years. Comparatively – the TSX is still not expensive as it is trading at only 13.9 – times next 12-months earnings as opposed to the S&P 500 trading at 19.7-times earnings. Time will tell if this the start of a longer trend or just a one-off event caused by the recent run-up in metal and petroleum prices.
The way I see it – the world lost a sense of trust last month that will take years to repair. With the end of the Cold War in the early 1990’s the countries of world started to trust each other to supply the much needed products. This trust grew to the point where North America trusted that Communist China to supply most of its consumer goods and Europe relied on Russia to supply most of its petroleum needs. Minerals and technology were also shared around the world – much of it on an amazing same-day or fill as needed basis. Globalization became a key word of the last decade. This all changed on February 24 when Russia broke its word and invaded Ukraine. In addition to the devastation of life and property, this unprovoked attack also disrupted supply lines and commerce across much of Europe. The free world will now play defense and no longer trust Russia, its allies or other totalitarian states for anything strategic. Home grown is the new order of the day….
For the Week – The DJI rose by 0.12% to 34,818, while the S&P 500 gained 0.07% to 4,546 and the NASDAQ improved by 0.65% to 14,262. Up north – the TSX fell by 0.24% to 21,953 and the TSX Venture gained 1.24% to 897.
Gold bullion dropped by 1.74% to US$1,925, as silver fell by 4.1% to US$25.66 and copper gained 1.94% to US$4.71. Meanwhile – crude oil fell by a 11-year high 12.84% to US$99.27 while natural gas rose by 3.97% to US$5.72. The Canadian dollar lost 0.09% to US$0.7992. Overall – the S&P GSCI Commodities Index fell by 8.18% to 721.
And Finally – It seems that increased marijuana outlets may be the best remedy for rising housing prices – as a recent Real Estate Economics study found that Vancouver houses within 100-metres of a cannabis dispensary sold on average for 3.8% less that those houses further away.
Good luck in week ahead….