October 8, 2016

On Friday, the S&P 500 fell 0.3% and Toronto was down 0.2%.

There were few larger moves in the stocks on our list. The biggest decline was Canadian Western Bank down 1.8%.

In my own investing I bought 100 shares of HEINY an America Deposit Receipt which represents ownership of 50 shares of Heineken Inc. It has 250 different brand names. In North America the best known (other than Heineken) is Dos Equis. I would be interested in adding to my position if the price drifts lower.

Statistics Canada reports that Canada added 67,000 jobs in September. It’s hard to know what to make of this given that in the past year this report seems to have been particularly volatile. It is subject to statistical error. Certainly, it appears to be good news.

The national unemployment rate at 7.0% may sound high to those who came of age in the mid 2000’s or later. It does not sound high to me probably because I came of age in the late ’70’s and early ’80’s when the unemployment rate was closer to 10%. Based on Statistics Canada data available at the above link, the national unemployment rate topped out at 13.1% in December 1982. And it was FAR higher than that in my home province of Nova Scotia. The national unemployment rate did not get below 7.0% until November 1999 and that only lasted for three months. National unemployment rates below 7.0% existed in most of 2005 through 2008 and again in parts of 2014 and 2016. The lowest figure was 5.8% in October 2007. The fact is that at 7.0%, today’s unemployment rate is a good bit lower than the 8.3% average of the past 40 years.

Statistics Canada also reported on oil and gas production noting that: Production of crude oil and equivalent products rose 1.9% to 213.5 million cubic metres in 2015, marking the sixth consecutive annual increase. Compared with 2014, the value of these products fell 41.4% to $68.4 billion. There is, apparently still a LOT of oil and gas production but the capital investments in looking for new deposits is way down. As it should be in response to lower prices.

Wells Fargo has been a disappointment lately due to revelations of bad behavior in its retail branches and exasperated by a fairly weak response so far combined with a public and political mood that is very unforgiving in such matters. This bank will report Q3 earnings in about a week and we may learn more then. I suspect its operating profits will have been very little affected. But its outlook for the future and its estimates of the costs and lost business will be key. It will have to be convincing regarding taking responsibility for the bad behavior and in making changes.

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