October 11, 2015

On Friday, the S&P 500 rose 0.1% and Toronto fell 0.1%.

Costco added to the gains of the previous day and rose 1.5% to $153.97.

There were a few things in the news that struck me as surprising:

  1. Alberta added 12,000 jobs in September according to Statistics Canada. The net addition was in part-time jobs. This seems very surprising given the lower oil prices. I am not convinced that this was a real gain. It might have more to┬ádo with the lack of precision in the stats Canada estimates and the process of seasonal averaging. Still, Alberta’s economy has not yet taken a really huge hit so far and those who think Alberta is sort of down for the count are likely quite wrong.

2. Another somewhat related piece of news was that the Edmonton Catholic school Board is looking to hire 200 teachers and will recruit in Ontario as there are not enough suitable candidates locally. School enrollment at the Board is at a record high. Again, rather surprising amid talk of an Alberta recession.

3. It was reported in the Globe and Mail that Bombardier’s loss in 2014 was its first in a decade. I found that surprising but upon checking my own report and graph on Bombardier shows it to be true. It is then a bit of a puzzle as to how the company ended up with negative common equity at the end of 2014 after just one year of losses. Looking into this I found that Bombardier has had a fairly weak balance sheet with inadequate common equity and too much debt for at least a decade. Even when its share price was briefly at the $30 level back in 1999 its common equity level was moderately thin. When equity is thin it can be wiped out fast as happened to Bombardier in 2014. They restored equity to a positive level in 2015┬ámostly by issuing shares. It is sad that they did not issue shares in 1999 and 2000 when their share price was at a peak. Instead, amazingly enough, they bought back significant amounts of shares in the year 2000 at prices near the top of the historical range.


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