Month: January 2023

TXPR closed at 547.53, up 0.58% on the day. Volume today was 748,240, second-lowest of the past 21 trading days.

CPD closed at 10.795, up 0.42% on the day. Volume was 85,560, second-lowest of the past 21 trading days.

ZPR closed at 9.02, down 0.22% on the day. Volume was 117,180, second-lowest of the past 21 trading days.

Five-year Canada yields were down to 3.33% today.

Equities were mostly boring:

Wall Street’s main indexes closed lower on the first trading day of 2023 with big drags from Tesla and Apple, while investors worried about the Federal Reserve’s interest-rate hiking path as they awaited minutes from its December meeting. The Canadian benchmark index ended the session with a modest gain, thanks partly to a rally in the gold sector.
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The S&P/TSX Composite Index closed up 58.85 points, or 0.30%, to 19,443.77. Despite Wall Street’s losses, the Toronto market saw most sectors gain – with the notable exception of energy, which lost 5.8%. Oil prices settled 4.1% lower at US$76.93 a barrel, pressured by weak demand data from China, a gloomy economic outlook and a stronger U.S. dollar.

But there was one area of excitement:

Tesla Inc. TSLA-Q -12.24%decrease
shares kicked off 2023 with a thud, plunging more than 12 per cent on Tuesday on growing worries about weakening demand and logistical problems that have hampered deliveries for the world’s most valuable automaker.

Once worth more than $1 trillion, Tesla lost more than 65 per cent in market value in a tumultuous 2022 that saw it increasingly challenged by other automakers and face production issues stemming from COVID lockdowns in China.

Tuesday’s slide knocked off nearly $50 billion in market value, roughly equal to the valuation of rival Ford Motor Co, which last year sold three times as many cars as Tesla.

The sell-off came after Tesla missed market expectations for fourth-quarter deliveries despite shipping a record number of vehicles.
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At a value of about $341 billion, Tesla is still the world’s most valuable automaker, even though its production is a fraction of rivals such as Toyota Motor Corp.

I bet Bill Gates is happy!

Bill Gates’ $500 million Tesla short position is a bit awkward in terms of his own pledges to help with climate change. Tesla is a trillion-dollar company with a focus on accelerating the transition to sustainability. It’s also the only company that has had massive success beating the odds stacked against it while pushing electric vehicles and making them more commonplace. Tesla is essentially the loudest advocate for sustainability and has shaken up the automotive industry.

Yet, the author of How To Avoid A Climate Disaster put his money on the failure of a company that is aligned with that book’s message, according to screenshots of a message between Gates and Tesla CEO Elon Musk.

The quoted argument is infantile, obviously. Whether or not you like a company’s products has very little to do with whether or not you own the stock – that decision is determined by whatever gap you might deduce between price and value. Tesla’s a great company and I hope it does well. Do I think it ever deserved to be worth half of the entire global auto industry? No.

German inflation news was indecisive:

German inflation eased for a second month in a row in December due to falling energy prices and the government’s one-off payment of household energy bills, coming in below expectations even as analysts warn that a continued slowdown is not a given.

German consumer prices, harmonised to compare with other European Union countries, rose by 9.6% on the year in December, preliminary data from the Federal Statistics Office showed on Tuesday. Analysts polled by Reuters predicted prices would rise by 10.7% year-on year in December.

October saw the highest reading since comparable data going back to 1996, with harmonized price index up 11.6% on the year. November saw a slight easing, with an increase of 11.3%.

A one-off payment for household energy bills in December, part of government efforts to shield consumers, had a downward effect on prices, according to the statistics office.

Compared with November, December prices fell by 1.2%. Analysts had expected a drop of 0.5% on the previous month.

But 2022 was good for pension plans!

Soaring interest rates helped push more pension plans into surplus in 2022, offsetting market losses as pensions brace for another volatile year in 2023, according to two reports that measure the funding status of Canadian plans.

Consulting company Mercer Canada Ltd. said its quarterly pension health pulse, which tracks the median solvency ratio of nearly 500 Canadian defined benefit (DB) pension plans that are Mercer clients, increased to 113 per cent as of Dec. 31, up from 103 per cent at the start of the year.

And professional services firm Aon PLC said the aggregate solvency of DB pension plans of companies in the S&P/TSX Composite Index, as measured by its pension risk tracker, increased to 100.8 per cent at the end of 2022, up from 96.9 per cent a year earlier.
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At the end of the fourth quarter, 79 per cent of plans tracked by Mercer were estimated to be in surplus on a solvency basis, and another 12 per cent had ratios between 90 per cent and 100 per cent. Four per cent of plans had solvency ratios between 80 per cent and 90 per cent, and 5 per cent were below 80 per cent, according to Mercer’s data.
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The main factor that helped boost solvency levels for many Canadian pension plans in 2022 was the rapid rise in interest rates as central banks tried to beat back surging inflation. The Bank of Canada raised its benchmark rate seven times in 2022, from 0.25 per cent to 4.25 per cent.
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With more plans in surplus and continuing headwinds in markets, some pension fund managers could take steps to reduce risk in their portfolios, shifting more assets to fixed income – which now offers higher yields – or contracting with insurance companies to buy annuities to pay future benefits.