October 18, 2016

Tuesday was an up day in the stock markets with the S&P 500 up 0.6% and Toronto up 1.1%.

Most of the stocks on our list were higher.

The news at Wells Fargo is not getting any better. There is evidence that the CEO was told about fraudulent account openings years ago. It appears that the management was sort of unable to accept the bad news. It seems they dismissed it as isolated incidents. People are curious what Warren Buffett will say. Buffett is extremely loyal to his friends. But his loyalty has limits. He tends to be unforgiving about breaches of ethics. He also does not like to criticise people publicly unless they have attacked him. So, I am not sure that Buffett will say much about Stumpf at all. It will be interesting also what Buffett might have to say about the new CEO, Tim Sloan. He has far less reason to be loyal to Sloan and so I don’t expect him to praise Sloan.

Statistics Canada reported that Canadianm manufacturing activeity was up 0.9% in August. This is not an annualised number but just the increase in the one month. Even Alberta had an increase though that after a similar decline in July. The increase is good news but it should have been prominently noted that the number was actually down 1.0% from August 2015.

Melcor has finally bought back a few shares in the past 10 days or so. There was 1400 shares repurchased last week and 800 on Monday. Apparently they have had  their bid in at just $12.50. It would be clever for them to buy shares at such a low price except that the volume is incredibly tiny and it might have been more clever to pay a bit more but buy more shares. We will see how their sales went in Q3 and what their outlook is. They may continue to think it best to hang onto cash just in case. On the other hand perhaps they will show a bit more confidence with oil recently somewhat higher.