February 10, 2018

On Friday, the U.S. markets once again were highly volatile and the DOW, at it low, was down 500 points before finishing the day up 330 points or 1.4%. The S&P 500 finished the day up 0.5% and Toronto finished down 0.2%.

A number of U.S. stocks rebounded somewhat including: American Express up 3.8%, Visa up 2.4%, Berkshire up 2.2%

Dollarama was down 3.2%. CRH Medical was down 4.6%.

In my own trading, I added to my AutoCanda position on Friday.

The near-term direction of the U.S. market depends on how many investors become fearful of further declines and and how many are ready and willing to buy.

There is still plenty of things that could “spook” the market including, among other things, the Russian investigation and political tensions related to Trump not releasing the Democratic version of “the memo”.

RBC Direct System Outage

RBC has indicated that they had a major problem in their discount trading platform on Thursday and trades were not going through and it was due to a problem with a fibre optic cable.

I trade through TD Direct. But I occasionally do trades in RBC Direct for a relative.

I tried to sell two stocks on Thursday and not only did the trades not go through, but it was not really clear to me if they did or not. This is a big failure. I doubt that RBC has any legal obligation to make traders whole but their still could be a class-action law suit or some kind of regulatory penalty to RBC due to this. I understand their call center has been over-whelmed also.

The January Jobs Report

Statistics Canada released a poor jobs report for January. The headline indicated 88,000 jobs lost and an unemployment rate of 5.9%.

I have noted before that the jobs / unemployment rate data is from a survey of households and is subject to significant errors. As I recall, Statistics Canada indicates someplace that the statistical error (and this assumes that they have a good random sample) is about 30,000.

I am never one to say that statistical data like the unemployment rate or inflation is manipulated. I believe Statistics Canada presents the data honestly.

However, there have been some wild swings in the data that call the accuracy into question. I think it is somewhat irresponsible to release this data and state “employment fell by 88,000 in January” without being a lot more clear that this is only an estimate and is subject to error / uncertainty.

It is frustrating to watch guests on Business News Network opine that the loss may have been due to the normal loss of Christmas seasonal workers. In fact, the data is already seasonally adjusted although again that is a process subject to uncertainty and error.

Basically, people love to see confirmation of their position in the data. Those against the minimum wage increase immediately saw evidence of that causing job losses.

I would read very little into this January report. It largely offset an usually strong report in December.

Before jumping to conclusions of doom, consider that the Statistics Canada press release also states:

“Adjusted to US concepts, the unemployment rate in Canada was 4.9% in January, compared with 4.1% in the United States. The unemployment rate for both countries trended downward in the 12 months to January.”

“The labour force participation rate in Canada (adjusted to US concepts) was 65.5% in January, compared with 62.7% in the United States. On a year-over-year basis, the participation rate declined by 0.3 percentage points in Canada, while it was down 0.2 percentage points in the United States.”