Columnist image
Noah Zivitz

Managing Editor, BNN Bloomberg

|Archive

Canadian inflation is our top priority today after Statistics Canada’s consumer price index jumped 6.8 per cent year-over year. That’s an acceleration from March, and pushes our benchmark cost of living indicator to the highest since January 1991. And so we’re left wondering for another month if we’ve seen the peak. And based on BMO Chief Economist Doug Porter’s hot take on CPI, we’re going to be wondering for a while longer: “We expect that the worst is yet to come on the headline readings, and that inflation north of six per cent will still be with us by the end of this year,” he wrote in a report to clients this morning.

MUST-SEE HOUSING TV

If you missed it, check out Andy’s conversation with Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) CEO Mark Kenney. On NIMBYism, he said there’s a “full-blown war” on high-density home construction that could imperil Canada’s economy. And he addressed an often overlooked segment of the market that could ease Canada’s supply conundrum: modular/mobile homes, which he said are unfortunately still carrying a stigma because of our memory of decades-old trailer parks. Read all about it here. Separately, we’ll point out here that RBC Capital Markets Analyst Jimmy Shan last night cut his price target on CAPREIT to $66.00 per share from $69.00 because of what he described as a “valuation conundrum.”

RETAILERS WALLOPED BY INFLATION AND WEATHER

Target shares have been down more than 20 per cent in the pre-market after the company, like Walmart yesterday, posted a quarter that was marred by inflation. Net income plummeted 48 per cent, while sales at stores open more than a year (same-store sales) rose 3.3 per cent. “Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations,” said Chairman and CEO Brian Cornell in the release. Target also warned on full-year margins.  

Meanwhile, Lowe’s got burned by cold temperatures in the first quarter. Net income was flat at US$2.3 billion; same-store sales fell four per cent. “Because 75 per cent of our customer base is DIY, our [first-quarter] sales were disproportionately impact by the cooler spring temperatures,” said Lowe’s Chair/President/CEO Marvin Ellison in the release, adding sales trends have improved this month.

POTENTIAL ECONOMIC BOON IN BATTLE OF ALBERTA

For the first time since 1991, the Edmonton Oilers and Calgary Flames will square-off in an NHL playoff series that starts tonight. One can imagine that bar, restaurant, and hotel owners in those two cities are licking their chops. We’re looking into the potential boost to the province’s economy.

OTHER NOTABLE STORIES

  • Bit of an unusual announcement from CAE this morning: the Montreal-based maker of flight simulators said it’s delaying the release of its earnings to a TBD date “in order to allow the company’s external auditors to complete their final normal course audit procedures.” A spokesperson for the company told us in response to our request for more details that the auditors “advised [CAE] they needed more time to complete their technical work.” PwC is CAE’s auditor. Earnings were originally scheduled to be released tomorrow.

NOTABLE RELEASES/EVENTS

  • Notable data: Canadian CPI and Teranet/National Bank home price index, U.S. housing starts and building permits
  • Notable earnings: Cisco Systems, Lowe's, Target, TJX,
  • 1145: Enbridge President and CEO Al Monaco addresses Canadian Club of Toronto
  • 1245: Ritchie Bros. investor day
  • 1530: Canadian Radio-television and Telecommunications Commission Chair and CEO Ian Scott addresses House Standing Committee on Heritage Committee hearing on Main Estimates
  • G7 finance ministers and central bank governors open three-day meeting in Bonn, Germany
  • Results of United Conservative Party leadership vote expected