First Look With Surveillance: Crypto Tumble, G-7 Agenda
It’s a sour mood in markets again this morning, with a lot of red across Asia, Europe, and among U.S. futures contracts, though that could change at any moment. Inflation remains the trigger, and we have more to sort through today with the U.S. April producer price index rising 11.0 per cent year-over-year; that’s a slight moderation from in March, but it was hotter than anticipated. At home, the S&P/TSX Composite Index tripped into correction territory yesterday as it closed 10.19 per cent below the all-time high that was set on March 29. Only 34 index-listed stocks are trading higher over that span. As for crypto, using Bitcoin as a barometer, the wild fluctuations continue: it has swung this morning between a loss of 10.5 per cent and a gain of 5.9 per cent.
POILIEVRE PUTS MACKLEM ON NOTICE
Pierre Poilievre, a front-running candidate in the Conservative Party of Canada leadership race, said in last night’s debate he’d replace Bank of Canada Governor Tiff Macklem, who he again dubbed “the ATM machine of this government.” So he’s taking a page from former U.S. President Donald Trump, who openly mused about canning Jerome Powell. What will domestic and international investors make of this? A quick scan of the Bank of Canada Act shows the governor and deputy governor’s terms are dependent on “good behavior”; we’ll try to get clarity on how open that is to interpretation.
CAN QUEBECOR SAVE ROGERS-SHAW?
Who knows. But today we’ll get a chance to really focus on the role it’s prepared to play as the Montreal-based cable and wireless operator reports earnings, holds its annual meeting, and has a management Q&A with reporters. Already, Quebecor has made it clear it’s not Freedom Mobile or bust, insofar as national expansion goes. In its earnings release (which included a narrow beat on profit), the company said it’s looking “with increasing favour” on expanding its wireless business — whether by scooping up Shaw Communications Inc.’s assets or building on the spectrum it has acquired. “The opportunities are many and the alternatives are promising,” it said.
NATURAL GAS CASH GUSHERS
It’s more of the same from Canada’s energy sector but it’s no less impressive. Take Birchcliff Energy. It posted record first-quarter free funds flow ($95.4 million) and said it’s doubling its quarterly dividend to two cents per share. But look ahead: the company stated it intends to raise its annual dividend to at least $0.80 next year. Peyto Exploration similarly is swimming in cash, announcing first-quarter funds from operations soared 69 per cent to a record $203 million. And Crescent Point Energy joined the fray, announcing its dividend is jumping almost 45 per cent to $0.065 per share after reporting a doubling of first-quarter adjusted funds flow (to $534 million).
OTHER NOTABLE STORIES
- Canadian Tire announced its board approved a 25 per cent dividend hike (taking the quarterly payout to $1.625 per share) while reporting a 19 per cent jump in what it calls normalized earnings. Its Mark’s banner led the way during the first quarter, with sales at those stores that were open at least a year up 17.1 per cent.
- Manulife Financial’s deep push into Asia worked against it in the last quarter. The insurance and wealth management firm missed profit expectations in the latest quarter as core earnings slumped in Asia amid what CEO Roy Gori described as a “rapid and unprecedented resurgence of COVID-19 (that) disrupted new business activities in multiple markets.”
- Sun Life Financial announced it’s raising its quarterly dividend three cents to $0.69 per share, despite a dip in first-quarter profit. CEO Kevin Strain said the “challenging economic environment and ongoing COVID-19 impacts” weighed on the company in its latest quarter. Looks like asset management was the saving grace as underlying profit from that business rose 12 per cent to $326 million.
- Brookfield Asset Management confirmed this morning that it will list a 25 per cent stake in its asset management business, and said shares in that spinoff will be distributed to its shareholders by the end of this year.
- It’s not exactly news that Linamar is dealing with supply chain hassles. Nonetheless, those logistical headaches contributed to a sharp drop in profit for the company in the first quarter as sales fell in both of its major divisions. CEO Linda Hasenfratz joins us at 830 a.m.
- Walt Disney Co. one-upped Netflix by posting subscriber growth (33 per cent, to $137.7 million) in its Disney+ streaming division during the fiscal second quarter. However, company management warned on a conference call that growth will slow in the second half of the year. Toss in revenue and adjusted profit that narrowly missed expectations, and the shares are slipping in early trading. One interesting piece of news tied to Disney’s streaming strategy: it paid US$1 billion in the quarter to terminate a licensing agreement so that it could keep content for itself. Also notable: revenue from the Parks and Experiences business almost tripled to $4.9 billion.
- Beyond Meat shares are cratering in pre-market trading after the faux meat maker reported a mere 1.2 per cent rise in first quarter revenue and much larger net and adjusted losses.
- So long (sort of) to the salad king. Freshii abruptly announced late yesterday that Matt Corrin, who built an international fast-food brand that brought healthier options to the masses and staged a number of shrewd publicity moves (remember the attempts to cozy up with Subway and McDonald’s?), is moving to the role of executive chairman as of today, handing the CEO role to Daniel Haroun, who was serving as the company’s CFO.
- Notable data: U.S. PPI and initial jobless claims
- Notable earnings: Brookfield Asset Management, Definity Financial, Canadian Tire, Quebecor, CI Financial, Algonquin Power & Utilities, Pieridae Energy, Crescent Point Energy, Aurora Cannabis, Dye & Durham, Mogo, Cascades, Leon's Furniture, Hardwoods Distribution, Freshii, Docebo, Extendicare, Sienna Senior Living, WeWork
- 1000: Natural Resources Minister Jonathan Wilkinson delivers remarks at the Center of Strategic & International Studies in Washington, D.C., alongside U.S. Energy Secretary Jennifer Granholm (plus media call-back at 11am)
- 1100: Canada Post unveils new processing facility in Scarborough, Ont. (could be good VO material if CTV sends a shooter. Wendy is checking)
- 1135: Bank of Canada Deputy Governor Tony Gravelle delivers speech in Montreal "Commodity Price Shocks and the Impact on Growth and Inflation in Canada"
- Quebecor holds annual meeting (930), plus news conference (1100)