November 15, 2016

On Tuesday, the S&P 500 was up 0.7% and Toronto was up 1.1%.

Some of the U.S. bank shares continued to rise but Wells Fargo was down 1.2% probably due to its unique challenges at this time. U.S.bond yields stopped rising today. It may be that the Trump impact on bonds and stocks is over, at least for now.

Element Fleet was down 6.9%. The former Element Financial recently split into Element Fleet and ECN Capital. I reported I had lost faith.

AutoCanada was up 3.7%. Statistics Canada reported motor vehicle sales for September. Alberta sales at 20,734 were considerably better than August’s level of 18,786 but were down 10% versus September 2015 and down 21% versus September 2014. These figures may indicate that motor vehicle sales have stabilised in Alberta albeit at some 21% lower than 2014. My understanding is that AutoCanada continues to be profitable in Alberta at these sales levels, with the exception of a few of its hardest hit dealers. And motor vehicle sales for the county as a whole were down 1% versus last year and up 3% versus 2014. So the car dealer industry as a whole across Canada remains healthy in terms of sales volumes.

Oil was up about 4% as on-again, off-again rumors that OPEC would start to become effective once again in colluding to push oil prices higher were on-again at least for today. It’s sad that Alberta has to pin its hopes on such collusion. But meanwhile the Alberta oil industry is adjusting to lower oil prices which is a better strategy than hoping for OPEC to come to the rescue. And, it’s possible that new pipelines will alleviate the discount that Alberta producers face due to lack of export capacity. I believe the industry in Alberta had been spending vastly too much on new developments particularly in the oil sands and that level of capital spending will not return. Therefore, Alberta’s economy will likely return to only modest growth even after the current contraction has run its course. But there will likely be some growth and Alberta is not likely to see continued retraction in its economy over the next few years.

Teranet reported its house price index for October. Calgary and Edmonton home prices continue to hold quite steady in recent months. Edmonton is steady over the past year while Calgary is down modestly.