Canadian Tire had a good day and rose 3.3% to $69.70. This puts it 6.8% above its closing price from December 3. Not spectacular ,but not bad. While there was always the risk that it could go lower, this stock certainly looked attractive at $66 and $67 etc. Most people I talk to are certainly not excited by this stock or this company. It’s no Apple. But what it is is a nicely profitable company that trades at an attractive looking price.
Apparently Wednesday’s market mover may be an announcement form the Federal Reserve Bank that i9t will buy more bonds. I will admit to the doomers that this sounds a bit scary. They are literally creating money out of thin air to buy these. They keep interest rates down artificially by buying up huge amounts of bonds. What I don’t get is why others buyers like pension funds and banks and insurance companies and investment funds don’t go on strike and stop buying or holding long term bonds. But they find it hard to stop. They have continuously made capital gains on bonds for years. So they buy more even though they should know the capital gains will ultimately reverse even if interest rates stay low since the bonds will mature at par. Many insurance companies and banks are somewhat forced to hold bonds by archaic regulations that consider government bonds to be risk free (apparently ignoring the certain capital losses on any government bond that trades above par.).
It seems crazy but more Fed bond buying is likely to be treated as good news by the stock market.