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OK if you thought last week’s volatility was bad, hopefully you didn’t watch markets much this week because they were worse. The mega caps did not deliver albeit, Google Aka Alphabet knocked it out of the Park and so did Amazon to a lesser extent. In fact, there were too many to mention but suffice to say, there are a lot of mine fields out there so if you are looking at high priced tech stocks…caveat emptor. That theme will likely continue next week when over 500 US companies report, although most of the marquee names have already reported. Still you might want to keep an eye out for Tyson Foods, Hasbro, Disney, Pfizer, Twitter, Pepsi and my personal favorite Peloton to name a few.

In other news, I must be somewhat suspicious of the jobs data on both sides of the border. In the US I am not sure if there was a lag following the Christmas holidays in hiring or perhaps there were significantly fewer mandated covid shutdowns south of the border. Now on our side of things, 200,000 jobs seem extreme unless of course, the job losses came from the service and entertainment section of the economy, served up as ceremonial sacrifices to combat a rapidly spreading virus. Call me crazy but I fail to see how some activities that involve concentrated population densities are allowed while others are not. I feel a great deal of angst when I watch story after story of small business owners forced to shut down even though they are adhering to the strictest of protocols.  Protect and isolate the elderly and immune compromised, get everyone else vaccinated and let’s get on with our lives…I find it remarkable how one politician after another who preach mask wearing and safety protocols yet come down with Covid and of course have ready access to doctors. But I digress.

Stock markets held up remarkably well to finish the week given the monster employment numbers and imbedded wage inflation which is now running at close to 6%. The 10 year US Treasury yield hit 1.92% today yet the Nasdaq and S&P closed up on the day. You can thank the rally in Amazon for much of the gain, but it pales in comparison to the rally in Snap which reported a positive surprise profit. Stock surged 58% today. Mind you for the week the stock was still down 13% so a bit of a pyric victory to shareholders. Still with more inflation data coming next week, rising bond yields could unsettle stock markets. Unless of course you are long banks, insurance companies and oil stocks. Did I mention crude oil hit $92 a barrel today? And it came on the heels of OPEC assuring markets of another 400,000 bpd increase next month.

I am guessing that once the Chinese Olympics are through, factories that have been shuttered to reduce air pollution, will restart burning all the hydrocarbons they can get their hands on. That includes coal as well. I note TECK Corp moved slightly higher this week but that might have more to do with a rebound in copper prices. And for you speculators, pot stocks sprang to life this week, although I cannot find a specific catalyst for the change in sentiment.

Next week, expect more rhetoric from Russia, North Korea not to mention ongoing geopolitical problems in the Middle East. Undercurrents of brokered oil sales from Iran and the abatement of their nuclear program may bubble to the surface and if successful could cause the resupply of up to 1 million barrels of oil to the marketplace. It’s a long shot, but if speculation in pots stocks is growing, its in the realm of possibilities.

Finally, I should mention Corporate Canada’s earnings reports are starting to build with 70 companies due to report. Bell weather names include Telus, Cameco (uranium) Manulife, Sun Life, Canaccord Genuity, Arc Resources, Saputo, Fortis and Enbridge. We expect good things from most of them, so fingers crossed, we don’t get waylaid by a black swan event.

Happy trading and Stay safe.

Cheers Steve

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