CHF WEEKLY ROUND-UP: January 29 – February 2, 2024

Welcome to Groundhog Day, more or less the mid-point of Winter. Apparently (if you trust groundhogs) there are only seven weeks until spring.

There is an old saying “as goes January, so goes the year” it may be accurate this year. Canadian Markets have floundered through the week and gained no ground but not falling back severely either. Some wild volatility has been seen as selling of the some of the Magnificent Seven in the US carried over.

U.S. equity markets were lower on Wednesday and Thursday, but started back up on Friday morning, but still below the all-time high of last week. It all started with earnings results from the M7 Tech Giants, good but not great. There was selling in Microsoft and Alphabet (Google) on the news, however Meta and Amazon turned out to be winners and rose dramatically. Apple got hurt on China concerns. Is the market running out of bulls.

U.S. gross domestic product came in stronger than expected last week, with a 3.3 percent annualized rate during the fourth quarter of 2023. GDP expanded 2.5 percent over the course of last year. The Fed didn’t move rates on Wednesday, staying at 5.25% to 5.5%. The U.S. economy added far more jobs than expected in January, with nonfarm payrolls rising by 353,000 last month, much more than the 187,000 jobs expected. Chair Powell trashed any thoughts of the up to 6 rate cuts some had predicted for this year. Likely to be no cuts in March either, maybe April, but the best bet is June or July, Powell is playing the long game still.

The BoE is staying at 5.5%. Both the Pound and the US dollar continue to rise since the new year. No Central banker wants to be the first to cut rates, nor do they want to risk having to re-raise after the cut proves to be too early.

The US economy seems to be able to remain far stronger than those afraid of a Recession feared. The Recession has been in Europe and now showing in China Real Estate like a slow-motion train wreck where the property developer Evergrande (the most indebted company in the world) is going to be liquidated holding $300B. in liabilities. Behind them is Country Garden which has $10.96 billion offshore bonds and 42.4-billion-yuan ($USD 5.81 billion) worth of loans not denominated in yuan. If it defaults, these debts will need to be restructured, and the company or its assets also risk liquidation by creditors. China is still in focus. The stimulus has failed. The fear is that the next Chinese export will be deflation and lots of it.

Gold made a new all-time high at $2,080 this week, the previous all-time high at $2,072 was on December 1, 2023. The strong Jobs report took $30/ oz off the price this morning as the dollar (DXY) gained strength. On the chart Gold is looking like it’s right at the end of its large triangle. Given the events in the Mideast, it seems unlikely to be about to break down. Silver is down $0.60 today, following the jobs report, at $22.50/oz, looks cheap relative to other assets, with silver bulls suggesting that silver’s underlying long-term worth is closer to $40-50. Maybe this is an opportunity to accumulate the best stories in the junior precious metals mining space.

There is starting to be some bullishness around Copper with Citi and Goldman Sachs issuing forecasts of up to $10,000/tonne ($4.50/lb.), largely on the back of forecast shortages. Copper is at $3.85/lb. today with no strong uptrend on the chart. The other base metals continue to struggle due to China’s weaker economy.

Battery materials are not advancing, Lithium at $13.30/kg and Cobalt at $13.22 are down on the month. Graphite is 1.3% lower. Analysts continue to believe that there is a long-term play in battery materials. Supply, especially of Lithium, grew faster than the market could absorb but demand is expected to return. Lithium’s recovery is probably in 2025 so there is time to identify the best candidates and get positions while share prices are low. Remember Warren Buffet said, “make money when you buy!”

Uranium is holding at $106/lb this week. Supply, and especially supply growth, remains uncertain and there may be more room to run. Producers will be announcing some very attractive results so there may still be a chance to participate.

Tensions in the Middle East had taken oil prices up 10 percent so far this year, but Canadian energy stocks are not playing along still facing a steep discount with the Trans Mountain Pipeline looking at more delays. Oil almost made US$78 per barrel early in the week but slipped to $72.30 after the Jobs report and stronger dollar this morning.

The upcoming U.S. presidential election could have deep impacts on the Canadian economy. Neither the sitting president, Joe Biden, nor the apparent opponent, Donald Trump, have been particularly attentive or helpful to Canada’s growth. What is needed is the middle ground candidate who can bring America back to balance. As John Lennon put it “You may say I’m a dreamer, but I’m not the only one.”

It has been an interesting week for our clients, and we are pleased to present to you our round-up of their news released between January 29 – February 2, 2024.

On January 29, 2024, Sokoman Minerals Corp. (TSXV: SIC) (OTCQB: SICNF) Provided a Corporate Update and Confirmation of Closing of Flow-through and Hard-Dollar Private Placements.

The Company announced that it has received final regulatory approval and has closed both its flow-through and non-flow-through private placement financings issuing 53,892,847 flow-through units and 3,200,000 non-flow-through units at CAD$0.065 each for aggregate gross proceeds of CAD$3,711,035. Details of the Financings set out in the Company’s December 19, 2023 news release remain unchanged.

The Company intends to undertake a proposed 2,500 m winter drilling program on the flagship Moosehead Gold project, which will commence in about three weeks and will focus on the recently discovered 552 Zone where improved grades and some visible gold has been seen in recent drilling. Drilling is planned to test the down-plunge extent of the 552 Zone and should also intersect any parallel structures, including extensions to the 253 Zone where previous drilling returned 1.56 g/t Au over 1.60 m.

Moosehead will require about 75% of the exploration funds raised. Additional drilling will follow based on the results of the winter program. The remaining 25% of the funding will be used for additional prospecting, sampling, and drilling on the 100%-owned Fleur de Lys Gold project where a very angular, visible gold-bearing float was recently discovered at the Golden Bull prospect. A recent site visit to the property confirmed that logging activities performed by a local timber harvester are creating more and better access and a safer and improved work environment across the property, possibly exposing new gold occurrences.

Sokoman has entered into a sponsorship agreement with RocksAndStocksNews (“R&S”), a private entity owned and operated by noted mining commentator Allan Barry Laboucan. He is based in Mexico and operates an online portal for precious metals and mining stocks.

“Allan is a very popular, passionate interviewer in the junior mining space. He really understands the mining sector and his interviews tend to be less technical, therefore very investor friendly.”

On January 29, 2024, Tenet Fintech Group Inc. (CSE: PKK) (OTC Pink: PKKFF), announced that it has amended the terms of its brokered private placement financing of up to $10,000,000 of securities of the Company led by Research Capital Corporation as lead agent and sole bookrunner in connection with the Offering.

“I have continuously worked with Peak Positioning, recently renamed Tenet Fintech, for 13 years. Cubeler®, the lending platform for small businesses, was launched in the fall of 2017, a year later produced nearly $2M revenue in China facilitating small business loans. Revenues grew to $100M in China, in 2022. The challenges Tenet faced during 2023 included an unexpected and unfortunate proxy battle. Thankfully, a group of long-term investors including me, and an exceptional legal team brought Johnson Joseph, Founder & CEO back to the helm (board and management). We are excited thinking of the prospects for 2024 which include developing the three remaining pillars plus the analytics and AI-based products (ie-Pulse and Equity Insider) designed for businesses and financial institutions. Tenet is an exceptional opportunity to participate in the early stage of an AI/data technology company. A Warren Buffett quote, “The value of a business is the cash it’s going to produce in the future.”

The PDAC Convention is just around the corner, March 3-6, 2024, and the CHF Capital Markets team is excited to be participating in this year’s lineup of activities. Hope to meet you there.