January 8, 2020

On Wednesday the markets seem to have concluded that the risks of the Iran U.S.A. spate have largely dissipated. (That, of course, may or may not turn out to be correct.)

The S&P 500 surged 0.5% while Toronto was about unchanged.

Linamar was down 4.55% to $46.52. That was a fairly muted response to the news it released yesterday.

Canadian Western Bank was up 2.4%.

Penny stock Ceapro was up 8% to $0.40.

After the close, Costco released stellar same-store sales growth figures for December. In the U.S. the figure was 9.0% or 8.4% after factoring out changes in gasoline prices. That is huge growth. Costco does not break that out to price and volume. It’s possible that inflation is a significant part of the growth. But it seems more likely that it is mostly volume. This is an indication of the strong U.S. economy. It also likely indicates that Costco continues to take market share from competitors.

Those comments also largely apply to Canada where same-store sales growth was 6.0% in Canadian dollars and with gasoline price fluctuations factored out.

At its last update Costco looked very expensive to me. But this kind of growth can justify a lofty P/E ratio.

Rail traffic figures are out for the first week of 2010 (which actually covers December 29th through January 4th. In the U.S. traffic was down what appears to be a couple of percent versus the first week of 2019. And note that rail traffic was down throughout 2019 and got worse as the year went on.

In Canada, rail traffic was up slightly versus the first week of 2019. Canadian rail traffic had been fairly stable most of 2019 (versus 2018) but was weak in Q4.

These rail traffic figures seem at odds with the strength of the stock markets.


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