TIME IS A COMMODITY

This week our team is taking a look at the position of Canada and the United States in the competitive global resource and trade community. As more results and news come in we must collectively realize that the wake of the credit fiasco is not over and its lasting impact is affecting the decisions of many. We'll also let you know which North American banks took it on the chin and which ones should be quick to recover.

First off, commodities have boosted Canada's current global trade surplus to a much greater than expected $5.6 billion. The energy sector has been at the core of this rise. On Wednesday, Statistics Canada reported a first quarter surplus of double the expectations. Looking at the global demand of commodities this does not surprise us. No matter how bad the economics of both Canada and the United States become, our natural resources will almost always bolster our earnings. This is especially true during a period of historic highs, which we are in.

TD Securities economist Jacqui Douglas stated that, "Although substantial appreciation of the Canadian dollar over the last couple of years raised fears that Canada could slip back into a situation of current account deficits, or even twin deficits, higher commodity prices are keeping the current account above water, and well out of the red."

Let's take a look at the US economy as they attempt to stabilize and promote growth. There have been four straight months of job losses reported in the United States as the country continues to fend off a full blown recession. On Friday, May 30th the Treasury Department reported that $57.4 million payments totaling $106.7 billion will be disbursed this year to 130 million households. These payouts are surrounding President Bush's plan to jump start the economy and are at the center of the $168 billion stimulus package. Most concerns are that US consumers will have to spend this money to stimulate the economy and many seem very hesitant. Investors need to diligently watch America's consumer spending levels as they will have a direct impact on the markets.

Which banks have been hammered the worst?

Citigroup, UBS and Merrill Lynch have lost ( from asset writedowns and credit losses) a combined $118.1 billion dollars since 2007. They come in #1, #2 and #3 as the biggest losers following the credit meltdown. The Bank of America lost $14.9 billion compared to Citigroup's $42.9 billion. Bear Sterns lost $3.3 billion; enough to break the bank, literally. The Royal Bank of Canada has reported $1.7 billion in writedowns. Although the Royal Bank of Canada is a much smaller financial institution than the major US banks listed above, they were very clever not to expose themselves to high levels of the American economy. Many other global players did not fare as well. Two great examples would be the Royal Bank of Scotland which lost $15.2 billion and the Deutsche Bank which lost $7.7 billion.

As these banks heal with the economies that feed them, so to will the markets. Most things in life are a commodity. Time is one of them. If time is a commodity you have, patience is the skill you need to develop now. We are confident that it's a buyers market. As the panic selling continues with many Canadian juniors it will be the patient investors who are rewarded. Check up on your favorite companies. Ensure that their bankroll is sufficient to last through the remainder of this storm. The skies will be clearing before this year is done.

All the best with your investments,

PinnacleDigest.com