April 8, 2020

Markets were higher on Wednesday on continued optimism that the virus situation won’t get as bad as recently thought and optimism that the U.S. economy will not stay shut down very long.

The S&P 500 was up 3.4% and Toronto was up 2.3%.

The price of Canadian heavy crude was down again however and currently sits at a dismal U.S. $7.61. West Texas is at U.S. $26.13  OPEC is holding a conference call tomorrow and the Alberta Energy minister will participate. Historically free market nations like Canada and the U.S. would never even consider cooperating with OPEC. But it seems that desperate times call for desperate measures.

After the close, Canadian Western Bank announced that it has submitted its long-planned regulatory application to move to the more advanced system for calculating its risk-weighted assets. If approved this will increase CWB’s risk weighted capital. The plan was that this would free up capital to support additional lending. It would allow a faster growth rate. Now that CWB presumably faces higher loan losses due to the economic shutdown and low oil prices this also would give it more a cushion to deal with that. Given that this application was expected (although the exact timing was unknown), this announcement may not have any immediate impact on the share price.

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