‘That’s a Wrap’
By Rod Blake
The new trading week began with shocked investors, traders and portfolio managers all alike trying to figure out how could the previous late in the week Silicon Valley Bank ‘SIVB-N’ collapse and subsequent market tailspin seemingly come out of nowhere and, why did it happen?
The way I see it – Good markets slowly climb a wall of worry while bad markets happen suddenly and seem to come from nowhere. Cases in point – the market crash of 1987, the Bre-X gold scandal of 1997, the 2008 financial crisis among others. All events that happened when most market pundits were saying things were just getting better and better. And the causes? On October 19th, 1987, newly introduced computerised trading systems started to sell in an over extended bull market which created more selling into a market where there were no circuit breakers in place to stop the selling action that subsequently accelerated and accelerated as the day went on. The 2-year Bre-X story that saw the Calgary, AB junior explorers’ stock run up from just pennies to $286.50-a-share, suddenly ended only when someone finally decided to do some check work on the company’s internal assays. And the financial crisis of 2008 came about when the market realized that a bunch of bad mortgages rolled up into new investment funds didn’t suddenly make them good mortgages. SVB happened because investors concerned about the bank’s exposure to the crypto market tried to withdraw $42 billion from the bank in just in a couple of days. Who knew? This why I always told my clients to “take profits accordingly” in good markets as you never know when a bad market might happen.
On Monday the CBOE Volatility Index or VIX rose to a new 4-month high of 26.52.
And the Dow Jones Industrial Average or DJI fell to a new 41/2-month low of 31,819.
While the TSX at 19,375 has given back all of its 2023 gains to date.
British Columbia approved the Haisla First Nation backed and Pembina Pipeline Corp. ‘PPL-T’ & ‘PBA-N’ operated Cedar liquefied natural gas (LNC) plant to be supplied with gas from BCs’ northeast in part by ARC Resources Ltd. ‘ARX-T’. The offshore floating operation to be built near Kitimat, BC. will have the capacity to export 3-million tonnes per annum of LNG.
This a Spain’s energy giant Repsol SA – sighting uneconomic projected returns – abandoned the company’s plans to develop an LNG terminal on Canada’s east coast at its current oil import facility near Saint John, New Brunswick. The proposed facility was to supply LNG to an undersupplied Europe.
Crude oil dropped to a new 15-month low of US$66.44 per barrel.
Frontier Lithium ‘FL-V’ announced its current 10,000-meter diamond drill program at the Sudbury, ON based company’s PAK Lithium Project in northwestern Ontario is expected to increase the project’s tonnage by some 40-million tonnes to about 100-million tonnes grading 1.50% lithium oxide Li2O.
This as lithium fell to a new 11/2-year low of US$46,384 per tonne.
Osisko Mining Inc. ‘OSK-T’ shares’ rose by $0.13 or 4.08% to $3.32 after the Toronto, ON based mineral developer announced the signing of an agreement with Cree First Nation subsidiary Miyuukaa Corp. to supply hydroelectric power to the company’s Windfall Gold Project near James Bay, Québec.
And Vancouver, BC based Calibre Mining Corp. ‘CXB-T’ reported the company’s satellite Pavon Central open pit mine in Nicaragua was in operation and adding 1,000 tonnes per day of +7-grams of gold per tonne (gpt) material to the nearby Libertad mill.
This as the price of gold bullion surged to a new 11-month high of US$1,977 per ounce.
Overall – the Commodities Research Bureau Index (CRB) fell to a new 6-month low of 279.
The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs increased by 8-rigs over the past week to 754, up by 91 from this time last year. Up north – the number of Canadian active rigs fell by 16-rigs to 207, an increase of 31 in the past year.
For the Week – the DJI lost 0.15% to 31,862 while the S&P 500 gained 1.42% to 3,917 and the NASDAQ rose by 4.42% to 11,631. Across the line – the TSX fell 1.96% to 19,388 and the TSX Venture lost 1.14% to 605. The CBOE Volatility Index or VIX rose by 2.86% to 25.51.
With currencies – the Canadian dollar gained 0.68% to US$0.7279 while the U.S. dollar ‘DXY’ lost 0.70% to 103.90.
With commodities – gold bullion gained 5.84% to US$1,977, with silver up by 9.50% to US$22.47, while copper lost 2.74% to US$3.91, and lithium fell by 4.63% to US$46,384. Crude oil plunged lower by 13.21% to US$66.44 as natural gas lost 3.28% to US$2.36, and uranium fell by 2.64% to US$49.75. With soft commodities – lumber surged higher by 26.97% to US$452. Overall – the CRB Commodities Index was down by 3.79% to 279.
And Finally – With a very unique way of helping Ukraine’s war effort – military challenged Latvia has seized over 1,200 autos from convicted drunk drivers in the past year and sent the vehicles to its war-torn neighbour to be used as needed.