These are stories Report on Business followed this week.
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Investors are coming off an unruly 32 hours and 30 minutes of trading. Except in Canada, where it was just 26 hours because we started off the week by giving thanks. (As though we had no idea of what was to come).
Markets swung wildly as investors fretted over everything from the economic outlook to the troubles of the euro zone to the spread of Ebola. Oil prices plunged, of particular note in Canada, and currency markets were roiled.
"Do you realize that less than a month ago the biggest concern for financial markets was the Scottish referendum?" said chief economist Douglas Porter of BMO Nesbitt Burns. "How very quaint. Suffice it to say, somewhat bigger issues have swamped sentiment since then."
Here, then, is the play-by-play from market watchers. No doubt others had some choice, but unpublishable, words, as well.
(Some comments, by the way, were not made on the day in question.)
Monday: A taste of things to come
The S&P 500 and Dow Jones industrial average tumbled, as did oil, while Toronto's S&P/TSX composite was closed for Canadian Thanksgiving.
"The main concern now given last week's sharp declines is as to whether the declines seen in the past three weeks are the start of a sharp move lower, or merely another dip, or buying opportunity of the type we've seen so often in the past five years. Some investors are hoping it is exactly that, and the start of earnings season in the U.S. will deliver a welcome boost and stem the selling and prompt a rebound, but this feels different, particularly given all the geopolitical concerns, Ebola and the plunging oil price." Michael Hewson, chief analyst, CMC Markets
"It certainly feels like a make-or-break week for the U.S., with around 53 S&P 500 firms reporting Q3 earnings this week, starting [Tuesday]. JPMorgan, Johnson & Johnson, Wells Fargo and Citigroup report before market, while Intel reports after-market. This will help give a better indication of growth from an earnings perspective and will set up expectations for the rest of the earnings season. Given the momentum we've been seeing in U.S. economic data, there is a good chance earnings will get off to a strong start. It'll be all about whether earnings can match momentum from the economic data and how confident companies are with forecasts." Stan Shamu, market strategist, IG
"What will be key for the markets over the next couple of months is corporate earnings season. There has been so much volatility over the last week, driven largely by fear, that investors need a reason to buy again. We may only be around two-thirds of the way into the 10-per-cent correction that so many believe is necessary, but solid earnings reports could make the current levels look quite attractive." Craig Erlam, market analyst, Alpari
Tuesday: Correction
New York markets were mixed, while the TSX tumbled into a correction, or a loss of 10 per cent from the September peak, and oil fell again.
"The TSX is flirting with an all-out correction after shedding 3.8 per cent last week. With [West Texas Intermediate] now slipping below $85, Canadian energy stocks have slid more than 15 per cent since their late-August high, while materials have shed 14 per cent in the past three months. Meantime, bond yields continue to fall, with the 10-year [Government of Canada] yield breaking below the 2-per-cent level this morning (1.95 per cent at last check), setting new lows for the year." Robert Kavcic, senior economist, BMO Nesbitt Burns, before North American markets opened and the TSX proved him prescient
"This recent fall in equity markets is not something that should come as a surprise to us. Over the last 12 to 18 months we have seen a blind rally in equity markets with a real lack of volume or volatility back up the moves higher. When we see this, it shows us that when markets inevitably do turn around the fall can be swift and sharp, and it seems that is where we are at the moment." James Hughes, chief market analyst, Alpari, before European and North American markets opened
"It's been a very busy morning on the economic data front and, unfortunately, it's just been yet another collection of disappointing and worrying figures. The most concerning are the figures from the euro zone where we saw a significant decline in industrial production in August, much larger than forecasts which were already rather gloomy. On top of this, the ZEW survey on economic sentiment showing another sharp drop from 14.2 to 4.1, while the German reading fell below 0, to -3.6, for the first time since November 2012. The euro zone growth story may be an old one at this stage, but the rate of decline only appears to be accelerating and we're seeing nothing from the surveys to suggest confidence is bottoming out. This doesn't bode well for the end of the year, nor does it suggest that [European Central Bank] efforts to slow it are having any impact." Alpari's Mr. Erlam, before the North American open
"From 30,000 feet, it is not very hard to understand the latest leg of the bond rally. The combination of falling equity markets, bad short-end positioning, deteriorating European fundamentals and perceived dovish central bank communications would do the trick." Strategists Mark Chandler, Ian Pollick and Paul Borean, RBC Dominion Securities in a research note titled "The bond market is super fun right now"
"While oil producers can't be pleased with the drop in oil prices, consumers should see a nice fillip from the resulting decline in the cost of gasoline. Pump prices in Canada and the U.S. are down about 10 per cent from the highs seen earlier this year. Holding consumption patterns steady, lower prices should boost spending power by about US$37-billion annualized in the U.S. and C$5-billion in Canada (about 0.3 per cent of consumption for both countries)." Benjamin Reitzes, senior economist, BMO Nesbitt Burns
Wednesday: Some kind of ugly
The S&P 500, Dow and TSX tumbled, while fears of a return of the euro crisis raged. Greek stocks plunged and bond yields spiked.
"Global uncertainty is ravaging markets. The weight of a deceleration in the global growth outlook complicated by geopolitics and the threat of Ebola and combined with strong oil supplies are driving a wave of risk aversion in markets. The U.S. bond market, with the two-year yield back at 0.35 per cent and the 10-year yield down to 2.15 per cent highlights a market that is being fueled by uncertainty." Camilla Sutton, chief currency strategist, Bank of Nova Scotia, before North American markets opened
"The euro zone is a true basket case and it is hard to believe that it needs an even bigger crisis than heading back into recession to enter into a pro-growth strategy. Totally dysfunctional." David Rosenberg, chief economist, Gluskin Sheff + Associates
"[Wednesday's] moves were extraordinary. Collapsing Treasury yields and a general and indiscriminate reduction in positions (long dollars, short yen, short vol, long credit, and so on). The most striking was the Treasury move because while we've seen reactions to exogenous shocks before ... that caused moves as big or bigger, I can't remember an equity-like position-led capitulation like this in the last 30 years. Given the nature of the move, the idea that somehow, we pick ourselves up, look at a world where Fed policy is easy for longer (again) and go back any time soon to our old familiar low vol, yield-hunting Nirvana seems as inconceivable as Humpty Dumpty being put back together." Kit Juckes, chief of foreign exchange, Société Générale
"You can run but you can't hide from the bond markets. The spike in the Greek 10-year yield and the sudden collapse in the equity markets seem all too familiar, and it looks like we are entering another phase of the euro zone debt crisis. The European markets are bearing the brunt of the Greek-inspired selloff but the London market is being dragged lower by association. When the bond traders sink their teeth into a country they don't let go; the panic surrounding the euro zone isn't going away any time soon." David Madden, market analyst, mid-morning eastern time
"Greece and the Terrible, Horrible, No Good, Very Bad Day." Title of a research note by Sal Guatieri, senior economist, BMO Nesbitt Burns
"If Apple announced a limited time 10-per-cent discount on the iPhone 6, consumers would line up around the block for the opportunity to get a deal. When stocks go on sale, investors have the opposite reaction - most are reluctant to buy and some sell. It isn't buy low, sell high thinking!" Murray Leith, vice-president and director, investment research, Odlum Brown
"The TSX is currently trading a very reasonable 14 times forward earnings, which one could argue is in fact cheap given we're in an era of lower bond yields. True, earnings expectations may still be in the process of adjusting to economic events of recent weeks, but the softening of the Canadian dollar has also not likely been fully factored in on the plus side. Perhaps moving gingerly at first, investors would do well to begin to lean back into equities, including cyclically levered energy stocks, in the weeks ahead." Avery Shenfeld, chief economist, CIBC World Markets
Thursday: Is it safe to look?
The day began on a down note on global markets, but perked up after suggestions by James Bullard, chief of the Federal Reserve Bank of St. Louis, that the U.S. central bank extend its asset-buying stimulus program known as quantitative easing, or QE, which is being wound down. The S&P 500 and Dow ended mixed, while the TSX shot up almost 185 points.
'Not that equity markets needed someone to inject a little life into them by throwing about inflammatory comments, but that has not stopped Fed member James Bullard. His suggestion that the Fed postpone the end of its debt-purchasing scheme saw volatility jump. Last night's figures from Netflix looked remarkably like they were trying to shoot themselves in the foot, and the out-of-hours trading in the share price saw it drop by a quarter. Equity traders are feeling less than charitable at the moment, and it has started much as it performed overnight. Goldman Sachs once again has beaten market expectations, a record that is showing no sign of becoming unstuck regardless of the chaos surrounding it." Alastair McCaig , market analyst, IG, mid-morning eastern time
"Is it safe to look? You can but it is not pretty." Jennifer Lee, senior economist, BMO Nesbitt Burns, before North American markets opened and overseas screens were still flashing red
"Equity markets found some support Thursday. Still, the recent selloff has beaten the S&P 500 well below its 200-day moving average in very short order. Outside of the financial crisis, you have to go back to when the United States' credit rating was downgraded in 2011 to find such a dramatic move. Why so fast? China is softening, but that's been coming for ages. Europe is stagnating, but hopes weren't exactly high there. A soft U.S. retail sales report on Wednesday? Hardly a reason to carve more than 400 points off the Dow at one point. The real reason probably begins with an E. Not because its spread is overly likely, but because the economic cost would, let's just say, not be small." BMO's Mr. Kavcic, referring to Ebola
Friday: Okay, you can look now
The S&P 500, Dow and TSX rallied, and oil picked up, as investors capped one heck of a week.
"European markets have continued the positive spill over from yesterday's comments by Federal Reserve policymaker James Bullard about the possibility of extending QE, and look set to end a turbulent week on a much more positive note, with further comments from Bank of England Chief economist Andrew Haldane about the prospects for low interest rates for longer helping support stock markets. Investors appear to be taking heart from the belief that central bankers are listening to their concerns about a premature tightening of monetary policy. It is does speak to a larger problem, though, with respect to who controls financial markets in that in the first sign of significant volatility central bankers feel compelled to offer soothing words of comfort in the manner of an adult trying to calm a sulky child with the offer of more sweets." CMC's Mr. Hewson
"In London equities are finishing the week on a positive note as Greek bond yields retreat. The fear has evaporated out of the euro zone today as the bond markets have calmed down but I wouldn't get too comfortable as next week is likely to be a rocky ride. The euro zone debt crisis has a history of rearing its ugly head, Ebola has yet to be contained, China's GDP report will tell us the golden days of Chinese growth are over. Confidence in equity markets takes months to be gained but it is lost in hours." David Madden, market analyst, IG
"The number of Catholic nuns in the world continues to dwindle, the Fides missionary news agency said Friday, citing the December 2012 edition of the Church's statistical annual. In 2012, it said, nuns were down by 10,677 to 702,529 worldwide with Europe again accounting for the lion's share of the drop, 9,051." From ANSA en Vatican. (This has nothing to do with the markets. But, in my defence, all I saw when it first crossed my screen was a sharp decline.)
- Follow our Inside the Market blog (for subscribers)
- David Parkinson: Markets rebound on QE hopes ahead of looming deadline
- David Berman in Inside the Market (for subscribers): Have markets hit bottom?
- Loonie bounces around by a penny as 'greed begets fear'
- The (painfully slow) rise and (gut-wrenching) fall of the TSX
- Tim Kiladze in Inside the Market (for subscribers): Relax. We will recovery from this market meltdown
- Eric Reguly: Winners and losers from oil's fall
- David Berman and Brian Milner: A market fall - and Canada's suddenly vulnerable energy sector
- Shawn McCarthy and Jeff Lewis: Oil producers face price war over slowing global demand
- Jeffrey Jones: In Alberta, anxiety grows over declining oil prices
The week in Business Briefing
- Oil price slump drives TSX to 'all-out correction'
- The (painfully slow) rise and (gut-wrenching) fall of the TSX
- Fears of new euro crisis mount 'by the day' as Greece woes flare again'
- At Starbucks, a raise and skirts 'no more than 4 inches above the knees'
The week in Streetwise (for subscribers)
- Jacqueline Nelson: AGF chief seeks aggressive turnaround in tough fund industry
- Niall McGee: CP-CSX deal could spark new era of M&A in rail
- Adrian Myers: Fierce debate over CSA's early-warning proposal isn't going away
- Tim Kiladze: Sunny days are long gone for Canadian banks' Caribbean operations
The week in real estate
- Claire Neary and Tara Perkins: Toronto scares off big U.S. home builder
- Tara Perkins: Canadians' debt payoffs rise as mortgage principal payments targeted
- Tara Perkins: St. John's housing market on a 'winning streak'
- Carrie Tait: Unsteady oil markets prompt fears Calgary housing will follow suit
The week in ROB Insight (for subscribers)
- Ian McGugan: The Black Zero is casting a long shadow over Germany
- Andrew Jackson: Public investment can trump budget surpluses in lowering Canada's debt
- Brian Lee Crowley: Nokia a lesson for backers of Canada's nanny state
- Ian McGugan: HBO's new service threatens cable's cozy world
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- Eric Atkins: CSX takeover would be great for CP Rail, but a 'step back' for shippers
- Shawn McCarthy: Gas interests lining up against TransCanada's Energy East pipeline
- Omar El Akkad: Google falls short as ad business shows cracks
The week's must-reads
- Greg Keenan: Recession's backfire rattles used car market
- Jacqueline Nelson: Chess grandmaster looks to rebrand game with high stakes tournament
- Jeffrey Jones: As prices plunge, the global oil showdown begins
- Jacqueline Nelson in Streetwise (for subscribers): AGF chief seeks aggressive turnaround in tough fund industry