February 4, 2015 Comments

Wednesday was another non-boring day in the markets. The S&P 500 was down 0.4% and Toronto was down 0.5%.

Notable losers included Canadian Western Bank down 3.7%, Canadian Tire down 2.0% and FirstService down 2.3% and CLO the oil sands ETF down 4.7%. (Yahoo Finance was just now showing CLO to be up 5.5%; I should really stop using Yahoo Finance it is not the most reliable source of information).

However Toll Brothers was up 1.9% and Visa was up 2.0% and most of the preferred shares on my list were up.

The Canadian dollar fell about 1 cent as oil fell about 8%.

It was interesting to hear in the news that the West Jet CEO had bluntly said that the company had no plans to pass along fuel savings to its customers. It’s completely normal behavior for companies to attempt to to pass along such savings. They tend to pass savings along only due to competition. (A concept that about 98% of the population does not seem to believe in) The airline industry is famously brutally competitive. Air Canada has gone broke at least once and there have been at least a half dozen airlines in Canada that went broke in the last 20 years or so. (Canada 3000, Greyhound – I kid you not, Jetsgo, and CanJet are three that leap to mind). Canadian Pacific was also basically broke when Air Canada bought it, as I recall. So, I think we can count on the fact that West Jet will pass on the savings if competition forces it to and that competition will indeed most likely force it to. I suspect the message of not passing along savings was meant more for Air Canada’s ears than anyone’s (i.e. I won’t lower mine, if you won’t lower yours) The only thing odd about this message was that it was said out loud to the public.

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