Author: Consultant

Monday May 8

China aggregate yuan financing, new loans and money supply

Japan services and composite PMI

Germany industrial production

(10 a.m. ET) U.S. wholesale inventories for March.

(2 p.m. ET) U.S. Fed Senior Loan Officer Opinion Survey for March.

Earnings include: Ag Growth International Inc.; Altius Minerals Corp.; CT REIT; Curaleaf Holdings Inc.; Ero Copper Corp.; Finning International Inc.; HudBay Minerals Inc.; PayPal Holdings Inc.; Russel Metals Inc.; Sleep Country Canada Holdings Inc.; Suncor Energy Inc.

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Tuesday May 9

China trade surplus

Japan household spending

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for April.

Earnings include: Airbnb Inc.; B2Gold Corp.; Boardwalk REIT; CCL Industries Inc.; Element Fleet Management Corp.; Exchange Income Corp.; Freehold Royalties Ltd.; Goeasy Ltd.; Great-West Lifeco Inc.; Innergex Renewable Energy Inc.; InterRent REIT; Keyera Corp.; Kinross Gold Corp.; Northland Power Inc.; NuVista Energy Ltd.; Ovintiv Inc.; Pet Valu Holdings Ltd.; SNC-Lavalin Group Inc.; Spartan Delta Corp.; Superior Plus Corp.; Tricon Capital Group Inc.

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Wednesday May 10

Germany CPI

(8:30 a.m. ET) Canadian building permits for March. Estimate is a decline of 2.0 per cent from February.

(8:30 a.m. ET) U.S. CPI for April. The Street is forecasting a rise of 0.4 per cent from March and up 5.0 per cent year-over-year. In March, CPI also rose 5.0 per cent from a year earlier.

(2 p.m. ET) U.S. budget balance for April.

Earnings include: Athabasca Oil Corp.; Bellus Health Inc.; Birchcliff Energy Ltd.; Boralex Inc.; Crombie REIT; Filo Mining Corp.; Granite REIT; Home Capital Group Inc.; IA Financial Corp. Inc.; Intact Financial Corp.; Linamar Corp.; Lundin Gold Inc.; Manulife Financial Corp.; Nutrien Ltd.; Nuvei Corp.; Osisko Mining Corp.; Pan American Silver Corp.; Paramount Resources Ltd.; Parex Resources Inc.; Peyto Exploration & Development Corp.; RioCan REIT; Ritchie Bros Auctioneers; Smart REIT; Stantec Inc.; Stella-Jones Inc.; Tamarack Valley Energy Ltd.; Torex Gold Corp.; Walt Disney Co.; WSP Global Inc.

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Thursday May 11

China CPI and PPI

Japan banking lending

Bank of England monetary policy announcement

(8:30 a.m. ET) U.S. initial jobless claims for week of May 6. Estimate is 245,000, up 3,000 from the previous week.

(8:30 a.m. ET) U.S. PPI final demand for April. Consensus is a rise of 0.3 per cent month-over-month and 2.4 per cent year-over-year.

Earnings include: Algonquin Power & Utilities Corp.; Allkem Ltd.; Brookfield Corp.; Canadian Tire Corp. Ltd.; Cascades Inc.; CI Financial Corp.; Definity Financial Corp.; Docebo Inc.; E-L Financial Corp.; Fairfax Financial Holdings Ltd.; Iamgold Corp.; Maple Leaf Foods Inc.; Merck ADR; Northwest Healthcare Properties REIT; Quebecor Inc.; Sun Life Financial Inc.; Trisura Group Ltd.; Trulieve Cannabis Corp.

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Friday May 12

(8:30 a.m. ET) U.S. import prices for April. The Street expects an increase of 0.3 per cent from March but a decline of 4.8 per cent year-over-year.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for May (preliminary reading).

(10:30 a.m. ET) Bank of Canada Senior Loan Officer Survey for Q1.

Earnings include: Air Canada; Canadian Apartment Properties REIT; Crescent Point Energy Corp.; Dentalcorp Holdings Ltd.; Emera Inc.; H&R REIT; NexGen Energy Ltd.; Onex Corp.; Perseus Mining Ltd.

Enbridge Inc. reported a first-quarter profit of $1.7 billion, down from $1.9 billion a year ago as it was hit by a realized loss due to the termination of foreign exchange hedges.

The pipeline company says the profit amounted to 86 cents per share for the quarter ended March 31, down from 95 cents per share in the same quarter a year earlier.

On an adjusted basis, Enbridge says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share a year earlier.

The result matched the average analyst estimate for adjusted profit per share, according to estimates compiled by financial markets data firm Refinitiv.

On Thursday, Enbridge announced a deal with shippers for tolling on its Mainline pipeline system, Canada’s largest oil pipeline network.

The company had been working on a new tolling agreement ever since its proposal to fill the pipeline through long-term contracts was rejected by the Canada Energy Regulator in November 2021.

This report by The Canadian Press was first published May 5, 2023.

The Canadian Press – Canadian Press – Fri May 5, 6:12AM CDT

Magna International Inc. upgraded its outlook for its sales and profit for the year as it reported its first-quarter profit fell compared with a year ago and its sales rose 11 per cent.

The auto parts company, which keeps its books in U.S. dollars, says its profit attributable to the company amounted to US$209 million or 73 cents per diluted share for the quarter ended March 31, down from US$364 million or $1.22 per diluted share a year earlier.

Sales totaled US$10.67 billion, up from US$9.64 billion in the first three months of 2022.

The company says the increase in sales came as global light vehicle production gained three per cent, including an eight per cent gain in North America and seven per cent in Europe.

On an adjusted basis, Magna says it earned US$1.11 per diluted share, down from an adjusted profit of US$1.28 per diluted share a year ago.

In its outlook for the full year, the company says it now expects total sales between US$40.2 billion and US$41.8 billion up from earlier expectations for between US$39.6 billion and US$41.2 billion. Net income attributable to Magna is expected to be between US$1.3 billion and $1.5 billion, up from earlier guidance for between US$1.1 billion and US$1.4 billion.

Published: 5/5/2023 6:05 PM ET

The Canadian market ended on a buoyant note on Friday on fairly widespread buying after data showed the Canadian economy saw a much bigger than expected addition of jobs in the month of April.

Strong U.S. non-farm payrolls employment, and encouraging results from Apple Inc. contributed as well to the bullish sentiment in the market.

The benchmark S&P/TSX Composite Index ended with a gain of 303.84 points or 1.5% at 20,542.03, recording its biggest single-session gain in five months.

The mood remained quite positive after data showed jobs growth in Canada beat expectations for a fifth straight month. According to the data released by Statistics Canada, the Canadian economy added 41,400 jobs in April 2023, much higher than an expected addition of 20,000 jobs.

The unemployment rate in Canada was at 5% for a fifth consecutive month in April, remaining near the record low of 4.9% seen in June and July of 2022.

Meanwhile, average hourly earnings for permanent employees in Canada increased by 5.2% year-on-year to $34.13 in April.

Data from the Labor Department showed non-farm payroll employment in the U.S. shot up by 253,000 jobs in April compared to economist estimates for an increase of about 179,000 jobs.

Technology, Energy and Healthcare stocks rallied sharply, lifting the respective sectoral indices by 3.61%, 3.35%, and 3.01%, respectively.

Consumer discretionary, financials and industrials shares also posted impressive gains, while shares from the rest of the sectors closed on a mixed note.

The Information Technology Capped Index surged 3.61%. Open Text Corp (OTEX.TO) soared more than 12%. The company reported a revenue of $1,244.7 million for the third-quarter, compared with revenue of $882.3 million in the year-ago quarter.

Shopify Inc (SHOP.TO) climbed nearly 7%. BlackBerry (BB.TO), Lightspeed Commerce (LSPD.TO), Softchoice (SFTC.TO) and Kinaxis Inc (KXS.TO) gained 4 to 7%.

Energy stocks rallied as oil prices rose sharply. Arc Resources (ARX.TO) and Pason Systems (PSI.TO) surged 7.5% and 8.7%, respectively. Precision Drilling Corp (PD.TO), Advantage Oil & Gas (AAV.TO), PrairieSky Royalty (PSK.TO), Vermilion Energy (VET.TO), MEG Energy (MEG.TO), Canadian Natural Resources (CNQ.TO), Paramount Resources (POU.TO), Enerplus Corp (ERF.TO), Imperial Oil (IMO.TO), Athabasca Oil Corp (ATH.TO) and Cenovus Energy (CVE.TO) rallied 3.2 to 5.4%.

Among the stocks in the Healthcare Index, Tilray Inc (TLRY.TO) climbed 8.5%, Canopy Growth Corp (WEED.TO) gained 6.55% and Chartwell Retirement Residences (CSH.UN.TO) gained 5.8%, while Sienna Senior Living (SIA.TO) advanced 2.1%.

Computer discretionary shares Magna International (MG.TO), Canada Goose Holdings (GOOS.TO) and Aritzia Inc (ATZ.TO) gained 6.3%, 5.1% and 4.1%, respectively. Spin Master Corp (TOY.TO), Mty Food Group (MTY.TO), Sleep Country Canada Holdings (ZZZ.TO) and Linamar Corp (LNR.TO) ended higher by 2.2 to 3.3%.

In the Financials section, Goeasy Ltd. (GSY.TO) surged 4.35%. Bank of Montreal (BMO.TO), Canadian Imperial Bank of Commerce (CM.TO), CDN Western Bank (CWB.TO), Laurentian Bank (LB.TO), Toronto-Dominion Bank (TD.TO) and Bank of Nova Scotia (BNS.TO) gained 2 to 3%.

Air Canada (AC.TO), up 11.6%, was the top gainer in the industrials section. The stock rose after the company lifted its profit forecast. Ballard Power Systems (BLDP.TO) surged nearly 2.5% and Canadian Pacific Railway (CP.TO) climbed 2.2%. Cargojet (CJT.TO) and Finning International (FTT.TO) also posted strong gains.

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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Federal Reserve expected to raise interest rates for the 10th time

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.