First Look With Surveillance: Fed Drum, OPEC+ Cuts
The rally that got things started this week is fading even further into the rear view as stocks appear poised to sputter their way into today’s session. Futures were solidly in the red for much of the morning, but that changed at 8:30 a.m. EDT with the release of U.S. initial jobless claims that rose more than expected last week. It’s a broken-record narrative about recession fears and inflation that, like usual, comes back to the U.S. Federal Reserve. As for the S&P/TSX Composite Index, only 67 of its members closed higher yesterday; and that was largely thanks to energy names on the back of OPEC+’s plan to cut production.
MACKLEM KEEPS FOOT ON THE GAS
Anyone hoping for a hint of dovishness in the Bank of Canada governor's speech today is out of luck. "All the signs today point to an economy that is clearly in excess demand," Tiff Macklem said. Notably, he also spoke about how the weakening of the Canadian dollar is adding to our inflation pressures since that depreciation makes U.S. goods and travel more expensive. Add it all up, and Macklem made it clear there are more hikes to come. While there was no clear indication how large the next move will be, CIBC Chief Economist Avery Shenfeld told clients he thinks it's a "lock" for a half-point on Oct. 26.
SUNCOR EXITS CANADIAN WIND AND SOLAR
Suncor is making good on its April pledge to get out of the wind- and solar-energy business, announcing late yesterday that it’s selling its entire portfolio of such assets in this country (other than a decommissioned facility in Saskatchewan) to Canadian Utilities for $730 million. An analyst at National Bank of Canada Financial Markets said he thinks proceeds will go toward paying down debt, which he sees reaching the target of $9 billion in early 2023 — which is the trigger for returning all free cash flow to shareholders. What a fine day for us to already have Eric Nuttall from Ninepoint Partners lined up for an extended chat at 10 a.m. EDT.
FOLLOW THE MONEY
Major Canadian companies continue paring their relationships with the tarnished brand of Hockey Canada. This morning it’s Telus, which confirmed it won’t be associated with the organization’s men’s events (including the flagship World Junior Championship) this season, matching the same move announced by Tim Hortons yesterday. Those are two of Hockey Canada’s four “premier marketing partners.”
OTHER NOTABLE STORIES
- Constellation Brands said it booked a US$1.06-billion impairment charge on its exposure to Canopy Growth in its fiscal second quarter, which is the reason for a wildly disparate set of full-year forecasts (and, let me tell you, it was also the trigger for a heck of an interesting conversation with Amber this morning). Meanwhile, the conglomerate’s beer sales surged 15 per cent year-over-year, and the division’s operating margin jumped 3.3 points thanks partly to “favourable pricing.” Constellation also announced the sale of some of its wine brands that don’t fit with its refined focused on higher-end assets. Terms weren’t disclosed.
- Copper Mountain Mining is on our radar after the Vancouver-based company announced the sale of its Eva Copper project in Australia to Harmony Gold Mining Co. for up to US$230 million.
- Notable data: U.S. initial jobless claims
- Notable earnings: Constellation Brands
- 900: Parliamentary Budget Officer releases costing note “Cost Estimate for Bill C-18: Online News Act”
- 1000: Canada Mortgage and Housing Corporation releases report on labour capacity constraints in construction industry
- 1000: National Supply Chain Task Force Co-Chairs hold news conference to discuss final report
- 1150: Bank of Canada Governor Tiff Macklem delivers speech in Halifax (Bank of Canada releases remarks at 1135; media avail at 1310)
- 1145: Ontario Securities Commission CEO Grant Vingoe participates in Economic Club panel “Buyer Aware: Applying essential protections to the crypto world” in Toronto
- 1300: Transport Minister Omar Alghabra holds news conference after release of Supply Chain Task Force’s final report
- 1300: U.S. Federal Reserve Governor Lisa Cook delivers speech at the Peterson Institute for International Economics
- Alberta United Conservative Party leadership election announcement