September 28, 2016

On Wednesday, markets got a boost from reports that OPEC would plan to reduce production starting in November. Some Canadian stocks such as Stantec were also boosted by news of the conditional approval of a large LNG project.

The S&P 500 ended the day up 0.5% while Toronto was up 1.2%.

Individual stocks on our list were mostly up with gains such as Stantec up 2.8% and Element Financial up 2.7%. But Couche-Tard was down 1.8% (which may have been partly due to the higher Canadian dollar).

Oil was up about 5% on the possible deal to cut production.

Costco was down 0.7% to $149.41. We rated it a Sell on July 31 at $167.22. It’s a great company and so those who would like to own it could consider taking a small position at this time. It will release earnings tomorrow.

There seems to be some confusion about the cost of the LNG project conditionally approved yesterday. When I first heard of this proposed project a few years the cost of about $36 billion was mentioned for an LNG terminal. I immediately thought that was preposterously high and it would never happen. Yesterday the $36 billion was mentioned again. But now I understand that this includes the terminal at “only” $11 billion and pipelines at $7 billion and some gas production that has already taken place and some planned gas production and even the cost that the proponents paid to acquire a company (progress Energy) in 2012. The project is FAR from certain to happen but at least $11 billion for the terminal is (maybe) within the realm of reason. There is however no way that more than one or two large export terminals will ever be built. (I believe there are many proposals).


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