For a long time, billionaire investors like George Soros and Warren Buffett have been saying that a second stock market crash is in the making. The TSX Composite Index surged 30% between April 1 and September 1 after falling 34% in March. The market crashed when the COVID-19 pandemic struck, and the market rallied on the back of the government stimulus package.
There were fears that the second wave of pandemic after the reopening of the economy would repeat the March sell-off. These fears are materializing. The increasing COVID-19 cases in the U.S., Canada, and Europe are recreating conditions of a lockdown. But this time, there won’t be a complete nationwide lockdown but tighter travel restrictions. Governments are better prepared to handle a coronavirus outbreak than they were in March.
Is the stock market crash 2.0 here?
George Soros stated that the free money coming from the fiscal stimulus package created a liquidity bubble, which drove stock valuations to new highs. When the valuations are high, there is more downside than upside.
The stock market was already bearish when the Canada Revenue Agency (CRA) delayed Canada Recovery Benefit (CRB) payments because of a technical glitch. The liquidity coming from the stimulus package was drying up. The COVID-19 resurgence accelerated the bearish tone. The TSX Composite Index has fallen 4.7% in the last three trading days and 6.2% in 13 trading days. In the March-sell off, the Index fell 11.8% in three trading days and 18.7% in 13 trading days.
The potential of another wave of pandemic hurt Air Canada (TSX:AC) and Suncor Energy (TSX:SU)(NYSE:SU) the most. Their stock prices fell 11.6% and 10.2%, respectively, to their March lows. Even virus stocks like Shopify, Lightspeed POS, and Kinaxis dipped single digits this week.
Companies are releasing their third-quarter earnings. The TSX Composite Index decline was partially offset by earnings surprises. For instance, better-than-expected third-quarter earnings sent RioCan REIT stock up 2.46%.
Stocks in the red
AC and Suncor are already struggling with sluggish air travel and oil demand. Another wave of tighter restrictions dampened any hopes of a recovery this year. The stock price momentum of AC and Suncor was range-bound since the pandemic. The recent dip pushed their stock prices to the lower end of their price range. AC stock has found support at $15. But Suncor stock lost its support and fell below $15. Warren Buffett exited airline stocks but retained his investment in Suncor in April.
A prolonged sector weakness leads to consolidation. The oil and gas industry has been in crisis for six years, and the pandemic has made things worse. Moreover, interest rates are near zero, creating an opportunity to acquire companies with strong assets at an attractive price.
The Canadian oil and gas industry saw its first mega-merger; Cenovus Energy agreed to acquire Husky Energy for $3.8 billion. Analysts believe that this could be the beginning of a mergers and acquisition supercycle. Suncor is in a far better position than most oil and gas companies because of its integrated business model. Its third-quarter earnings gave a snapshot of its liquidity, which will help it withstand crisis and operating efficiency that will help it return to profit when the oil price recovers to US$45/barrel.
The airline industry is already consolidated. It might undergo further consolidation, or some airlines might declare bankruptcy. For instance, AC slashed the Transat A.T. bid price by more than 70% to $190 million. But this deal could fall in jeopardy if AC faces the risk of bankruptcy.
What should you do in this stock market pullback?
The recent dip in the stock market has created an opportunity to buy post-pandemic stocks at discount. Suncor has growth potential, but its growth comes with risks. There are better stocks like Enbridge and RioCan, which have dividend yields of over 8.86% and 9.97%, respectively. These stocks are also reporting profits and positive cash flows. The stock market pullback has created an opportunity to lock such high-dividend yields for a lifetime.
Here are some more quality stocks to buy in the recent stock market pullback.
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Fool contributor Puja Tayal has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Enbridge, Shopify, and Shopify. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends KINAXIS INC.
Doug Ford rebuffs calls to reopen retail shops at 25 per cent capacity in Toronto, Peel region – The Globe and Mail
Ontario Premier Doug Ford is rejecting a push from prominent retailers to reopen non-essential stores in Toronto and Peel, a day after they published an open letter urging the government to allow 25 per cent capacity in retail shops in lockdown regions.
Mr. Ford on Wednesday said he feels the pain of business owners who are forced to close until at least Dec. 20 during the lockdown, but said he is listening to the province’s Chief Medical Officer of Health and others guiding his government during the COVID-19 pandemic.
“I’d switch those things open in a heartbeat. But I can’t. I have to listen to the health experts,” Mr. Ford said during his daily press briefing at Queen’s Park.
“I’m a businessperson. I don’t want to close these down. But health trumps my personal belief.”
As part of the lockdown, big-box stores selling essential items – such as Costco and Walmart – are allowed to open at 50 per cent capacity, while other retail stores and small businesses cannot offer in-store shopping and are forced to sell items for delivery or curbside pickup only.
A coalition of nearly 50 retailers, including Canadian Tire, Indigo, Hudson’s Bay and others, this week called on the Ontario government to lift the COVID-19 restrictions that have shuttered stores just in time for the crucial holiday shopping season.
In an open letter released on Tuesday, the group said that the closing of retailers deemed non-essential in Peel Region, which includes Mississauga and Brampton, and in Toronto is “an ineffective policy” that puts retail businesses at risk of failure. The group called for Ontario to implement store capacity limits at 25 per cent of the building capacity for all retailers – not selective lockdowns with big-box stores open at 50 per cent capacity.
Signatories pushing for the changes said Wednesday they felt unfairly targeted by the government’s rules.
“[Retailers] feel undeservedly singled out as an initiative to stop the spread of COVID-19, when in fact the government’s own statistics indicate that retail is not a significant source of spread,” Leon’s Furniture Ltd. president and chief executive officer Edward Leon said in an e-mail on Wednesday.
David Bensadoun, CEO of the Aldo Group Inc., said the decision to keep non-essential stores shuttered would drive customers to American stores.
“Every time we do a lockdown of specialty stores, we’re hurting Canadian retail,” he said.
“Even though Canadian retailers have terrific online experiences, they cannot compete with the big American players for ad dollars, so when we shift consumers online, we’re largely shifting them to Amazon, Walmart and other American mega-players. I don’t envy Ford’s position, I don’t think it’s easy. But in this case I think he’s made a mistake, and the sooner he corrects it the better, because these are the biggest weeks of the year for shopping.”
Heather Reisman, CEO of Indigo Books & Music Inc., said by funnelling more people into fewer stores, “you actually cause longer waiting lines with chance for closer contact. … This could create higher health risk while doing devastating damage to hundreds of businesses.”
Mr. Ford acknowledged that keeping big-box stores open for in-store shopping is “not fair,” but said they are intended to be a one-stop shop for groceries and other essential items. However, those stores also sell non-essential goods such as clothing, toys and gifts.
Ryan Mallough, director of provincial affairs for Ontario at the Canadian Federation of Independent Business, said small businesses are also calling for the government to present data that back up the need to keep independent retailers shuttered. His group has called for limited in-person and appointment-only shopping during the holiday season.
“If there’s any evidence that shopping at a busy big-box store with a couple hundred other people, even at 50 per cent capacity, is safer than at a small business with two or three other people, then show that data. Because right now that is one of the immensely frustrating things,” he said.
Ontario reported 1,723 new cases of COVID-19 on Wednesday, as well as 35 new deaths owing to the virus. Toronto and Peel account for more than half of the new infections, with 500 cases reported in Peel and 410 in Toronto. There were 196 new cases in York Region, north of Toronto, which is not in lockdown and still allows in-person shopping in malls and stores.
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Charity tree festooned with Dr. Strang's ties fetches $8K at auction – CBC.ca
As Nova Scotians get ready for Christmas, one anonymous person is celebrating with a tree like none other after winning it at auction for $8,250.
Instead of snowflakes or angels, this tree is adorned with ties from Nova Scotia’s chief medical officer of health, Dr. Robert Strang.
Strang’s eclectic tie collection has been thrown into the spotlight during the province’s regular COVID-19 updates, which are streamed online. It was his wife’s idea to wear a different one every day.
“It became a part of the briefing, me wearing a different tie each time,” said Strang, who started receiving ties as gifts from people as he became a household name among Nova Scotians.
“I don’t think of myself as famous. In some ways, it’s kind of embarrassing. I just happen to be, because of my job, I’m the front face of this.”
‘Light bulb’ idea
A few months ago, Strang was at a book launch and ran into Starr Cunningham, president and CEO of the Mental Health Foundation of Nova Scotia.
Cunningham said she’s always trying to come up with ideas to decorate items for the charity’s big Festival of Trees fundraiser. That encounter led to what she called a “light bulb moment.”
“I thought, ‘Wow, what if we got those ties and got them on a tree?'” she said. “I just reached out to him on a whim and he replied immediately and said, ‘How many do you want?'”
Strang dug through his collection and found 22 ties, each with their own story. One was from Sawyer Burke, an 11-year-old from Hatchet Lake who has become Strang’s penpal.
“He was very excited that what he’s given to me, I was then giving forward to contribute to the fundraiser for broader contributions to mental health,” said Strang.
The tree, trimmed with ties and bottles of hand sanitizer, was placed on the auction block where Cunningham said it received an immediate response.
“We were amazed,” she said. “We were watching the bids all night, because the auction closed at 8:30 and it just kept growing and growing and growing.”
The final price tag was $8,250 — the highest price for any item in the auction.
A timely cause
Strang said the tree was the first direct request he’s received to support a charity, and he was particularly interested in the cause.
“As part of our pandemic response, we need to be paying attention to the mental health impact,” he said. “There’s significant increases around stress, anxiety, depression — particularly in young people.”
Cunningham said the money raised from the tree’s sale will be used to create grants for various programs. This year, the foundation has helped connect people to their families and clinicians during the pandemic through technology.
“Something as simple as a phone in their hand has helped them cope in the pandemic,” said Cunningham.
So far, she is tight-lipped about the tree’s anonymous buyer. But she said people will soon know who spent thousands on Strang’s ties.
“We’re not able to say at this point in time, but it will certainly be shared with the community very soon.”
Pfizer cuts COVID-19 vaccine delivery by half for 2020 due to supply chain issues – Global News
Pfizer has confirmed to Global News that it will be distributing half the amount of COVID-19 vaccines that it had originally proposed for 2020 due to supply chain issues.
In an emailed statement to Global News, the pharmaceutical company confirmed what was first reported by the Wall Street Journal, that it will be delivering up to 50 million doses of the COVID-19 vaccine by the end of 2020 worldwide, down from the 100 million doses previously promised.
“Based on current projections we expect to produce globally up to 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021,” Pfizer said in a statement.
Pfizer said there are two reasons the number of doses expected has changed.
“For one, scaling up a vaccine at this pace is unprecedented, and we have made significant progress as we have moved forwards in the unknown,” the company said.
“Additionally, scale up of the raw material supply chain took longer than expected.”
Coronavirus: Canadian officials expect Pfizer vaccine ‘likely’ to arrive first
Pfizer also noted that results of its clinical trial were received later than expected.
The company said finished doses are currently being made at a “rapid pace.”
“We are confident in our ability to supply at a pace of approximately 1.3 billion doses by the end of 2021,” Pfizer said.
Pfizer had adjusted its supply outlook in 2020 from 100 million to 50 million in November in publicly available statements, but had promised up to 100 million doses as late as September.
The vaccine has been found to be 95 per cent effective against COVID-19 in recent tests, and the United Kingdom became the first country to approve the vaccine on Wednesday.
Canada is set to receive up to four million doses of Pfizer’s vaccine between January and March 2021, and will finish its review of the vaccine “soon,” according to Health Minister Patty Hajdu.
© 2020 Global News, a division of Corus Entertainment Inc.
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