Stocks on the Toronto Stock Exchange were literally unchanged yesterday as a computer failure prevented trading to continue past the opening bell. Things are expected to be up and running today.
Yesterday, the Organization of Petroleum Exporting Countries (OPEC) oil ministers agreed to their deepest oil output cut ever (3rd this year) cutting 2.2 million barrels per day (bpd) from oil markets. This is an attempt to balance supply with rapidly crumbling demand for fuel (a better balance will ultimately lead to more price stability).
The 12 members of the Organization of Petroleum Exporting Countries were also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel. Oil prices fell yesterday by $3.54 a barrel to $40.06 following the deal, after weekly U.S. data showed inventories in the world’s biggest consumer continued to build.
The cut is in addition to existing cuts of 2 million bpd since September. It lowers the supply target for the 12 members bound by output limits to 24.845 million bpd — down nearly 15% from September output or 5% of global supply. “I hope we surprised you — if not, we have to do something about it,” said OPEC President Chakib Khelil, host of the conference. Globally we consume ~ 80 million bpd in oil.
Stocks fell yesterday in the U.S. by approximately 1% but the NASDAQ did a little better, dropping 0.67% in a “yo-yo” recession as the U.S. government’s effort to stave off a deep economic recession raised worries about mounting public debt and blunted optimism following the Fed’s rate cut. Investors continue to “digest” whether the Fed (and the government) will have more ammunition left after its bold move on Tuesday to slash borrowing costs to a record low, even zero. This is while it has pledged to use “all available tools” to jumpstart the economy and stop economic declines.
This morning U.S. stock-index futures advanced as investors speculated President-elect Barack Obama and Treasury Secretary Henry Paulson will step up efforts to prevent the recession from deepening. Paulson is rumored to be ‘tapping’ the 2nd half of the Trouble Asset Recovery Plan for $350 billion and Obama is rumored to be preparing an $850 billion stimulus package for approval in early 2009.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
