Author: Consultant

BCE Inc. BCE-T -1.44%decrease and Telus Corp. T-T -1.61%decrease reported lower first-quarter profits as they brace for heightened competition from Rogers Communications Inc. RCI-B-T -0.86%decrease after the completion of its takeover of Calgary-based Shaw Communications Inc SJR-B-T +0.02%increase

BCE and Telus each boosted their first-quarter revenue and topped analyst expectations, even as their profits slipped on higher depreciation and amortization costs.

During conference calls to discuss their quarterly results, both telecoms – which had vigorously opposed Rogers’s $20-billion takeover of Shaw – were asked about the deal’s impact on their future profitability. Top executives at BCE and Telus said they are ready for the increased competition, having spent the past several years aggressively building out their networks in preparation.

Rogers on Wednesday announced revamped 5G wireless plans aimed at capturing a larger portion of the market for bundled services after consummating the Shaw takeover last month after two years of regulatory hurdles.

Toronto-based Rogers is now able to bundle its cellphone plans with residential offerings such as internet and television services in Western Canada, where it previously had no cable infrastructure. The telecom said its market for bundles doubled when it closed the deal, with roughly 70 per cent of Canadian households now able to purchase all of their services from Rogers.

That could “stir up competition in the Ontario and Western Canadian markets in the coming quarters,” Bank of Nova Scotia analyst Maher Yaghi said in a research note Thursday.

All of the Big Three telecoms – Bell, Telus and Rogers – are also expected to face competitive pressure from Quebecor Inc.’s QBR-B-T -2.02%decrease Vidéotron Ltd., which has expanded beyond its home market of Quebec by purchasing Shaw’s Freedom Mobile for $2.85-billion. Rogers and Shaw were forced to divest the wireless carrier to gain regulatory approval for their deal. Vidéotron, meanwhile, has promised Ottawa that it will offer wireless plans that are 20 per cent cheaper than those offered by the major wireless carriers on a specific benchmark date.

Desjardins analyst Jérome Dubreuil said Telus is likely to be affected the most by competition from Vidéotron, as well as from Rogers’s push to sell more bundled services.

“Among the Big Three, Telus has the most exposure to wireless in B.C., Alberta and Ontario, where we expect competition to increase in the coming months,” Mr. Dubreuil said in a note to clients.

Asked about the heightened competition from two of its rivals, Telus’s chief financial officer Doug French said the Vancouver-based telecom has been consistently bundling wireless and residential services over the past two years as it accelerated the build-out of its fibre-optic network.

“Our operational execution was to ensure that irrespective of what the outcome of the Shaw-Rogers decision was, we would be in the best position possible with more fibre, which is a superior product to cable by a significant amount,” Mr. French said in an interview.

BCE has also been investing in its infrastructure, including its fibre-optic internet and 5G wireless networks, to prepare for the heightened competition post Rogers-Shaw merger, chief executive Mirko Bibic said during the company’s annual shareholder meeting, also held on Thursday.

“With the very best networks, the best brands and the best customer experience, we’re going to be well positioned to be competitive against all those who are in our industry. And let’s not forget, we’ve been competing against these players for years and years and years, quite successfully,” Mr. Bibic said.

Telus reported $4.96-billion of revenue for the three-month period ended March 31, up 15.9 per cent from a year ago when it reported $4.28-billion of revenue. The Vancouver-based telecom attributed the increase to growth in its health business, driven by its acquisition of human-resources company LifeWorks Inc., a rebound in roaming revenues and new wireless and internet subscribers.

Its profit for the quarter came to $224-million, down 45 per cent from the same quarter last year, when it had $404-million of profit.

The company blamed the decrease on higher depreciation and amortization relating to its accelerated network investments, and restructuring costs related to its integration of LifeWorks. The company also made a lump-sum payment of $67-million related to ratifying its new collective agreement with the Telecommunications Workers Union, United Steelworkers Local 1944.

After adjusting for restructuring and other costs, Telus’s profit came to $386-million, down 7 per cent from a year ago, while its adjusted basic earnings of 27 cents per share were down 10 per cent. Analysts had been expecting adjusted earnings of 26 cents a share and revenue of $4.89-billion, according to the consensus estimate from S&P Capital IQ.

Montreal-based BCE reported $6.05-billion of revenue in its first quarter, up 3.5 per cent from a year ago. Its profit came to $788-million, down 15.6 per cent as it grappled with inflationary cost pressures.

After adjusting for severance and acquisition costs, asset impairments, losses or gains on investments and other items, BCE’s earnings came to $772-million, down 4.8 per cent from a year ago. The adjusted earnings amounted to 85 cents per common share, down 4.5 per cent from 89 cents a share a year ago. That beat analyst expectations of 77 cents per share of adjusted earnings and $5.99-billion of revenue.

The company also announced that its chief financial officer, Glen Leblanc, is retiring in September. He will be replaced by Curtis Millen, who is currently senior vice-president, corporate strategy and treasurer.

First Horizon and TD Bank have called off a $13 billion deal that would have formed America’s sixth-largest bank, adding to the turmoil sweeping the country’s regional lenders.

Caught up in the worst banking crisis since 2008, First Horizon (FHN)’s share price has plunged about 40% over the past couple months, falling well below the $25 per share that TD offered when the takeover was announced in February 2022.

The stock closed at $15.05 a share Wednesday and plunged another 36% Thursday after the deal was mutually abandoned by the banks.

First Horizon is a regional lender in the southeast United States and would have helped Canada’s TD expand south of the border. But regional banks have been losing the confidence of investors and customers since the March collapse of Silicon Valley Bank and Signature Bank.

On Monday, a third regional bank, First Republic, failed and JPMorgan purchased most of its assets. A fourth, PacWest Bank confirmed earlier Thursday that it’s looking for a financial lifeline.

First Horizon said it remains stable, cash-rich and diversified.

“While today’s announcement is unfortunate and unexpected, First Horizon will continue on its growth path operating from a position of strength and stability,” said First Horizon CEO Bryan Jordan, in a statement.

TD said in a statement that the companies called off the merger because of an unexpectedly long regulatory approval process. Without a timetable for approval, the companies began to question whether the deal would get regulators’ blessing at all. TD said the regulatory issue was for “reasons unrelated to First Horizon.”

In an interview with CNBC, Jordan concurred that he doesn’t believe the deal was called off because TD Bank wanted to avoid buying First Horizon as regional bank stocks plunge.

“We were unable to get a timeline for approval and we reached this agreement,” Jordan said. “We never assumed the regulatory approval was a given. We always knew that there was a risk in this process.”

He added that he believes that the banking sector remains strong, and that First Horizon has not taken considerable shifts to tighten its lending standards.

“I think things will stabilize, it’s just going to take some time,” Jordan said. “At the same time, we are seeing around the margins that contraction is occurring, just because of the tightness of financial conditions.”

Why First Republic may not be the end of the crisis

Although TD didn’t directly cite the banking crisis or First Horizon’s crumbling market value as the reason for abandoning the purchase, CEO Bharat Masrani said in a statement that the decision provided “clarity” to its customers and shareholders.

TD will pay First Horizon a $200 million breakup fee plus $25 million in reimbursement fees.

Other regional bank stocks have tumbled in recent days after First Republic’s failure. Investors are waiting for the next shoe to drop. Early Thursday, California-based PacWest Bank said it is exploring “all strategic options” after its share price was cut in half in after-hours trading following a Bloomberg report that it was considering a sale.

PacWest’s (PACW) stock was cut nearly in half Thursday, while Western Alliance Bank (WAL), another regional competitor, fell by more than 20%.

As the Fed has hiked interest rates to fight inflation, the value of regional lenders’ loans and bond holdings has crumbled. Customers had been moving their money to bigger banks, leaving some regional banks without the cash they need to pay for withdrawals.

• Shell reported adjusted earnings of $9.6 billion for the first three months of the year, comfortably beating analyst expectations of $8.6 billion, according to Refinitiv.
• The company posted adjusted earnings of $9.1 billion over the same period a year earlier and $9.8 billion for the final three months of 2022.
• Shell’s results follow hot on the heels of U.K. rival BP, which on Tuesday reported a drop in first-quarter profit but beat analyst expectations on robust oil and gas trading.

https://www.cnbc.com/2023/05/04/shell-q1-earnings-2023.html

WASHINGTON (AP) — The Federal Reserve reinforced its fight against high inflation Wednesday by raising its key interest rate by a quarter-point to the highest level in 16 years. But the Fed also signaled that it may now pause the streak of 10 rate hikes that have made borrowing for consumers and businesses steadily more expensive.

In a statement after its latest policy meeting, the Fed removed a sentence from its previous statement that had said “some additional” rate hikes might be needed. It replaced it with language that said it will consider a range of factors in “determining the extent” to which future hikes might be needed.

Speaking at a news conference, Chair Jerome Powell said the Fed has yet to decide whether to suspend its rate hikes. But he pointed to the change in the statement’s language as confirming at least that possibility.

The Fed’s rate increases since March 2022 have more than doubled mortgage rates, elevated the costs of auto loans, credit card borrowing and business loans and heightened the risk of a recession. Home sales have plunged as a result. The Fed’s latest move, which raised its benchmark rate to roughly 5.1%, could further increase borrowing costs.

Still, the Fed’s statement Wednesday offered little indication that its string of rate hikes have made significant progress toward its goal of cooling the economy, the job market and inflation. Inflation has fallen from a peak of 9.1% in June to 5% in March but remains well above the Fed’s 2% target rate.

“Inflation pressures continue to run high, and the process of getting getting inflation back down to 2% has a long way to go,” Powell said.

The surge in rates has contributed to the collapse of three large banks and turmoil in the banking industry. All three failed banks had bought long-term bonds that paid low rates and then rapidly lost value as the Fed sent rates higher.

The banking upheaval might have played a role in the Fed’s decision Wednesday to consider a pause. Powell had said in March that a cutback in lending by banks, to shore up their finances, could act as the equivalent of a quarter-point rate hike in slowing the economy.

At his news conference, Powell said: “The strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses.”

Related video: Federal Reserve expected to raise interest rates for the 10th time (WTVF Nashville, TN)

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Fed economists have estimated that tighter credit resulting from the bank failures will contribute to a “mild recession” later this year, thereby raising the pressure on the central bank to suspend its rate hikes.

The Fed is now also grappling with a standoff around the nation’s borrowing limit, which caps how much debt the government can issue. Congressional Republicans are demanding steep spending cuts as the price of agreeing to lift the nation’s borrowing cap.

The Fed’s decision Wednesday came against an increasingly cloudy backdrop. The economy appears to be cooling, with consumer spending flat in February and March, indicating that many shoppers have grown cautious in the face of higher prices and borrowing costs. Manufacturing, too, is weakening.

Even the surprisingly resilient job market, which has kept the unemployment rate near 50-year lows for months, is showing cracks. Hiring has decelerated, job postings have declined and fewer people are quitting jobs for other, typically higher-paying positions.

The turmoil in the nation’s banking sector, which re-erupted last weekend as regulators seized and sold off First Republic Bank, has intensified the pressure on the economy. It was the second-largest U.S. bank failure ever and the third major banking collapse in the past six weeks. Investors have grown anxious about whether other regional banks may suffer from similar problems.

Goldman Sachs estimates that a widespread pullback in bank lending could cut U.S. growth by 0.4 percentage point this year. That could be enough to cause a recession. In December, the Fed projected growth of just 0.5% in 2023.

Wall Street traders were also unnerved by this week’s announcement from Treasury Secretary Janet Yellen that the nation could default on its debt as soon as June 1 unless Congress agrees to lift the debt limit, which caps how much the government can borrow. A first-ever default on the U.S. debt could potentially lead to a global financial crisis.

The Fed’s rate hike Wednesday comes as other major central banks are also tightening credit. European Central Bank President Christine Lagarde is expected to announce another interest rate increase Thursday, after inflation figures released Tuesday showed that price increases ticked up last month.

Consumer prices rose 7% in the 20 countries that use the euro currency in April from a year earlier, up from a 6.9% year-over-year increase in March.

In the United States, some major drivers of higher prices have stalled or started to reverse, causing slowdowns in overall inflation. The consumer price index rose 5% in March from a year earlier, sharply lower than its 9.1% peak in June.

The rise in rental costs has eased as more newly built apartments have come online. Gas and energy prices have fallen steadily. Food costs are moderating. Supply chain snarls are no longer blocking trade, thereby lowering the cost for new and used cars, furniture and appliances.

Still, while overall inflation has cooled, “core” inflation — which excludes volatile food and energy costs — has remained chronically high. According to the Fed’s preferred measure, core prices rose 4.6% in March from a year earlier, scarcely better than the 4.7% it reached in July.

Musk bans ‘genderfluid’ ‘Anti-Christ’ promoting pedophilia flag from Twitter: ‘Not tolerated on this platform’ | Fox News

TC Energy Corp. reported a first-quarter profit of $1.31 billion, up from $358 million in the same quarter last year.

The pipeline company says the profit amounted to $1.29 per diluted share for the quarter ended March 31, up from a profit of 36 cents per diluted share a year earlier.

Revenue totalled $3.93 billion, up from $3.50 billion in the first three months of 2022.

TC Energy says its comparable results for its most recent quarter amounted to $1.21 per share, up from $1.12 per share in the same quarter last year.

Analysts on average had expected a profit of $1.15 per share, according to estimates compiled by financial markets data firm Refinitiv.

TC Energy says construction of its Coastal GasLink project continued in line with its revised cost and schedule and is now about 87 per cent complete. The company says it continues to target mechanical completion by late this year.

This report by The Canadian Press was first published April 28, 2023.

Canadian uranium miner Cameco (CCO) has reported that its first quarter profit more than doubled from a year earlier.

The Saskatoon-based company, which is the world’s largest publicly traded uranium miner, also reported that its revenue rose more than 70% due to higher deliveries and prices.

Cameco said its profit for this year’s first quarter amounted to $119 million or $0.27 per share, up 198% from $40 million or $0.10 a share a year ago.

Revenue in Q1 totalled $687 million, up 73% from $398 million in the first three months of 2022.

Analysts who cover the company had expected a Q1 profit of $0.25 per share, according to Refinitiv data.

Looking ahead, Cameco raised its revenue forecast for all of this year to between $2.22 billion and $2.37 billion compared with previous guidance of between $2.12 billion and $2.27 billion.

Stocks moved sharply lower during trading on Tuesday, with the major averages adding to the slim losses posted during Monday’s session. The major averages all showed significant moves to the downside on the day.

The major averages recovered from their worst levels of the day but still posted steep losses. The Dow tumbled 367.17 points or 1.1 percent to 33,684.53, the Nasdaq slumped 132.09 points or 1.1 percent to 12,080.51 and the S&P 500 plunged 48.29 points or 1.2 percent to 4,119.58.

The sell-off on Wall Street came as some traders looked to cash in on recent strength in the markets ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

With the Fed widely expected to raise interest rates by another 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

CME Group’s FedWatch Tool is currently indicating an 87.5 percent chance the Fed will raise rates by 25 basis points and a 72.9 percent chance the central bank will subsequently leave rates unchanged in June.

Concerns about lawmakers’ struggles to reach an agreement on raising the U.S. debt ceiling also weighed on Wall Street.

U.S. Treasury Secretary Janet Yellen has warned the Treasury might run out of money to cover obligations as soon as June 1.

In U.S. economic news, the Commerce Department released a report showing new orders for U.S. manufactured goods increased by slightly more than expected in March.

The Commerce Department said factory orders advanced by 0.9 percent in March after slumping by a revised 1.1 percent in February.

Economists had expected factory orders to climb by 0.8 percent compared to the 0.7 percent decrease originally reported for the previous month.

A separate report released by the Labor Department showed job openings in the U.S. fell by more than expected in the month of March.

The Labor Department said job openings decreased to 9.590 million in March from an upwardly revised 9.974 million in February. With the drop, job openings fell to their lowest level since April 2021.

Economists had expected job openings to decline to 9.775 million from the 9.931 million originally reported for the previous month.

Energy stocks moved sharply lower on the day, with another steep drop by the price of crude oil weighing on the sector.

After slumping $1.12 to $75.66 a barrel in the previous session, crude for June delivery plummeted $4 to $71.66 a barrel amid concerns about the outlook for demand.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 5.1 percent and the NYSE Arca Oil Index dove by 4.5 percent.

Banking stocks also showed a substantial move to the downside on the day, with the KBW Bank Index tumbling by 4.5 percent to its lowest closing level in over two years.

Networking, brokerage and steel telecom stocks also saw significant weakness, while gold stocks were among the few groups to buck the downtrend amid a spike by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan’s Nikkei 225 Index crept up by 0.1 percent, while Australia’s S&P/ASX 200 Index slid by 0.9 percent following a surprise interest rate hike.

Meanwhile, the major European markets all moved notably lower on the day. While the French CAC 40 Index tumbled by 1.5 percent, the German DAX Index and the U.K.’s FTSE 100 Index both slumped by 1.2 percent.

In the bond market, treasuries showed a strong move back to the upside following the steep drop seen on Monday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 13.5 basis points to 3.439 percent.

Looking Ahead

Trading on Wednesday is likely to be driven by reaction to the Fed’s monetary policy announcement, although reports on private sector employment and service sector activity may attract attention earlier in the day.

On the earnings front, Advanced Micro Devices (AMD), Clorox (CLX), Ford (F) and Starbucks (SBUX) are among the companies releasing their quarterly results after the close of today’s trading.

CVS Health (CVS), Kraft Heinz (KHC) and Yum! Brands (YUM) are also among the companies due to report their results before the start of trading on Wednesday.

Oil prices sank about 5% to a five-week low on Tuesday on concerns about the economy as U.S. politicians discuss ways to avoid a debt default and investors prepare for more rate hikes this week.

Brent futures fell $3.99, or 5%, to settle at $75.32 a barrel, while West Texas Intermediate crude (WTI) fell $4.00, or 5.3%, to end at $71.66.

That was the lowest close for both benchmarks since March 24 and was also their biggest one-day percentage declines since early January.

Oil prices and Wall Street’s main indexes both fell after U.S. Treasury Secretary Janet Yellen said the government could run out of money within a month.

The White House said President Joe Biden would not negotiate over the debt ceiling during his meeting with four top congressional leaders on May 9, but he will discuss starting “a separate budget process.”

U.S. job openings fell for a third straight month in March and layoffs increased to the highest level in more than two years, suggesting some softening in the labor market that could aid the Federal Reserve’s fight against inflation.

“The U.S. economy continues to evolve in a manner consistent with a recession commencing later this year,” analysts at Barclays, a bank, said in a note.

“The manufacturing sector is contracting, the consumer is struggling, … There are broadening signs of cracks emerging within the labor market,” Barclays said.

Later this week, investors will look for market direction from expected interest rate hikes by central banks still fighting inflation. More hikes could slow economic growth and dent energy demand.

The U.S. Federal Reserve is expected to increase interest rates by another 25 basis points on Wednesday.

The European Central Bank is also expected to raise rates at its regular policy meeting on Thursday.

“The … action of central banks in their mission to tame elevated consumer and producer prices … all cast a rather long shadow of doubt on prospects going forward,” oil broker PVM’s Tamas Varga said.

Concerns about diesel demand in recent months, meanwhile, has pressured U.S. heating oil futures to their lowest level since December 2021.

“Oil basically has weakening prospects from the world’s two largest economies, China and the U.S., and if the macro backdrop deteriorates momentum selling could easily send prices below the $70 level,” said Edward Moya, senior market analyst at data and analytics firm OANDA.

Over the weekend, data from China, the world’s top crude importer, showed manufacturing activity fell unexpectedly in April. That was the first contraction in the manufacturing purchasing managers’ index since December.

IRAN OIL OUTPUT RISING

On the supply side, Iran’s oil production surpassed 3 million barrels per day (bpd), its oil minister said. The OPEC member, which has been under U.S. sanctions since 2018, pumped 2.4 million bpd on average in 2021.

The market shrugged off news that the Organization of the Petroleum Exporting Countries’ output fell in April, as sanctioned countries Russia and Iran continued to find outlets for their crude.

Meanwhile, U.S. crude stockpiles were forecast to have drawn down for a third week in a row for the first time since December, falling some 1.1 million barrels last week, according to analysts in a Reuters poll.

The poll was conducted ahead of reports from the American Petroleum Institute, due at 4:30 p.m. EDT on Tuesday and the U.S. Energy Information Administration (EIA) at 10:30 a.m. EDT on Wednesday.