Wednesday was yet another strong and record day for the stock markets. The S&P 500 was up 0.2% and Toronto was up 0.4%.
Aurora Cannabis was up 15.5% as there has been some good earnings reports from other Cannabis companies. Aurora remains risky due to its debt.
Toll Brothers was up 2.9%.
Visa was up 1.9% after announcing an acquisition yesterday.
As you may have seen, Boston Pizza is running television ads featuring free delivery. That should help their sales. It is the franchisees that have to absorb the cost of free delivery; the royalty per dollar of sales is unaffected.
So far, I had not seen evidence that Boston Pizza International was very concerned about the lower sales. I would have thought they should be VERY concerned about any potential cut to the distribution. It would presumably be hard to sell new franchise locations if potential owners saw that weak sales were causing a distribution cut. This new promotion may mean they are taking action to insure that a distribution cut is avoided.
Today, West Texas oil was $58.60 while Western Canadian Select was $33.50. That is a discount of U.S. $25.10. There will always be some discount due to the different grade of oil and the different location. But this “spread” has once again “blown out” to a figure that is costing the Alberta oil producers a lot of money. And also, Alberta is losing out on royalty income and both Alberta and Canada stand to collect less in income taxes.
Parties benefiting would be those buying the Western Canadian crude and also if there are any non-producers who had arranged to purchase cheap in Alberta and ship to the higher value markets in the U.S. In this scenario the rail roads should also be doing well. Apparently oil by rail is way up so I am not clear why the discount has widened again. The government may have to ratchet up the production curtailments that the NDP had originated. The Conservative government has been easing the curtailment. There has also been no news on how much oil is being shipped under the rail contracts that the NDP agreed to and that the conservative government is trying to sell to the private sector. That oil was supposed to start moving as early as last July but as far as I know none was moving on those contracts as of December.
It’s Wednesday, and therefore time to check out the latest rail car loading statistics to see if the real economy is keeping up with the gains in the trading markets.
Let’s see: In the U.S. rail car loads in the second week of 2020 was about 500,000 carloads versus 550,000 last year. So a big drop. However last year the second week had spiked higher. But the 2020 number is also slightly below 2018 and 2017. Definitely does not show strength in the part of the U.S. economy that involves movements of goods. Petroleum and chemical carloads were up. All other categories were flat or down.
In Canada, total carloads in week 2 were somewhat below the 2019 level (however week 2 in 2019 was particularly strong, so a tough comparable) but nicely above the 2018 and 2017 levels. This indicator suggests the Canadian economy is moving goods at a fairly similar volume as last year.