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Apple-Fest Is a Snooze, Market Shrugs

10-13-2020

The market was a little weaker early on, led lower by the S&P, which fell not quite 0.5% initially before it bounced, while the Nasdaq did a bit better, as folks appeared to be excited over Apple's new phone. To me that is somewhat of a nonevent, but as I've noted many times the fundamentals don't make much difference.

"When the Phone Don't Ring, You'll Know It's Me" In any case, the Apple-fest was a nonevent and the market sold off in its wake. However, the Nasdaq refused to really join in on the downside and the decline fizzled, leaving the indices with the mixed and modest changes that you see in the box scores.

Away from stocks, green paper bounced, particularly against the British pound, and while that was positive for fixed income, it was quite negative for the metals. Silver lost almost 4% and gold 1.5%. I have no real idea why the metals are so sensitive to currency moves these days, but they certainly seem to be. The miners though were not roughed up too badly, with some showing small gains.

Stretching Every Dollar Last night, Kirkland Lake announced its production results and once again demonstrated how much money they are capable of making. Given the amount of cash they generated, it's quite likely they earned north of a dollar a share for the quarter. Production was a little less than might've been hoped for due to some glitches at Macassa. Nonetheless, they raised the dividend by 50%, so the stock now yields roughly 1.6%, which is quite a bit more than you can get from a 10-year Treasury, i.e., about 100 basis points.

New Gold also reported production results that were quite promising as grade, volume, and price all improved (despite their hedges). The company is now fully turned around and has the potential to have a very strong 2021.

Positions in stocks mentioned: long KL, long NGD.