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three charts

A freshly produced bar of gold is cleaned at the Boroo gold mine in Boroo, about 150 km (93 miles) north of the Mongolian capital of Ulan Bator in this July 5, 2006 file photo. Boroo, owned by Canada's Centerra Gold Inc. produced 9 tonnes of gold last year -- about half of total production in the Central Asian nation of deserts and grasslands.NIR ELIAS/Reuters

CHART 1: Gold stocks lack lustre

Investors don't seem to be buying the theory that gold stocks will catch up to bullion's power rally any time soon.

The price of gold has risen for 11 straight years and – while below record highs of last summer – the precious metal is still holding onto most of its gains. But shares of gold producers continue to underperform the commodity, with the average stock price of Toronto-listed gold companies now at the lowest level in more than a decade relative to the metal, notes Marco Lettieri, an economist in Montreal at National Bank Financial Inc.

"This is attracting attention and bringing forth questions of whether gold stocks can play catch up to gold prices," Mr. Lettieri said in a recent report. "Despite a 50 per cent rise in gold prices since 2010, gold stocks performed poorly and have disappointed many over the past two years."

Producers of the metal are being hit with soaring expenses for energy and labour that are eating into their profits, and there's no sign of relief, he notes. The underperformance has also been blamed on other problems miners face, such as operational and political risks.


CHART 2: A mixed outlook for U.S. earnings

U.S. companies are expected to eke out modest earnings growth as they report first-quarter results over the coming weeks, but the outlook by industry is strikingly uneven.

Profits at companies in the S&P 500 rose 3.2 per cent on average in the period, according to estimates by Robert Kavcic, an economist in Toronto at BMO Nesbitt Burns. That would be the slowest pace since the third quarter of 2009. Analysts have been lowering their estimates since the beginning of the year as the upturn in profit margins reaches its limits, clouds hang over Europe's economy and China's economic growth slows, Mr. Kavcic notes in a report.

As the chart shows, winners and losers will be heavily dictated by sector. The industrial segment is the only sector expected to enjoy double-digit profit gains over last year, while materials producers and telecommunication providers are poised to see significant declines.

The first companies out of the gate with quarterly earnings already showed mixed performance last week. Alcoa Inc. reported a big plunge in profits from a year ago but still beat analyst expectations. Google Inc.'s earnings rose, but J.P. Morgan Chase & Co. reported profit that was down 3.1 per cent from a year ago.


CHART 3: Disturbing trend in U.S. stores

Job losses at U.S. retail stores may signal trouble for overall employment.

Retailers cut jobs for the second consecutive month in March, a disturbing development in a context where more than half of companies in the country were hiring, according to Stéfane Marion, chief economist in Montreal at National Bank Financial Inc. General-merchandise stores were behind almost all of the losses and have eliminated 83,000 jobs in the past two months.

"This is unprecedented," Mr. Marion said in a report. "This is much more than we would expect at this point in the economic cycle and all the more curious given that such stores reported peak employment of 3.14 million last January."

More Americans have been employed in retail than in manufacturing since 2002, Mr. Marion notes, increasing the sector's importance to the economy. And even though he'll review another month of data to rule out a seasonal dip before drawing conclusions, he's already alerting clients.

"The potential negative impact of a restructuring of retailers on overall employment trends should not be underestimated," Mr. Marion said.