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‘That’s a Wrap’

By Rod Blake

As the investors, brokers, traders and portfolio managers prepared for the opening of another week of North American activity there was no escaping the fact that there seemed to be two different and distinct markets. One side that played along with the views of the central bankers that people should not expect too much of a return this year as higher interest rates would lead to higher unemployment and ultimately a recession. The other camp followed some of the more predominant market soothsayers who gave no credence to the economic outlook, proclaimed that that technology will once again prevail, and piled one after another into the ever popular artificial intelligence (AI) sector. So while the breadth of the market was suffering according to the economic plan, some were enjoying first half returns not seen in many years. And for some, the fear of missing out (FOMO) would become too great and they too would move to the IA trade.

The way I see it – As a broker I saw the effects of FOMO many times. The most extreme was probably the Bre-X Minerals market of the late 1990s. This junior exploration company saw its stock rise from pennies to over $280 a share as analyst after analyst endorsed what later proved to be the world’s largest mining fraud. Fraud aside – I always warned my clients that the easy money is always made early in the trade. Those who come in late to the trade bear a greater chance of holding the stock when the market comes to its senses and suddenly reverses back to the norm. Try to avoid the FOMO feeling and joining a trade late in the cycle. There is always a new bull market on the horizon. Being early in the next cycle – that’s where the real money is made.

Suncor Energy Inc. ‘SU-T & N’ announced the Calgary, AB oilsands giant would lay off 1,500 or about nine percent of the company’s workers by the end of this year in an effort to “strengthen the company for the future”.

Canada’s largest crude oil refiner – and Saint John, NB based Irving Oil Ltd. surprised the market by announcing the privately owned company announced it was looking at several options for the future – including the sale of its assets.

This as the price of crude oil rose after Saudi Arabia announced the Middle East country would cut crude oil production by some 1-million barrels per day as of July.

It was only a matter of time before it happened, but the speed of the event seems incredible in that as reported by Automotive News EuropeTesla’s Model Y with – 267,200 units sold – was the world’s bestselling car in the 1st-quarter of the year, moving ahead of perennial leader’s Toyota Corolla’s 256,400 units sold.

According to Katusa ResearchMore electric vehicles (EVs) were sold in 2022 than from the beginning of human civilization through 2020…..combined.

Meanwhile – General Motors Co. ‘GM-N’ mirrored Ford’s resent decision and announced that the giant automaker would also enable its EVs to be combatable with Tesla charging stations. (This is somewhat reminiscent of the old Beta vs. VHS video discussions of the 1980’s.)

Katusa also reported that future lithium demand far exceeds future lithium mining projections.

Mag Silver Corp. ‘MAG-T & N’ shares’ rose by $0.34 or 2.72% to $12.85 after the Vancouver, BC based miner announced the company’s 44% owned Juanicipio Silver Mine in Mexico had achieved commercial production status and was on target to produce its design capacity of some 4,000 tonnes per day.

And the price of Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ stock rose by $1.65 or 2.97% to $57.28 after Canada’s mining giant confirmed the company had received and was reviewing a number of potential transactions regarding Teck’s steelmaking coal business.

Marathon Gold Corp. ‘MOZ-T’ shares’ rose by $0.05 or 6.67% to $0.80 after the Toronto, ON based mineral developer announced a US$45-million – 1.5% net smelter returns royalty financing from Toronto’s Franco-Nevada Corp. ‘FNC-T & N’ that will be used to advance the company’s Valentine Gold Project in Newfoundland towards a production decision.

Meanwhile – Newmont Corporation ‘NEM-N’ & ‘NGT-T’ announced the world’s largest gold miner was suspending operations at its Peñasquito gold mine in Mexico due to a union labour dispute.

It used to be that gold mining g companies were known for giving very little back to shareholders in the way of dividends. But my oh my how things are changing as British Virgin Islands based Aura Minerals Inc. ‘ORA-T’ just declared a semi-annual dividend of US$0.14 per share which, on a $9.83 stock, infers an annual return of some 3.9%.

The price of uranium rose by $0.90 to a new 14-month high of US$55.50 a pound.

The S&P 500 rose to a new 10-month high of 4,299 and the NASDAQ achieved a new 14-month high of 13,276.

Meanwhile – the CBOE Volatility Index or VIX dropped to a new 3-year low of 13.65 as the markets decided that all is well with the world.

The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 1-rig over the past week to 695, down by 38 from this time last year. Up north – the number of active rigs rose by 39, for loss of 5 in the past year.

For the Week – the DJI gained 0.34% to 33,877 with the S&P 500 up 0.40% to 4,299 and the NASDAQ ahead by 0.14% to 13,259. In Canada – the TSX lost 0.66% to 19,892 while the TSX Venture rose by 0.16% to 610. The CBOE Volatility Index or VIX fell by 5.27% to 13.83.

With currencies – the Canadian dollar rose by 0.17% to US$0.7460 as the U.S. dollar ‘DXY’ lost 0.37% to 103.56. 

With commodities gold bullion gained 0.72% to US$1,961, with silver up by 2.92% to US$22.29, while copper gained 1.34% to US$3.77, but lithium fell by 0.47% to  US$41,657. Crude oil lost 2.16% to US$70.32 as natural gas gained 3.67% to US$2.26, and uranium rose by 1.65% to US$55.50. With soft commodities – lumber gained 5.20% to US$506. Overall – the CRB Commodities Index was up by 0.35% at 289.

And Finally – As thick smoke from northern forest fires continued to drift south and choke cities of the U.S. eastern seaboard, it encouraged some to facetiously bring back the South Park cartoon cry of “Blame Canada!”

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