Here is oil news:

LONDON — Oil prices fell about $2 (U.S.) a barrel Tuesday to their lowest levels in 18 months in a market expecting more mild weather and rising inventories in the United States.

Light, sweet crude for February delivery dropped $2.04 to $$54.05 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. February Brent crude at London's ICE Futures exchange fell as much as $1.96 to $53.64 a barrel.

Traders said a break through key support levels triggered a wave of sell orders.

The Nymex contract had fallen 22 cents to settle at $56.09 a barrel Monday on record high January winter temperatures in the U.S. Northeast. The volatile session saw crude rise as high as $57.72 on reports that OPEC oil ministers are considering another cut in output, and worries that a dispute between Russia and Belarus could result in energy shortages in parts of Europe.

The halt to the flow of Russian oil through Belarus had supported prices Monday, but ample supplies in Germany, Poland and Ukraine were expected to keep refineries running.

Nigeria's oil minister Edmund Daukoru discouraged talk of any immediate action to support prices by OPEC, which recently resolved to cut output by 1.7 million barrels per day.

“Let's implement the 1.7 million fully then we'll see if there's a need for additional cuts,” Mr. Daukoru said.

If OPEC announced another production cut — on top of the 1.2 million barrel-a-day reduction that began in November, and the 500,000 barrel-a-day cut set to begin Feb. 1 — prices would likely rise. Still, OPEC's previous cuts haven't been able to keep crude prices above $60 a barrel for long, largely because many traders doubt that the cuts are fully enforced.

Forecasters expect temperatures in the U.S. Northeast, the world's largest heating oil market, to drop to normal levels over the next couple of weeks.

Heating oil futures fell more than half a cent to $1.5498 a gallon while natural gas rose 6.2 cents to $6.44 per 1,000 cubic feet.

Analysts surveyed expect U.S. petroleum inventories to rise in government data to be released Wednesday by the U.S. Energy Department. Crude inventories were expected to climb an average of 820,000 barrels, the survey showed.

Crude stocks normally fall this time of year, but with imports rebounding from a recent slump, inventories are likely to rise, said analyst Phil Flynn of Alaron Trading Corp. in Chicago.

Petroleum product stocks are expected to increase for the fourth straight week. Distillate stocks, which include heating oil and diesel fuel, are seen rising by an average of 1.9 million barrels while gasoline stocks are projected to increase by 2.5 million barrels.

Link :
http://www.globeinvestor.com/servlet/story/RTGAM.20070109.woilprices0109/GIStory/

This may affect any holdings of oil stocks or Mutual funds (MFs) invested in oil companies and drag them down

Also indices based on this commodity like our TSX will also experience a downturn, generally speaking.

Canadian dollar falls to 14-month low versus US$

09/01/07

TORONTO (Reuters) - The Canadian dollar fell to a 14-month low against the U.S. currency on Tuesday, hurt by sliding energy prices and weaker-than-expected domestic housing starts data.

The currency fell to C$1.1797 to the U.S. dollar, or 84.77 U.S. cents, its lowest level since November 2005, and down from Monday's close of C$1.1755, or 85.07 U.S. cents.

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Link:

http://www.globeinvestor.com/servlet/story/ROC.20070109.2007-01-09T145025Z_01_TOR001471_RTRIDST_0_BUSINESS-MARKETS-CANADA-DOLLAR-COL/GIStory/


For those holding 'unhedged in currency' global stocks in Canadian dollars (CAD) will experience an uplift in value. Also as most major world markets are more inversely oil sensitive and since oil has dropped today, the major world markets (London, Germany, France, Japan, U.S.) in general should be up - this analysis based solely on this factor .

Enjoy the rally while you can, analyst says
ANGELA BARNES


Tuesday, January 09, 2007

Enjoy the expected rally in the U.S. stock market this year, because things may well change for the worse late next year or early in 2009, according to Tobias Levkovich, Citigroup Global Markets Inc.'s chief U.S. equity strategist. He thinks the market could correct at that time, possibly quite sharply.

“We believe stocks should achieve new highs in 2007, which may carry over into 2008 before the combination of a number of coincident factors we view as likely cause equity markets to correct, quite possibly severely, in late 2008/early 2009,” Mr. Levkovich said in a recent report.

“The combination of another economic cyclical peak eight years after a recession, the baby boomers' retirement effect on various social programs, the expiration of tax cuts, an unpredictable presidential election, the likelihood for a widening of credit spreads, Iranian nuclear ambitions become reality, and the culmination of the Beijing Olympics all argue for a time of reckoning late in 2008 or in early 2009,” he said. He rates the possibility of a “major pullback” at that time as “pretty high,” but suggests investors might be too lulled by the ongoing strength in the market to see it coming.

Mr. Levkovich is more upbeat on the U.S. market than many observers. His year-end 2007 target of 1,600 on the Standard & Poor's 500-stock index implies a more than 25-per-cent gain from current levels, which is well above the 7- to 8-per-cent advance that many in the market anticipate. And he notes that even that 7- to 8-per-cent expectation comes with a caveat — that it is possible if there are no terrorist threats, geopolitical turmoil, energy shocks, a sharp decline in the U.S. dollar, further significant depreciation in U.S. housing prices or a recession.

Moreover, many in the market fret that this rally, which has now gone for 50 months since the bottom set in October, 2002, has already lasted longer than the average bull market without a 10-per-cent correction. But Mr. Levkovich doesn't share that concern. He said this rally “is still less impressive than the ones after the crash in 1929 and the 1973-74 severe market downturn.”

As he sees it, the green light is still signalling for 2007 and investors should take advantage of any near-term pullbacks.

© The Globe and Mail

Link:
http://www.globeinvestor.com/servlet/story/RTGAM.20070109.wforecast0109/GIStory/

Scramble for US stocks and MFs investing in the US!

http://www.investmentexecutive.com/client/en/News/News.asp?Id=37345&IdSection=148

European shares likely to rise, says BCA Research


Rising profit margins indicate that excess returns will stay high


Wednesday, January 10, 2007


By James Langton



Strong return on equity values point to further upside for European stock prices, suggests BCA Research

“Our Global Investment Strategy service argues that European stocks remain attractive because their RoE is substantially higher than the risk-free borrowing rate,” it reports in a research note. “This effectively represents the ‘Excess Return’ of stocks, and has correlated closely with share price behavior.”

“Though the ECB is likely to hike rates further and profit growth is set to decelerate, rising profit margins indicate that excess returns will stay high,” BCA says. “High RoEs relative to the cost of capital, in turn, point to another year of strong merger & acquisition activity, providing additional support for stock prices.”

“We expect European bourses to post solid gains again in 2007,” it concludes.


Run for a slice of Europe!

Here's a bear view and a part-time bear view!

http://www.globeinvestor.com/servlet/story/RTGAM.20070111.wbear0111/GIStory/

Strategist thinks bear will hang around
ANGELA BARNES


Thursday, January 11, 2007

The bear has come out of hibernation very early this year, says Clément Gignac, chief economist and strategist at National Bank Financial.

And Mr. Gignac sees the bear hanging around this year. He lists 13 reasons for his continuing cautious view on the S&P/TSX composite index, which he notes has outperformed its U.S. counterpart, the Standard & Poor's 500-stock index, in Canadian currency for five consecutive years, the best run in five decades.

“Recognizing up front that our underweight recommendation on energy and the Canadian stock market put in place in early 2005 was premature and unprofitable (in plain English, a tactical mistake), we nevertheless remain skeptical about the sustainability of the 2005-2006 commodity price rally and continue to recommend underweighting of the Canadian stock market in general and resource sectors in particular,” Mr. Gignac said in a report Thursday morning. He has a “conservative” year-end 2007 target for the TSX composite of 11,200. It stood Thursday afternoon at 12,518.

So why is he pessimistic about the Toronto market? Well for one thing, he thinks that crude oil could soon drop to his long-term price assumption of $45 (U.S.) a barrel. Earlier this morning, crude futures dropped below $53 for the first time in 19 months before recovering. He also has concerns about the oil sands projects, saying “whatever the outcome of the next federal election, it seems hard to believe that oil sands operations will be immune from cost pressures resulting from any new Ottawa green plan.”

And Mr. Gignac isn't buying the China explosive growth story for commodities. Indeed, he sees a number of potential problems for commodities, including the fact that global real interest rates are on the rise.

What about financials, another major support of the Toronto market? Mr. Gignac suggests that the “best days may be over for financials.”

“With resources and financials making up close to 75 per cent of market cap [of the TSX] constituting a well-diversified Canadian portfolio has become a real challenge, especially for institutional investors,” he said.

And he lists still more reasons to be negative. Possible downward revisions in profit estimates: a close correlation between the Toronto market and emerging markets; possible reductions in commodity price assumptions leading to cuts in distributions by energy trusts and a valuation on the Toronto market that at first blush seems low but is in fact high. Moreover, “almost all Bay Street strategists are bullish,” which raises a yellow caution flag, he noted.

Given his bearish bent, it is not surprising that Mr. Gignac is recommending that investors underweight stocks. He has stocks at just 40 per cent, fixed income at 45 per cent and cash at 15 per cent in recommended asset mix. He also recommends that investors play the defensive sectors such as insurance, utilities and staples.

Nick Majendie, senior vice-president of Canaccord Capital Corp. another long-term bear, is somewhat less pessimistic than Mr. Gignac. He has nudged up his 12-month target for the TSX composite to 12,960 from 12,700, but that only translates into a gain of about 3 per cent from current levels, and then says that that is feasible only after a North American slowdown or recession which leads to a global slowdown and an easing of monetary policy by central bankers by mid year.

“We suspect, however, that the interim pattern behind this sort of return will be a 10 to 20 per cent plus correction from current levels ... and the birth of a new cyclical bull market” by the second quarter or by mid year, he said in a recent market comment.

© The Globe and Mail

Toronto stocks jump 100 points; oils and gold lead

12/01/07

TORONTO (Reuters) - Toronto stocks jumped 100 points for a second straight session on Friday helped by a rebound in oil prices and firmer resource shares.

Just after the open, the Toronto Stock Exchange's S&P/TSX composite index <.GSPTSE> was up 101.72 points, or 0.8 percent, at 12,621.62.

http://www.globeinvestor.com/servlet/story/ROC.20070112.2007-01-12T230252Z_01_N12301954_RTRIDST_0_BUSINESS-COLUMN-CANADA-MARKETS-COL/GIStory/

Looks like we are set to have a good week ahead of us.

Bay Street Week Ahead: Not all doom and gloom on TSX

12/01/07

By Jennifer Kwan

TORONTO (Reuters) - If convention were to rule, the rocky start for Canada's benchmark equity index this month would spell a bearish outlook for the rest of the year.

Four years of double-digit gains for the Toronto Stock Exchange's S&P/TSX composite index <.GPSTSE> has left some thinking it's time for it to cool off, especially since the oil-company-heavy index has kicked off the year with a 1.8 percent loss amid slumping oil prices. Crude prices have shed 15 percent so far this year, and touched a 19-month low.

A rebound in oil prices on Friday helped the S&P/TSX rally almost 160 points to close at 12,678.81. And analysts say this week's broad-based bounce -- a 1.6 percent gain -- could be a sign of more good things to come.

Recent strong economic data on both sides of the border, including upbeat December jobs data and solid U.S. retail sales, could provide key support.

Monday's Bank of Canada business outlook survey said firms have lowered their inflation outlook, painting a rosier picture of economic growth for the year.

"I think it's quite optimistic out there," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, noting that apart from stronger economic data, some early earnings reports have also helped to renew investor confidence.

"I think people will say the economy is fine, inflation is not a problem, interest rates are low, valuations are reasonable," he said.

Chief economist Patricia Croft at Phillips, Hager & North expects a period of volatility that will likely be driven by economic data.

"I do think we are at a bit of an inflection point where it was a given that central banks were tightening and pausing and economic activity was slowing," said Patricia Croft, who sees weakness on the TSX and remains cautious of a boom year.

"There's still kind of that historical precedence: where January goes, the rest of the year goes. But I'm not so sure it will hold this year since we are in this transition mode."

A strong start to the corporate earnings season with solid results from Canada's top media companies captured the spotlight this week.

Merger speculation is also in the air following Wednesday's announcement by CanWest Global Communications Corp. that it had teamed up with a private-equity unit of global investment banker Goldman Sachs & Co. in a C$2.3 billion takeover offer for Alliance Atlantis Communications Inc. .

While the index is starting to look like it will reverse course to move higher, there's still a lot of caution about whether the bull run will continue.

"Our 'conservative' 2007 year-end target of 11,200 implies a significant probability of a reality check on such Wall Street and Bay Street exuberance," National Bank Financial chief economist Clement Gignac wrote in a research note, listing 13 reasons why there is a bearish overtone.

Those include the expectation oil will fall to $45, curbs on capital spending by the Chinese government, and downward earnings revisions.

Despite bearish forecasts, the TSX has undergone a "meaningful correction" in commodities and market activity will resume on a positive note, said John Ing, president of Maison Placements Canada.

"The bull market is very much alive," he said.