by Zubin Driver
October 21, 2009
Yes, it's just a number, but numbers are what we track in this business, and last week the Dow Jones Industrial Index spent most of the week above 10,000 before closing just under it at 9,995. In January of '09 the Dow reached 9000 points before spending the next 3 months tanking; in mid July the market finally beat the 9000 mark, and since that time has been making new highs regularly.
Earnings highlights from last week included beats by Intel, Google, JP Morgan, and Alcoa; Bank of America reported disappointing numbers, booking a loss of $1 billion amidst continuing concern over the amount of bad loans it still holds on its books. Many companies report numbers this week including MMM, Microsoft, and Yahoo; thus far Apple and Wells Fargo beat analyst expectations significantly.
Back to backing up the truck
Last week oil broke out of a range it has occupied since early summer, between 60 and 75 per barrel. Every Wednesday the US Department of Energy reports inventory numbers, which tell how much oil the Department holds in reserve. When a significant quantity of oil has been added to the reserve, the oil price usually declines, whereas when there is less oil in the reserve it usually appreciates. This week gasoline inventories fell by 5.2 million barrels; that day oil finally closed above $76 / barrel and continued rising for the next two days, trading up to close at $79 Friday. Bullish oil analysts have been calling for the price to return to $100 levels over the coming year, as the oft-told tale of Chinese and developing world demand continues to re-assert itself after last year's crash.
Lithium Letdown? or Opportunity?
A couple of weeks ago the world's largest lithium producer, SQM, announced that it will be cutting prices on its contracts with purchasers by 20%. Like some other commodities such as iron, lithium does not trade on a spot market, therefore its price does not fluctuate daily and is set in negotiations between major producers like SQM and their customers. When SQM's price slash was announced a number of the small lithium explorers tracked here sold off quite sharply, but since then have been slowly recovering a little. The lithium story is still an emerging and largely conceptual play, so the venture investor is well advised to stay diversified into other areas of interest like resource and tech. Yet this dip is also an opportunity for those of us who missed the initial run in this sector.
Best regards,
Zubin
Zubin Driver
Investment Advisor
(W) 604 643-7608 / (F) 604 643-7606
Email: zubin_driver@canaccord.com
Canaccord Capital Corporation
Attention: Zubin Driver
P.O. Box 10337 Pacific Centre
2200 - 609 Granville St.
Vancouver, B.C. V7Y 1H2
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 OFFICES IN MAJOR CENTRES ACROSS CANADA. MEMBER OF ALL CANADIAN STOCK EXCHANGES AND THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA. MEMBER CANADIAN INVESTOR PROTECTION FUND (CIPF).
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