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Noah Zivitz

Managing Editor, BNN Bloomberg

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The was relief this morning from the rout in global stock markets, albeit fleeting. The S&P/TSX Composite Index dipped into negative territory shortly before 11am after it and the major U.S. markets opened higher. So let’s be careful about calling the initial gains a rebound. After all, the TSX closed yesterday on the brink of a correction after its largest single-day loss in almost two years. Or check out the Nasdaq, which is deep into bear market territory after tumbling 27.6 per cent from its all-time high. After the dust settled on yesterday’s trading session, Brian Levitt from Invesco told us the market hadn’t yet reached the point of capitulation and said things won’t settle down until peak inflation is in the rear view. And on that front, tomorrow brings this week’s main even with the April U.S. consumer price index, which is expected to moderate to 8.1 per cent year-over-year from 8.5 per cent in March.

SUNCOR ATTEMPTS TO COUNTER ACTIVIST

With activist investor Elliott Management breathing down its neck, Suncor is sharing more of its wealth with investors after raking in a record haul from its oil sands operations. The Canadian energy giant’s board raised the quarterly dividend to a record of $0.47 per share, representing a 12 per cent increase from the previous level. It’s symptomatic of how dramatically the industry’s fortunes have turned after Suncor took a hatchet to its dividend two years ago. Additionally, Suncor’s board is expanding its share repurchase program to as much as 10 per cent of the float. Suncor has the wherewithal for those moves after its adjusted funds from operations nearly doubled in the first quarter to $4.09 billion, including a record $3.41 billion from the oil sands. There was also a nugget of strategic news in the earnings release, as Suncor said it’s now considering selling all of its assets in the United Kingdom. No word though on its network of gas stations that Elliott wants to see divested.

HIGH-STAKES DECISION FOR ENERGY SECTOR

The Alberta Court of Appeal will, at last, release its opinion today on the province’s challenge of the federal Impact Assessment Act. That’s the legislation that colloquially became known as the No More Pipelines Act. More formally, prior to becoming law, it was known as Bill C-69, and prompted ex-TransCanada CEO Hal Kvisle to tell us in 2018 that no “competent pipeline company” would seek approval for a project if it became law. Today, we find out if the Alberta court agrees with the province that the legislation was an overreach by the federal government into provincial affairs.

OTHER NOTABLE STORIES

  • Beyond Suncor, I spotted a few other dividend sweeteners in the flurry of earnings since yesterday’s closing bells. Ovintiv said its board approved a 25 per cent boost to the quarterly payment, pushing it to US$0.25 per share. Finning International nudged up its quarterly payment five per cent to $0.236 per share (it also beat profit and revenue expectations by wide margins — CEO Scott Thomson joins us at 11:30 a.m.) And CT REIT’s monthly distribution is rising 3.4 per cent to $0.07 per unit.
  • Bausch Health shares have been down almost 20 per cent in pre-market trading after the pharma company missed first-quarter profit expectations and cut its full-year outlook.
  • Peloton Interactive shares are also getting thrashed in early trading (down about 25 per cent). The fancy bike and treadmill maker swung to an adjusted loss in its fiscal third quarter as revenue plunged 24 per cent, and it forecast revenue for the current quarter that trails expectations. The new CEO, Barry McCarthy, acknowledged the challenges of the turnaround he’s in charge of, and said Peloton ended the quarter “thinly capitalized for a business of our scale.”
  • The pandemic pet boom is big business. Pet Valu Holdings this morning reported a 22.8 per cent surge in sales at stores that were open for at least a year in the first quarter, while overall revenue climbed 25 per cent to $213 million and profit rose almost seven-fold. The retailer also raised its full-year revenue and adjusted earnings before interest, taxes, depreciation, and amortization forecasts.
  • Boardwalk Real Estate Investment Trust cut its full-year forecasts for funds from operations and net operating income, which the Alberta-focused apartment owner attributed to rising interest costs and utility expenses.
  • Pfizer announced this morning it’s buying Biohaven Pharmaceuticals for US$11.6 billion, or US$148.50 per share. That works out to a 79 per cent premium to yesterday’s close for Biohaven, a neurological-focused biopharmaceutical firm whose prized product appears to be a migraine treatment.

NOTABLE RELEASES/EVENTS

  • Notable earnings: Intact Financial, George Weston, Keyera, Equitable Group, Kinross Gold, Turquoise Hill Resources, Superior Plus, Cronos Group, Nuvei, Pet Valu Holdings, Dentalcorp, Tricon Residential, Bausch Health Companies, Coinbase Global, Peloton Interactive, Electronic Arts 
  • 945: U.S. Treasury Secretary Janet Yellen addresses U.S. Senate Banking Committee hearing “The Financial Stability Oversight Council Annual Report to Congress”
  • 1130: U.S. President Joe Biden delivers remarks on “plan to fight inflation” at the White House
  • ~1300: Alberta Court of Appeal releases opinion on Impact Assessment Act reference case
  • Quebec Superior Court hearing to consider remediation agreement with SNC-Lavalin re. charges tied to work on Jacques Cartier bridge