A Weekly Recap of All Things Resources to Friday, July 21st

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‘That’s a Wrap’

By Rod Blake

As the brokers, investors, traders and portfolio managers powered up their terminals for the week ahead, they were left to wonder if last week’s surprisingly strong market gains were the last exhausted push of the current 9-month tech led bull market or, was this the result of a much broader bull market that would include commodities as well.

The way I see it – As a broker, I always took special note of a day where one piece of economic news seemed to change the sentiment of the market as, sometimes it was a one-off short-term event, or on others, it effected the long-term direction of the market. Last week had such a day when the U.S. Consumer Price Index (CPI) number came in lower than expected and the market yelled a collective “Game On” as players surmised that the back of inflation had been broken and the only worry now was how soft (if any) of a recession lay ahead. I can see two plausible scenarios playing out here. One is that in spite of the drop in U.S. CPI, inflation remains higher than target and the Federal Reserve System or FED continues to tighten which firms the U.S dollar and puts more weight on U.S. dollar priced resources. The other is that the optimistic market pundits are right, and the FED stops tightening, or even better yet, cuts rates that will put downward pressure on the U.S. dollar and give a lift to resources. Will the North American markets continue to push higher, or will the traditional summer doldrums set in? The next few weeks could be very interesting to say the least.

Lumber rose to a new 5-month high of US$581 per 1,000 board feet (MBF).   

The American markets made great strides in making up for any previous losses with the DJI, S&P 500 and NASDAQ all rising to respective new 18month highs of 35,228, 4,566 and 14,358.

The TSX Exchange, while lagging its American counterparts, was also in proactive territory – reaching a new 21/2-month high of 20,548.

The CRB Commodities Index rose to a new 3-month high of 308.                                                                    

The Lion Electric Company ‘LEV-T & N’ shares’ rose by $0.20 or 7.19% to $2.98 after the Montreal, QC based electric bus and truck manufacturer secured a US$142-million financing to help facilitate the company’s growth strategy.

The price of Prairiesky Royalty Ltd. ‘PSK-T’ stock rose by $1.01 or 3.96% to a new 5-year high of $26.54 after the Calgary, AB based petroleum royalty company pleased investors with its 2nd-quarter financials.

The important Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 6-rigs over the past week to 669, down by 89 from this time last year. Up north – the number of Canadian active rigs was unchanged at 187, down by 8 from a year ago.

Going almost unnoticed in the ‘magnificent seven’ congested tech rally – the price of the world’s largest publicly traded uranium company – Cameco Corporation ‘CCO-T ‘ & ‘CCJ-N’ quietly rose to a new 12-year high of $43.39 a share.

Newmont Corporation ‘NEM-N’ & ‘NGT-T’ stock fell by $2.73 or 6.04% to US$42.45 after the world’s largest gold miner failed to impress the street with its 2nd-quarter financials.

It is said that “One should do more of what is working”. So in a country where the sales of electric (EV) and plug-in hybrid electric (PHEV) vehicle sales rose by 37% to 3.1-million units in the first half of this year – China introduced a further series of measures to entice its people to purchase more of the same.

Without any significant event to focus on – the North American markets were mixed going into the weekend.

For the Week – the DJI gained 2.08% to 35,228 with the S&P 500 up 0.69% to 4,536 while the NASDAQ lost 0.57% to 14,033. In Canada – the TSX gained 1.41% to 20,548 but the TSX Venture fell by 1.75% to 617. The CBOE Volatility Index or VIX rose by 1.95% to 13.60.

With currencies – the Canadian dollar fell by 0.07% to US$0.7561 as the U.S. dollar ‘DXY’ rose by 1.19% to 101.09.

With commodities – gold bullion gained 0.31% to US$1,962, with silver down by 0.93% to US$24.59, as copper lost 2.04% to US$3.80, and lithium fell by 3.11% to US$41,678. Crude oil lost 0.09% to US$76.64 while natural gas gained 5.02% to US$2.72, and uranium rose by 0.63% to US$55.75. With soft commodities – lumber lost 5.04% to US$546. Overall – the CRB Commodities Index was up by 1.99% at 308.

And Finally – It would seem that the wealth disparity gap in Canada is reaching extremes as according to a recent Statistics Canada report – 20% of wealthiest Canadians account for nearly 68% of the country’s net worth, while the bottom 40% by wealth account for just 3% of Canada’s net worth.

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