Oil dropped significantly yesterday, falling as much as 10% at one point, as investors concluded that supply is not contracting as quickly as demand in the short-term. Oil has now traded at less than $35 (future market) per barrel down from a record set in July of $147 per barrel. Declining energy and materials shares weighed heavily on the Toronto Stock Exchange which was open (after being closed or halted due to technical difficulties).

Stocks fell in the U.S. yesterday, after Standard & Poor’s threatened to strip General Electric of its ‘AAA’ credit rating. General Electric shares 8.2% and ranked among the top drags on the Dow industrials after S&P said there is at least a 1-in-3 chance that it will cut the company’s credit rating from the top “AAA” tier in the next two years.

The Dow Jones industrial Average dropped 2.49%, the Standard & Poor’s 500 Index 2.12%, the Nasdaq Composite Index 1.71% but Canada dropped by more than 3.5%.

General Motors Corp. and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for a restructuring under a rescue plan. This was announced by President George W. Bush this morning which should lift the U.S. Market today but Canada will be under pressure with the downward pressure on oil (now down more than $110 per barrel since July).

Regards,

Wilfred Vos Bcs, CFP, FMA, FCSI, CIM, CFA, MBA, DMS, CBV

SVP & Partner