Weekly Round-Up: All Eyes on the US

Moody’s pegged Sandy’s total economic toll at $49.9 billion, including $30 billion in damage and $20 billion in lost business, making it the third-most-damaging storm to hit the country after Hurricane Katrina in 2005 and Hurricane Andrew in 1992.

Investors also remained focused on a range of other economic data as the country entered the last full week of campaigning before the November 6 presidential election. And for the most part, that data looked positive.

On Thursday, the Conference Board reported that its measure of consumer confidence rose to 72.2 in October, up from 68.4 in September. That’s the highest level since February 2008, although it did fall slightly short of the 72.5 that economists were expecting.

“Consumers were modestly more upbeat about their financial situation and the short-term economic outlook, and appear to be in better spirits approaching the holiday season,” said Lynn Franco, the Conference Board’s director of economic indicators.

As well, the Institute for Supply Management said that its manufacturing activity measure rose to 51.7 in October from 51.5 in September, which shows that US factories are continuing to increase their output (any number above 50 indicates expansion).

And on Friday, the October employment report, the last major piece of economic data before the election, showed that the US created 171,000 jobs in October, ahead of the 120,000 to 125,000 that economists were expecting. The Labor Department also said that the economy added 84,000 more jobs in August and September than originally estimated. Despite the gains, the unemployment rate rose to 7.9 percent from 7.8 percent, but that was mostly because more people started looking for work.

In morning trade Friday, Brent crude is down 1.12 percent at $106.96 a barrel, while copper is down 1.49 percent at $3.50 a pound. Gold is down 1.85 percent at $1,683.70 an ounce.

Gold

Barrick Gold (NYSE:ABX,TSX:ABX) reported that its net earnings fell to $620 million, or $0.62 a share, from $1.37 billion, or $1.37 a share, a year ago. On an adjusted basis, Barrick earned $850 million, or $0.85 per share, compared to $1.38 billion, or $1.38. That was short of the $1 billion that analysts were expecting. Revenue declined to $3.43 billion from $3.91 billion.

The company’s gold and copper output fell in the quarter and its production costs rose. As well, the cost of its Pascua Lama project, located in the mountains between Chile and Peru, continues to rise. Barrick said the mine will cost about $8.5 billion to build, up from its estimate of $7.5 billion to $8 billion in July and far higher than an earlier forecast of around $4.7 billion. The company now expects Pascua Lama to start up in mid-2014. When it does, it will produce up to 850,000 ounces of gold annually. To put that in context, Barrick produced 7.7 million ounces in 2011.

Grande Portage Resources (TSXV:GPG) announced positive results from its drilling program at the Herbert gold project near Juneau, Alaska. The company owns 65 percent of the property. Quaterra Resources (TSXV:QTA) owns the remaining 35 percent.

The latest drilling included hole 12J-3, which was drilled in the recently discovered Goat Creek vein. The hole intercepted 79.41 grams per metric ton of gold over 2.05 meters. That included a 0.8-meter section indicating 192.5 g/t of gold, 227 g/t of silver, 1 percent lead and 0.7 percent zinc. Other highlights include hole 315E, which intercepted 48.12 g/t of gold over 1.13 meters.

Oil and gas

ExxonMobil (NYSE:XOM), the largest publicly-traded oil company in the world, reported that its third-quarter profits fell 7 percent, to $9.6 billion, or $2.09 a share, from $10.3 billion, or $2.13 a share, a year ago. That beat the consensus forecast of $1.95 a share. Revenue fell 7.7 percent, to $115.7 billion.

Earnings at the company’s upstream business — exploration and production — fell 29 percent, mainly due to a 7.5 percent drop in production. That offset a sharp jump in downstream, or refining earnings, to $3.2 billion from $1.6 billion.

Suncor Energy (TSX:SU,NYSE:SU), Canada’s largest oil company, reported that its net earnings rose 23 percent, to $1.6 billion, or $1.01 a share, from $1.3 billion, or $0.82 a share, a year earlier. However, earnings from continuing operations fell to $1.3 billion, or $0.85 a share, from $1.8 billion, or $1.14 a share. But that still beat the consensus forecast of $0.78. The company’s oil sands production rose, but it saw lower output from its oil rigs in the Atlantic due to planned maintenance.

The company also said that its Fort Hills oil sands project will likely start up a year later than planned, in 2017. That’s because of rising production of light oil from shale projects in the US; this oil requires less refining than oil sands crude. As a result, the company is looking for ways to cut costs at Fort Hills and two other oil sands projects that it owns through a joint venture with France’s Total (NYSE:TOT).

Copper

Rambler Metals and Mining (LSE:RMM,TSXV:RAB) reported that its Ming mine in Newfoundland and Labrador, Canada entered commercial production on November 1. The mine’s mill has run for 60 straight days following commissioning at 85 percent capacity. Since mining commenced in May 2012, the Ming project has produced 7,300 wet metric tons of ore grading 27 percent copper, 6 g/t of gold and 49 g/t of silver.

Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.