I wasn’t able to come into the office yesterday because I was sick – and those of you who know me well, know that I need to be really, really sick to miss work – and so, I was home sick with something fierce from Thursday night until this morning fighting some crazy virus that my husband caught from our little baby niece, who then graciously shared it with me.

I’ve pieced myself together enough to write to you today and give you your weekly WOTS fix – so here’s a quick recap of the bad week that both my body and the market had:

                                                           

• The S&P 500 fell 2.2% for the week as lower commodity prices tugged down energy and materials, and underwhelming earnings reports pressured industrials and tech. All 10 S&P 500 sectors declined. The S&P 500 reached an all-time high during intraday trading on Monday, but failed to close at that level.
• The TSX dropped 3.1%, led lower by materials and energy, which fell 8.0% and 6.2%, respectively and impacted all major equity markets.
• WTI crude oil slid 5.7% for the week to $47.99/bbl and Brent crude fell 4.3% to $54.65/bbl while shares in precious metals producers were forced to reflect bullion prices just under $1,100/oz.
• The Canadian dollar continued to trend lower and now sits at the lowest level, relative to the U.S. dollar, in over 10 years. What’s weighing on the loonie? Oil price weakness and diverging Canadian and U.S. central bank policies.

So, any good news? Yes, there is always good news – it just depends on where you look.

 

With the media busy making all of this bad news front & center, US economic data largely flew under the radar - but it shouldn’t have as there were some positive surprises. With the help of low interest rates, sales of previously owned homes surged 3.2% m/m to 5.49 million units in June, (the highest monthly rate in more than 8 years) and 2 important gauges of national economic activity—the Conference Board’s Leading Index and an index developed by the Chicago Fed—climbed more than expected in June. This is encouraging because these indexes attempt to forecast economic activity 3–6 months from now – reaffirming our view that the domestic economy should strengthen in the second half of the year.

 

With respect to oil, because demand remains sturdy, we believe it would be difficult for prices to linger near these level—or lower—for very long. While market participants seem anxious about Chinese demand, the country’s crude oil consumption and imports increased in recent years, including in 2014, even as GDP growth slowed (not to mention European and U.S. demand should rise if these economies improve as we anticipate). As the Canadian dollar and crude oil remain tightly correlated, this suggests hope for eventual loonie recovery – but it’s going to be a long and bumpy road ahead.

 

As for me, the only good thing about being sick is that I get to binge watch shows on Netflix & HBO. A good friend of mine recently suggested I watch True Detective and halfway into the first season, I’m hooked…in a weird way I must admit – as it’s unlike any show I’ve ever watched. The script/writing is brilliant, the acting is amazing but the episodes run slow – yet they don’t seem to drag. I guess the best analogy would be the anticipation of a really tasty stew that you have to let simmer for hours so that the flavours and ingredients fuse together over time in the slow cooker – filling your home with that delicious smell that you have to wait to taste. That slow cooking feeling of the show is what’s keeping me hooked and I can’t wait to see what the final meal ends up tasting like…
Did I mention that this virus made me lose my appetite? I must be hungry now. I think I’ll go home and make a stew while I watch more episodes.