Author: Consultant

  • Meltdown as Elon Musk enters Twitter headquarters ahead of takeover: ‘Let that sink in!’

    Meltdown as Elon Musk enters Twitter headquarters ahead of takeover: ‘Let that sink in!’

    Tesla CEO Elon Musk made a big splash on Twitter with a video of himself walking into the tech giant’s headquarters ahead of his takeover of the company. 

    Musk, who is set to officially have ownership of the social media platform by Friday, shared a clip of himself walking into Twitter’s lobby while carrying a sink.

    “Entering Twitter HQ – let that sink in!” Musk exclaimed with a visual pun. 

    https://www.foxnews.com/media/meltdown-elon-musk-enters-twitter-headquarters-ahead-takeover-let-sink

  • CP Rail reports revenue, earnings up on strong demand for potash shipping

    CP Rail reports revenue, earnings up on strong demand for potash shipping

    Canadian Pacific Railway Ltd. CP-T +1.59%increase says its revenue and earnings for the third quarter were up from last year as it saw strong demand for potash shipping and other services.

    The Calgary-based railway says revenues of $2.31-billion for the quarter ending Sept. 30 were up 19 per cent compared with $1.94-billion in the same quarter last year.

    The company says foreign-exchanged adjusted potash revenue was up 48 per cent, intermodal up 44 per cent, automotive up 31 per cent, while energy, chemical and plastics were down 10 per cent.

    Net income of $891-million or 96 cents per share for the quarter was up from $472-million or 71 cents per share for the same quarter last year.

    Core adjusted diluted earnings per share, which exclude significant items and accounting related to its purchase of Kansas City Southern, came in at $1.01, a 15-per-cent increase from a year earlier.

    The company says its reportable train accident frequency was down 76 per cent to a record low of 0.37 per million train-miles from 1.54 in the third quarter of 2021, while its personal injury rate was down 12 per cent to 0.86 injuries per 200,000 employee-hours.

  • Teck Resources exits oil sands with $1-billion sale of Fort Hills stake to Suncor

    Teck Resources exits oil sands with $1-billion sale of Fort Hills stake to Suncor

    Teck Resources Ltd. is exiting the oil sands business with a $1-billion sale of its stake in the Fort Hills oil sands project to Suncor Energy Inc. to concentrate on its base metals operations.

    In the largest oil-sands transaction in years, Suncor will acquire Vancouver-based Teck’s 21.3-per-cent interest, boosting its share to 75.4 per cent and further consolidating oil sands holdings in the region at a time of high oil prices. France’s TotalEnergies owns the remaining interest in Fort Hills, and has said it also plans to part with its oil sands holdings.

    Teck had long signaled that it intended to sell its oil sands holding to focus on mining metals including copper and zinc – crucial for electrifying the economy – and to lower its carbon footprint. When he retired last summer, longtime chief executive officer Don Lindsay said environmentally conscious investors had avoided the Teck’s shares because of the oil sands interest. The company also mines metallurgical coal.

    Suncor, Canada’s largest oil sands producer and the operator of Fort Hills, was widely viewed as the most logical buyer of the Teck interest.

    “This transaction advances our strategy of pursuing industry leading copper growth and rebalancing our portfolio of high-quality assets to low-carbon metals,” Mr. Lindsay’s successor, Jonathan Price, said in a statement. Mr. Price said the company will review where to deploy the proceeds from the sale.

    The deal comes with oil sands-industry profits surging due to high crude prices. The sector is also seeking to improve its reputation with investors, governments and the public through an alliance among the largest companies that has pledged to invest billions of dollars in technology to get to net-zero carbon emissions by 2050.

    In September, TotalEnergies said it plans to spin off its oil sands interests, which also include a 50-per-cent stake in a project called Surmont, into a new publicly traded company. CEO Patrick Pouyanne said the oil sands stakes do not fit with TotalEnergies’s climate strategy.

    The acquisition meets Suncor’s objectives for financial returns and fits with its strategy to “optimize” its holdings around core producing projects, interim CEO Kris Smith said in a statement. It will fund the transaction with cash from asset sales it has in the works, the company said.

    With the transaction, Teck will record an after-tax, non-cash impairment charge $950-million in the third quarter of this year, it said. For its part, Suncor said it will record a non-cash charge of $2.6-billion on its existing interest.

    Fort Hills, located 90 kilometres north of Fort McMurray, Alta., is the country’s newest oil sands mining project, starting operations in 2018 at a construction cost of $17-billion. It was plagued in its early years with operational problems as well as a government-mandated limit on production when the industry faced a squeeze on export pipeline capacity.

    Suncor said on Wednesday that its gross output is expected to be lower than previously projected, and operating costs higher, because of “mine constraints as well as accelerated development of further mine pits for increased sustained long-term production.”

  • Bank of Canada hikes key interest rate by 0.5 percentage points, raising borrowing costs for sixth time in a row

    Bank of Canada hikes key interest rate by 0.5 percentage points, raising borrowing costs for sixth time in a row

    The Bank of Canada increased its benchmark interest rate by 0.5 percentage points, ratcheting up Canadian borrowing costs for the sixth consecutive time this year while warning that economic growth will “stall” in the coming quarters.

    This moves the policy rate to 3.75 per cent for the first time since early 2008. Financial markets had been anticipating a larger 0.75 percentage point rate hike.

    The central bank said that interest rates will likely need to rise further to get decades-high inflation under control. But it struck a more dovish tone than in previous announcements, noting that higher borrowing costs are already squeezing the economy. It said in an updated economic forecast that there is a roughly 50 per cent chance of a recession in Canada next year.

    “Future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding,” the bank said in its rate decision statement.

    Live updates: Follow the Bank of Canada’s rate decision

    Rob Carrick: Young people priced out of houses should be loving the rise in interest rates

    The decision caught markets by surprise. Bank of Canada governor Tiff Macklem had been notably hawkish in his communications ahead of the announcement, leading bond traders and private-sector economists to expect a larger rate increase. Many thought the bank would move aggressively to keep pace with the U.S. Federal Reserve to prevent further deterioration of the Canadian dollar.

    The yield on the 2-year-government bond plunged more than 20 basis points following the announcement. The Canadian dollar fell one cent against the U.S. dollar, hitting 73 US cents.

    “In the Bank of Canada’s game of chicken with inflation, central bankers were the first to swerve,” Royce Mendes, head of macro strategy at Desjardins, wrote in a note to clients. “Governing Council still expects that rates will need to rise further, but they are obviously looking to fine-tune policy adjustments more now than they were earlier this year.”

    The bank has raised rates six times since March in one of the fastest monetary policy tightening cycles on record. Higher rates make it more expensive for households and businesses to borrow money, with the goal of curbing demand for goods and services and slowing the pace of consumer price growth.

    The effects of tighter monetary policy are “becoming evident” in interest-sensitive areas of the economy, the bank said. The housing market has entered a lengthy slump, while consumer spending and business investment is softening. Canadian exports are also weakening as key trading partners teeter on the brink of recession.

    The bank slashed its forecast for Canadian economic growth. It now expects 0.9 per cent annual GDP growth next year, down from its previous estimate of 1.8 per cent. While it avoided using the word “recession,” the bank said that an economic contraction is increasingly likely.

    “GDP growth is then projected to slow to be 0 per cent and 0.5 per cent through the end of 2022 and the first half of 2023,” the bank said in its quarterly Monetary Policy Report, published Wednesday. “This suggests that a couple quarters with growth slightly below zero is just as likely as a couple of quarters with small positive growth.”

    This puts the bank in a precarious position. Economic activity is slowing quickly, but inflation remains stubbornly above the bank’s 2-per-cent target. Moreover, bank officials believe there is still “substantial excess demand in the Canadian economy,” which is showing up most clearly in labour shortages and rising service prices.

    Headline consumer price index inflation has fallen in recent months, hitting an annual rate of 6.9 per cent in September, down from a high of 8.1 per cent in June. Still, much of the decline so far has come from lower gasoline prices. Other prices continue to push higher, with nearly two-thirds of the components of the consumer price index seeing annual price increases above 5 per cent.

    “The Bank’s preferred measures of core inflation are not yet showing meaningful evidence that underlying price pressures are easing. Near-term inflation expectations remain high, increasing the risk that elevated inflation becomes entrenched,” the bank said.

    The bank cut its inflation forecast slightly. It now expects CPI inflation to average 6.9 per cent in 2022, down from the previous projection of 7.2 per cent. It sees inflation averaging 4.1 per cent in 2023, down from an earlier forecast of 4.6 per cent, and hitting 2.8 per cent by the fourth quarter of next year.

  • Alphabet misses on earnings as YouTube shrinks; company will cut headcount growth by half in Q4

    Alphabet misses on earnings as YouTube shrinks; company will cut headcount growth by half in Q4

    • Alphabet missed analyst expectations on the top and bottom lines.
    • Revenue at YouTube declined, while analysts were expecting growth of about 3%.
    • Total growth of 6% marked the weakest period of expansion since 2013, other than one period during the pandemic.

    Alphabet shares dropped about 7% in extended trading on Tuesday after the company reported weaker-than-expected earnings and revenue for the third quarter and said it would significantly decrease headcount growth.

    • Earnings per share (EPS): $1.06 vs. $1.25 expected, according to Refinitiv estimates.
    • Revenue: $69.09 billion vs. $70.58 billion expected, according to Refinitiv estimates.
    • YouTube advertising revenue: $7.07 billion vs $7.42 billion expected, according to StreetAccount estimates.
    • Google Cloud revenue: $6.9 billion vs $6.69 billion expected, according to StreetAccount estimates
    • Traffic acquisition costs (TAC): $11.83 vs $12.38 expected, according to StreetAccount estimates

    Revenue growth slowed to 6% from 41% a year earlier as the company contends with a continued downdraft in online ad spending. Other than one period early in the pandemic, it’s the weakest period for growth since 2013.

    YouTube ad revenue slid about 2% to $7.07 billion from $7.21 billion a year ago. Analysts were expecting an increase of about 3%. Alphabet reported overall advertising revenue of $54.48 billion during the quarter, up slightly from the prior year.

    https://www.cnbc.com/2022/10/25/alphabet-googl-q3-2022-earnings-.html

  • Housing, mortgage sectors brace for more pain as Bank of Canada tees up another big rate hike

    Housing, mortgage sectors brace for more pain as Bank of Canada tees up another big rate hike

    The Bank has already hiked the policy rate by three percentage points over the course of the year, bringing it to 3.25 per cent. This aggressive tightening campaign has raised borrowing costs and taken the steam out of the country’s hottest housing markets as more prospective home buyers sit on the sidelines.   

    Existing home prices in Canada have been declining from the $816,720 peak reached in February and checked in at $640,479 in September, according to data from the Canadian Real Estate Association.

    But September saw the first month-over-month decline in Canada’s new home price index since January 2020.

    Though Bank of Montreal chief economist Douglas Porter acknowledged the 0.1 per cent dip wasn’t a big move, he said the index was nevertheless a barometer that measures home price inflation through “replacement costs.”

    “This is at least one area where the (Bank of Canada’s) aggressive tightening campaign is having a direct impact on headline inflation, with more to come,” Porter warned in an Oct. 25 note.  

    Among homeowners, variable-rate mortgage holders are likely to feel the pinch first, said Royce Mendes, managing director and head of macro strategy at Desjardins. Mendes and macro strategy associate Tiago Figueiredo added that they expect the Bank of Canada to raise rates by 75 basis points this week and deliver one more 25-basis-point hike in December, remaining reluctant to forecast anything higher than that.  

    If the widely anticipated 75-basis-point hike comes down the pipeline on Oct. 26 and pushes the policy rate up to four per cent, Desjardins economists believe that homeowners who took out a variable-rate mortgage between May 2020 and July 2022 could be forced to top up their payments.   

    “Admittedly, variable-rate mortgages represent only about one third of total mortgages outstanding, and we’re talking about a subset of that,” Mendes and Figueiredo said in an Oct. 21 note. “But banks are already sending out letters to clients whose variable-rate mortgages owe more interest than their fixed monthly payment obligation. And that’s just the tip of the iceberg.”  

    These impacts are also rippling through the broader mortgage market with shares of the country’s biggest mortgage providers coming under pressure this year. National Bank of Canada analyst Jaeme Gloyn noted that Home Capital Group’s stock is down 38 per cent this year, Equitable Bank slipped 32 per cent, Timbercreek Financial Corp. fell 22 per cent and First National Financial Corp. is off 16 per cent.  

    Gloyn expects these mortgage stocks to be held down by rising rates for the rest of the year. Housing market risks also remain elevated, Gloyn cautioned, noting that the average price of a low-rise home in the Greater Toronto Area is down seven per cent year over year as of the first week of October.  

    “Overall, we believe Mortgage Land’s relative underperformance will persist in the near term, at least until uncertainty surrounding these risks diminish,” Gloyn said in an Oct. 24 note, adding that the bank was lowering price targets across the board.  

    “What could cause a shift in our view?… We have a keen eye on the employment outlook and central bank positioning. We believe more widespread employment losses will pressure mortgage stocks lower, potentially to crisis trough levels that would offer investors a more attractive entry. A dovish turn from the Federal Reserve and/or Bank of Canada could also cause a change in our currently softer view.”  

  • Federal Infrastructure Bank commits $970-million toward Canada’s first small modular nuclear reactor

    Federal Infrastructure Bank commits $970-million toward Canada’s first small modular nuclear reactor

    The federal government will provide nearly $1-billion in debt financing toward the construction of a commercial small modular reactor (SMR) – which will be a first in Canada and among the first built worldwide.

    The Canada Infrastructure Bank announced Tuesday it will provide a low-interest loan of $970-million for an SMR at Ontario Power Generation’s Darlington Nuclear Generation Station in Clarington, Ont., about 70 kilometres east of Toronto. Infrastructure Bank chief executive Ehren Cory declined to disclose the loan’s interest rate, but characterized it as his organization’s largest-ever investment in clean power.

    Mr. Cory added that the government’s objective was “getting this project launched as quickly as possible, and showing the role that nuclear can play as part of that overall clean solution.” OPG officials said Tuesday the reactor will begin supplying power to Ontario’s grid in 2028.

    Ontario to extend life of Pickering nuclear plant until 2026

    The loan represents by far the federal government’s largest financial commitment since it began promoting SMRs in 2018. Since then, Ottawa has provided tens of millions of dollars in grants to support Canadian-based SMR developers, but those are small sums compared with the billions required to deliver a mature reactor design. The government hopes success at Darlington will spur new SMR projects in Saskatchewan, New Brunswick and Alberta.

    “We are doing this because nuclear energy, as a non-emitting source of energy, is critical to the achievement of Canada’s and the world’s climate goals,” Natural Resources Minister Jonathan Wilkinson said at an event Tuesday at the Darlington station.

    With outputs of 300 megawatts or less, SMRs are physically smaller than reactors built during the industry’s heyday in the 1970s and 1980s. Darlington’s four reactors were built between 1982 and 1993, and theyeach provide 935 megawatts. Alsowhereastraditional reactors were constructed on-site, most SMRs are intended to be partly fabricated in factories. The industry expects these features will lead to lower construction costs.

    OPG said the Darlington SMR will be built at several facilities across Ontario, including by BWXT Canada Ltd. at its manufacturing facility in Cambridge, Ont. Buildings and containment structures will be fabricated and preassembled off-site, whereas Darlington’s concrete structures were poured on location.

    In December, 2021, OPG announced it had selected GE Hitachi Nuclear Energy as a partner to build a BWRX-300, which is in some respects an updated version of a previous design known as the ESBWR, which was certified by the U.S. Nuclear Regulatory Commission.

    The BWRX-300 is not yet licensed by the Canadian Nuclear Safety Commission. Saskatchewan’s SaskPower also selected the BWRX-300 design, but hasn’t yet decided whether to build one.

    Mr. Cory said the Canada Investment Bank views the BWRX-300 as a tested design with a track record of deployments.

    “We had technical advice from our side that said that many of the core elements of it, and the components, were well-tested,” he said. “So we view that technology as acceptable and moderate.”

    According to the World Nuclear Industry Status Report, released by Mycle Schneider Consulting earlier this month, there have been no major advances in SMR technology in recent years. Many previously announced SMRs are either years – and in some cases decades – behind schedule, or have performed poorly.

    What the report did observe was “increasing media attention and some additional public funding commitments.” In February, French president Emmanuel Macron announced US$1.1-billion in funding toward development of an SMR design. The U.S. Department of Energy has announced up to US$5.5-billion in funding for SMRs, in addition to US$1.2-billion it has already spent, although no SMRs have yet been built on American soil.

    M.V. Ramana, a professor at the University of British Columbia’s public policy school, specializes in energy and is a co-author of the World Nuclear Industry Status Report. He said OPG’s timeline is unrealistic, and delays are likely.

    “This particular design is still very preliminary,” he said. “When a design is submitted to a regulator for a safety review, typically the regulators ask questions, and the design starts getting changed … and that means there is no way to have an assessment of how much this reactor would cost.”

    OPG said the Darlington SMR will be cost-competitive with other forms of generation, but did not provide a cost estimate. “We will issue a cost ahead of construction,” said spokesperson Neal Kelly in a written response to questions. “We’re still in the site preparation phase of the project.”

    OPG said it’s taking a “gated approach” to the project, with each phase requiring board approval. Mr. Cory said if OPG decides to abandon the reactor at any stage, the loan’s terms require full repayment. Taxpayers also won’t be on the hook for cost overruns, he added.

    The Canada Investment Bank takes direction from the federal government on what sectors it can invest in, and this time last year, nuclear was not specifically designated as a target for investment.

    “In Budget 2022, the federal government made clear that within our clean power mandate, they wanted to include in that scope the potential for small modular reactors,” Mr. Cory said. “That gave us the authority to go out and source deals.

    “We continue to talk to other jurisdictions who are also pursuing nuclear, so this probably won’t be the last.”

  • General Motors posts big third-quarter earnings beat but holds full-year guidance steady amid ‘headwinds’

    General Motors posts big third-quarter earnings beat but holds full-year guidance steady amid ‘headwinds’

    • General Motors easily beat Wall Street’s earnings expectations during the third quarter, while slightly missing on revenue.
    • The company did not adjust its guidance for the year.
    • GM CEO Mary Barra on Tuesday said the company is “actively managing the headwinds we face.”

    https://www.cnbc.com/2022/10/25/general-motors-gm-earnings-q3-2022.html

  • Wave of LNG tankers is overwhelming Europe in energy crisis and hitting natural gas prices

    Wave of LNG tankers is overwhelming Europe in energy crisis and hitting natural gas prices

    • 60 liquified natural gas vessels are slow sailing or anchored around Northwest Europe, the Mediterranean, and the Iberian Peninsula, according to MarineTraffic.
    • The vessels are considered floating LNG storage since they cannot unload and the situation is impacting the price of natural gas and freight rates.
    • Natural gas is critical for European energy needs into the winter and Russia has reduced its supply of gas as a result of the war in Ukraine, but existing storage capacity is at 93%.

    https://www.cnbc.com/2022/10/24/wave-of-lng-tankers-overwhelms-europe-and-hits-natural-gas-prices.html