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By Gregory Thomas
Special to the Vancouver Sun
Saturday, February 10, 2007
Canada's economy surprised everyone in January, adding 88,900 jobs, the most in eight months, outstripping economists' expectations by a factor of seven to one, and sending the Canadian dollar to a seven-month high. Gold prices reached levels not seen since July. And oil cracked the $60-a-barrel mark. All this was too much for traders, who sold gold stocks, oil stocks, and sent Canada's leading index to its steepest loss since Jan. 3.
Adrian Mastracci, fee-only portfolio manager at
KCM Wealth Management in Vancouver, says, "We can't keep going at this pace. If we have a slowing economy, slowing GDP, but a terrific jobs situation, that doesn't compute."
The S&P/TSX Composite erased 100.35 points, shedding 0.8 per cent, to 13,083.95, ending the week lower by 0.3 per cent. But the resource-heavy S&P/TSX Venture composite climbed 21.04, or 0.7 per cent to 2,997.73, ending the week higher by 0.8 per cent.
"Something is going to have to give," said Adrian Mastracci, a fee-only investment counsellor at Vancouver-based KCM Wealth Management. "We can't keep going at this pace. If we have a slowing economy, slowing GDP, but a terrific jobs situation, that doesn't compute. If either one of those numbers doesn't change, that would be worse, because that would suggest we are losing productivity.
"The worst scenario is that those numbers are real. Investors should prepare for a slowdown. And if they don't get it, or the slowdown is benign, it will be a bonus."
In New York, concerns over rising mortgage defaults sent U.S. markets to their biggest weekly drop of the year. Citigroup, the biggest U.S. bank, dropped the most in seven months. U.S. Federal Reserve official William Poole slammed mortgage lending practices Friday, saying "many companies made too many loans that were poorly documented, and now those are coming home to roost."
The Dow Jones Industrial average dropped 56.80 points, or 0.5 per cent to 12,580.83. The S&P 500 shed 10.25, or 0.7 per cent to 1,438.06. The Nasdaq composite fell 28.85, or 1.2 per cent, to 2,459.82.
For the week, the Dow declined 0.6 per cent, while the S&P and Nasdaq slipped 0.7 per cent.
In New York, March crude climbed 18 cents, or 0.3 per cent, to $59.89 US a barrel, after touching $60.80, the highest level in more than a month. Crude ended the week up 1.5 per cent. Next-day natural gas at Spectra Energy's Huntingdon tolling station in Abbotsford was lower by 18 cents, or 2.4 per cent for the week at $7.22 US per million Btu.
April gold reached a six-month high, gaining $9.50, or 1.4 per cent, to $672.30 US an ounce, ending the week high by 3.2 per cent.
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