First Look With Surveillance: US CPI, Musk Backtracks
U.S. inflation fell more than expected last month. The July consumer price index landed at 8.5 per cent, down from the 20.5-year high of 9.1 per cent in June. Wall Street was expecting 8.7 per cent. It should be pointed out the data landed in the midst of a long wait for the next scheduled U.S. Federal Reserve policy decision (Sept. 21), which had some people wondering about the possibility of an inter-meeting rate hike if the CPI was much hotter than anticipated. In the immediate aftermath of this morning’s data, Bloomberg Senior U.S. Economist Yelena Shulyatyeva told us she thinks that idea of an emergency rate hike is now off the table. U.S. equity market futures surged as traders absorbed the inflation numbers.
MORE HARDSHIP IN B.C. FORESTRY INDUSTRY
West Fraser Timber announced it is permanently slashing 255 million board feet of production capacity at three mills in British Columbia as a result of what’s described as increasingly challenged access to timber and transportation problems. The curtailments are being achieved by scrapping one shift at each of the mills, resulting in the loss of 147 jobs.
TECH DOWNTURN STINGS EQB
The company formerly known as Equitable Group (ie, the branchless bank) reported a 17 per cent plunge in second-quarter net income after markets closed yesterday. The blame can be pinned on non-interest income, which swung into negative territory due to mark-to-market losses on investments that EQB said were made to gain access to “innovative business models and early-stage technologies.” We’ll learn more about that, and the fundamentals of the business (including a surge in reverse mortgage activity, new provisions for credit losses, and adjustments to underwriting practices), when chief executive Andrew Moor joins us at 3:30 p.m. EDT. Will also point out EQB is raising its quarterly dividend seven per cent to $0.31 per share.
ELECTING JERRY DIAS’S SUCCESSOR
It’s been almost half a year since Dias left his role as national president of Unifor. Health issues were cited as the official reason; the union later released findings of an independent probe into Dias’s alleged breach of Unifor’s code of conduct for accepting money from a COVID-19 rapid-test supplier whose product he promoted to certain employers. And so, today is an opportunity for Unifor members to turn the page on that public relations fiasco. As for the new national president: she or he will inherit the role at a time when wages are under the microscope, not to mention perennial questions about the competitiveness of this country’s auto industry.
OTHER NOTABLE STORIES
- The aforementioned labour theme was highlighted by Metro’s chief executive in that company’s latest earnings release. Eric La Flèche said “increasing inflationary pressures as well as ongoing labour shortages … are impacting the supply chain and our operations.” Nevertheless, the company’s adjusted profit jumped 11 per cent to $1.18 per share, helped by a 7.2 per cent jump in pharmacy same-store sales.
- Occupancy at Boardwalk Real Estate Investment Trust’s properties continues to march higher as more Canadians are pushed into the rental market. The REIT said average occupancy in the second quarter was 96.44 per cent, compared to 95.9 per cent a year earlier; and, in a release, chief executive Sam Kolias said “significant leasing gains” have pushed occupancy to 97.1 per cent this month. Kolias will take us in-depth on what’s happening in the market at 4:30p.m. ET.
- Lundin Gold is about to pay a dividend for the first time. The miner announced US$0.20 per share will be handed out on Sept. 13 to shareholders of record as of Aug. 24. In a release, chief executive Ron Hochstein said the semi-annual payment is made possible thanks in part to cash flow from Lundin’s Fruta del Norte mine in Ecuador. Other than helping to fund the dividend, Ecuador caused some problems for Lundin in its latest quarter, as blockades hindered some shipments. As for its outlook, the numbers are heading in the direction investors generally like, as the company raised its outlook for production and cut its call on all-in sustaining costs.
- Elon Musk made two things clear in a late-night tweet: he really doesn’t want to buy Twitter, and he’s also done paring his Tesla stake after it came to light that he sold 7.9 million shares.
- Coinbase swung to a loss in the second quarter as the so-called crypto winter put a chill on revenue and trading volume. It also warned on third-quarter user and trading metrics. Nonetheless, the trading platform operator is touting itself as “an all-weather company.” Which helps explain the recent job cuts and today’s mantra of taking a “pause, maintain, and prioritize” product development.
- CAE cut its full-year adjusted operating profit growth forecast to mid-20 per cent from the previous call for mid-30 per cent growth. That comes amid a laundry list of headwinds it rattled off in a release this morning (all the usual suspects: pandemic, war in Ukraine, high inflation, etc.) The Montreal-based maker of simulation technology also reported a 54 per cent drop in fiscal first-quarter operating income this morning, due in part to what CAE called “unfavourable contract profit adjustments” in its defense unit.
- Notable data: U.S. CPI, China CPI and PPI
- Notable earnings: Manulife Financial, Metro, Linamar, CAE, Stelco Holdings, Stantec, Franco-Nevada, Peyto Exploration, Birchcliff Energy, Canadian Apartment Properties Real Estate Investment Trust, Stella-Jones, Emera, Ballard Power Systems, Element Fleet Management, Indigo Books & Music, The Walt Disney Co.
- 1215: Deputy Prime Minister and Finance Minister Chrystia Freeland holds meeting in Ki