Author: Consultant

U.S. payrolls surged by 261,000 in October, better than expected as hiring remains strong

• Nonfarm payrolls grew by 261,000 in October, better than the estimate for 205,000.
• The unemployment rate moved higher to 3.7%, while a broader jobless measure also increased, to 6.8%.
• Big job gainers by industry included health care, professional and technical services, and leisure and hospitality.
• Average hourly earnings rose 0.4% for the month and were up 4.7% from a year ago.

Job growth was stronger than expected in October despite Federal Reserve interest rate increases aimed at slowing what is still a strong labor market.

Nonfarm payrolls grew by 261,000 for the month while the unemployment rate moved higher to 3.7%, the Labor Department reported Friday. Those payroll numbers were better than the Dow Jones estimate for 205,000 more jobs, but worse than the 3.5% estimate for the unemployment rate.

Although the number was better than expected, it still marked the slowest pace of job gains since December 2020.

Average hourly earnings grew 4.7% from a year ago and 0.4% for the month, indicating that wage growth is still likely to serve as a price pressure as worker pay is still well short of the rate of inflation. The yearly growth met expectations while the monthly gain was slightly ahead of the 0.3% estimate.

Health care led job gains, adding 53,000 positions, while professional and technical services contributed 43,000, and manufacturing grew by 32,000.

Leisure and hospitality also posted solid growth, up 35,000 jobs, though the pace of increases has slowed considerably from the gains posted in 2021. The group, which includes hotel, restaurant and bar jobs along with related sectors, is averaging gains of 78,000 a month this year, compared with 196,000 last year.

Heading into the holiday shopping season, retail posted only a modest gain of 7,200 jobs. Wholesale trade added 15,000, while transportation and warehousing was up 8,000.

The unemployment rate rose 0.2 percentage point even though the labor force participation rate declined by one-tenth of a point to 62.2%. An alternative measure of unemployment, which includes discouraged workers and those holding part-time jobs for economic reasons, also edged higher to 6.8%.

Stock market futures rose following the nonfarm payrolls release, while Treasury yields also were higher.

September’s jobs number was revised higher, to 315,000, an increase of 52,000 from the original estimate. August’s number moved lower by 23,000 to 292,000.

The new figures come as the Fed is on a campaign to bring down inflation running at an annual rate of 8.2%, according to one government gauge. Earlier this week, the central bank approved its fourth consecutive 0.75 percentage point interest rate increase, taking benchmark borrowing rates to a range of 3.75%-4%.

Those hikes are aimed in part at cooling a labor market where there are still nearly two jobs for every available unemployed worker. Even with the reduced pace, job growth has been well ahead of its pre-pandemic level, in which monthly payroll growth averaged 164,000 in 2019.

But Tom Porcelli, chief U.S. economist at RBC Capital Markets, said the broader picture is of a slowly deteriorating labor market.

“This thing doesn’t fall of a cliff. It’s a grind into a slower backdrop,” he said. “It works this way every time. So the fact that people want to hang their hat on this lagging indicator to determine where we are going is sort of laughable.”

Indeed, there have been signs of cracks lately.

Amazon on Thursday said it is pausing hiring for roles in its corporate workforce, an announcement that came after the online retail behemoth said it was halting new hires for its corporate retail jobs.

Also, Apple said it will be freezing new hires except for research and development. Ride-hailing company Lyft reported it will be slicing 13% of its workforce, while online payments company Stripe said it is cutting 14% of its workers.

Fed Chairman Jerome Powell on Wednesday characterized the labor market as “overheated” and said the current pace of wage gains is “well above” what would be consistent with the central bank’s 2% inflation target.

“Demand is still strong,” said Amy Glaser, senior vice president of business operations at Adecco, a staffing and recruiting firm. “Everyone is anticipating at some point that we’ll start to see a shift in demand. But so far we’re continuing to see the labor market defying the law of supply and demand.”

Glaser said demand is especially strong in warehousing, retail and hospitality, the sector hardest hit by the Covid pandemic.

Suncor Reports Net Loss In Third Quarter As It Takes Writedown On Fort Hills

The Canadian Press – Canadian Press – Wed Nov 2, 7:56PM CDT

CALGARY — Suncor Inc. says it recorded a net loss of $609 million in the third quarter as it took a writedown of $3.4 billion against its share of the Fort Hills oilsands mine.

The net loss, which works out to 45 cents per common share, is in contrast to an $877 million profit, or 59 cents per common share, in the prior year’s quarter.

Suncor announced last week it will buy out Teck Resources Ltd.’s 21.3 per cent stake in the Fort Hills oilsands project for approximately $1 billion. The agreed-upon sales price reflects a lower market value for the mine, resulting in a non-cash impairment charge.

On an adjusted basis, Suncor says it earned $2.6 billion for the three months ended Sept. 30, or $1.88 per share, compared to $1.0 billion or 71 cents per common share in the same three months of 2021.

The adjusted profit from operations was primarily due to significantly higher crude oil prices and higher upstream production, partially offset by increased income taxes, royalties and operating expenses.

Suncor’s total upstream production increased to 724,100 barrels of oil equivalent per day (boe/d) in the third quarter of 2022, compared to 698,600 boe/d in the prior year’s quarter. Refinery crude throughput was 466,600 barrels per day and refinery utilization was 100 per cent in the third quarter of 2022, compared to 460,300 barrels per day and 99 per cent in the third quarter of 2021.

This report by The Canadian Press was first published Nov. 2, 2022.

Canadian Natural Resources boosts dividend 13%

Canadian Natural Resources Ltd. reported a profit of $2.8 billion in the third quarter and boosted its quarterly dividend by 13 per cent.

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Net earnings for the oilsands major were down slightly from the previous quarter as energy prices have fallen from their 2022 highs, but profit was still up 28 per cent compared to the same three-month period in 2021 thanks to higher year-on-year energy prices resulting from Russia’s invasion of Ukraine and continued global supply weakness.

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Strong drilling results helped the Calgary-based company to record average natural gas production of 2,132 million cubic feet per day (MMcf/d) — a 25 per cent increase over the same period last year. Canadian Natural also said it realized an average price of $6.57 per thousand cubic feet of gas during a period when the benchmark Canadian gas price (AECO) briefly turned negative. The company credited the higher realized price to the fact that approximately 37 per cent of its natural gas is exported to markets outside of AECO.

Canadian Natural said its high-value synthetic crude oil (SCO) also generated significant free cash flow for the company in the third quarter with an average realized price of $120.91 — a strong premium of US$8.87/bbl to benchmark West Texas Intermediate (WTI).

Canadian Natural also boosted its liquids production, averaging 983,678 barrels per day (bbl/d), an increase of 14 per cent from the previous quarter. The company said its liquids realized price was $84.91 per barrel, up 25 per cent over the third quarter of 2021.

The company said it would increase its quarterly dividend for the second time this year to 85 cents per common share, up from 75 cents, payable to shareholders of record on Dec. 16.

Pressed during a conference call on when the oilsands giant will begin spending in earnest on decarbonization, chief executive Tim McKay said Thursday that the work has already begun for Canadian Natural and the other oilsands companies belonging to the Pathways Alliance, a group which has proposed to build a major carbon capture and storage network in Alberta.

“The spending actually starts this year,” McKay said. “There’s a lot of environmental work. Obviously, we’d like to submit the regulatory pieces as soon as possible, hopefully here in 2023. And then with that, you would like to order pipe for the trunk lines. So there is a lot of work being done by proximately 200 different individuals between all the companies to expedite the project.”

Cenovus Energy Inc. chief executive Alex Pourbaix, whose company also belongs to the Pathways Alliance, said earlier this week that the federal and provincial governments will have to introduce more carbon capture incentives and certainty around carbon pricing before projects can move forward.

Ottawa willing to accept lower returns, more risk to put $15-billion growth fund to work

The federal government’s new $15-billion Canada Growth Fund is prepared to accept a lower return or increase its potential loss exposure in order to stimulate institutional investment in innovation and green projects with risky economic foundations, Ottawa announced Thursday as part of the fall economic update.

“Launching the new Canada Growth Fund … will help bring to Canada the billions of dollars in new private investment required to reduce our emissions, grow our economy and create good jobs,” Finance Minister Chrystia Freeland said, adding that the projects will have meaningful Indigenous participation and meet “the highest” environmental standards.

“From critical minerals, to ports, to energy, we will continue to make it easier for businesses to invest in major projects in Canada.”

The Liberal government has made several attempts to entice pensions and other institutional investors to fund projects to create jobs, improve Canada’s productivity and commercialize intellectual property.

In this latest iteration, the Canada Growth Fund will seek direct investments including co-investments with private investors and bilateral partnerships where the fund will invest in industrial emitters, clean-tech companies and other companies “across low-carbon supply chains” such as those involved in the production of critical minerals.

To “address demand risk and improve project economics,” the fund will also enter contacts to provide revenue for a certain volume of production in cases “where sufficient demand from prospective private buyers is still developing.”

It will provide anchor equity to fund projects in cases where the risk level or capital required would attract limited interest from private capital.

The fund plans to piggyback some of its investments on the pipelines of private funds, but there will also be sponsorships, where the fund identifies opportunities and tries to convene multiple financial and strategic partners.

Investment management teams will target companies and projects with “a reasonable chance to strengthen the development of Canadian workers and generate knowledge that will produce long-term benefits for the Canadian economy beyond those realized directly by the specific investment in the project or company,” according to a background document shared by the Finance Department as part of the economic update.

For example, companies and projects with a focus on intellectual property development and commercialization would be desirable, as would those that demonstrate an ability to improve Canadian competitiveness through new or existing value chains.

Investments will span the capital structure, and could include equity, debt and derivative contracts.

Ottawa said it will expect private investing partners to share in any downside, and will only make the concession investments — such as debt instruments where the Canada Growth Fund earns below-market returns or has higher exposure to loss through low-interest loans or subordinated debt — to the extent necessary to get a worthwhile project or company off the ground.

“While CGF may accept a first-loss position, for example, investors should share in the financial downside of under-performing investments,” according to the document.

Fertilizer giant Nutrien sticking to plan to boost production; potash sales slump

Amanda Stephenson, The Canadian Press – Canadian Press – Thu Nov 3, 1:21PM CDT

CALGARY — Nutrien Ltd. is sticking to its plan to increase potash production, even as the Saskatoon-based fertilizer giant cut its full-year guidance for 2022 due to slumping potash sales volumes in the second half of this year.

The company — which is the largest fertilizer producer in the world — saw its share price tumble Thursday after releasing its third-quarter financial results after the close of markets on Wednesday.

By mid-day Thursday, Nutrien’s shares were down more than 13 per cent to $98.65 on the Toronto Stock Exchange. Investors appeared to be spooked by the company’s announcement that it is lowering its full-year adjusted earnings forecast from the previously stated range of US$14 billion to US$15.5 billion, to a new range of US$12.2 billion to US$13.2 billion.

Nutrien also lowered its full-year guidance for 2022 potash sales to 12.5 to 12.9 billion tonnes, down from a previously announced range of 14.3 to 14.9 billion.

The poorer forecast came in spite of Nutrien’s reported third-quarter adjusted earnings per share of US$2.5 billion, or US$2.51 per share, an 82 per cent increase from the the prior year’s quarter.

Nutrien also saw its revenue increase by 36 per cent, thanks to higher selling prices for fertilizer and strong results from its farm retail network.

But the company saw its potash sales volumes decline in North America and Brazil during the third quarter, in part because farmers appear to be postponing fertilizer purchases in the face of high prices. A cool wet spring in North America also compressed the planting season and led to less fertilizer going into the ground, said Nutrien interim CEO Ken Seitz on a conference call Thursday.

Seitz said these challenges, while enough to result in a lowered guidance for the year, are “near-term” issues and don’t change the company’s previously announced plan to increase its annual potash production capability to 18 million tonnes by 2025.

The plan, which was announced earlier this year as the Russia-Ukraine war shook up global agricultural markets and reduced supplies of fertilizer from Eastern Europe, represents an increase of more than five million tonnes, or 40 percent, compared to 2020 production levels.

Nutrien has said it will achieve this by investing in expansions at its existing Saskatchewan mines, including the hiring of approximately 350 more people.

“The longer-term fundamentals for our business remain very strong and the challenge of feeding a growing world has not abated,” Seitz said.

“We had a lull in demand here in the third quarter, but again, the backdrop of ag fundamentals remain strong. The supply side continues to be challenged — we see that continuing into 2023.”

Nutrien is forecasting potash supply from Eastern Europe to continue to be constrained in 2023, with shipments from Belarus projected to be down 40 to 60 percent and Russia down 15 to 30 percent compared to 2021 levels. The company is forecasting global potash shipments to be between 64 to 67 million tonnes in 2023, with projected Nutrien potash sales volumes of approximately 15 million tonnes.

In a research note, Raymond James analyst Matt Arnold said while he was slightly disappointed with Nutrien’s weaker-than-expected third quarter and its revised guidance for the year, he still believes the company is well-positioned to benefit from long-term trends in agriculture.

“We think the overall backdrop for Nutrien remains favourable given high grain and fertilizer prices,” Arnold said. “Also, continued supply disruptions from the Russia/Ukraine conflict are likely, which create market-share opportunities for the company. As a result, we think 2023 should be another strong year for the company.”

This report by The Canadian Press was first published Nov. 3, 2022.

Nutrien Delivers Earnings Growth and Expects Strong Market Fundamentals in 2023

Nutrien Ltd. (TSX and NYSE: NTR) announced today its third quarter 2022 results, with net earnings of $1.6 billion ($2.94 diluted net earnings per share), which includes a non-cash impairment reversal of $330 million relating to our Phosphate operations. Third quarter 2022 adjusted net earnings per share¹ were $2.51 and adjusted EBITDA¹ was $2.5 billion.

“Nutrien has delivered record earnings in 2022 due to the strength of agriculture fundamentals, higher fertilizer prices and excellent Retail performance. During the third quarter, we saw a temporary reduction in potash purchasing in North America and Brazil, which has impacted our sales volumes and realized prices in the second half of the year. However, the underlying demand drivers remain strong and global fertilizer supply challenges still persist, creating a supportive environment for Nutrien as we look ahead to 2023 and beyond,” commented Ken Seitz, Nutrien’s President and CEO.

“We are focused on efficiently supplying our customers with the products and services they need to help sustainably feed a growing world. We continue to take a multi-year view of the market and remain confident that our additional low-cost potash and nitrogen production capability will be required to meet future demand,” added Mr. Seitz.

Highlights:

• Nutrien generated record net earnings of $6.6 billion and adjusted EBITDA¹ of $10.1 billion in the first nine months of 2022 due to higher realized prices and strong Retail performance, more than offsetting a reduction in fertilizer sales volumes. As a result, cash provided by operating activitiesimproved to $3.4 billion in the first nine months of 2022.
• Nutrien revised full-year 2022 adjusted EBITDA guidance¹ and adjusted net earnings per share guidance¹ to $12.2 to $13.2 billion and $13.25 to $14.50 per share, respectively.
• Nutrien Ag Solutions (“Retail”) delivered record adjusted EBITDA in the first nine months of 2022, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio¹ as at September 30, 2022 improved to 55 percent compared to 59 percent for the same period in 2021 driven by higher margins.
• Potash adjusted EBITDA increased in the third quarter and the first nine months of 2022 compared to the prior year due to higher net realized selling prices and record offshore sales volumes, more than offsetting lower North American sales volumes.
• Nitrogen third quarter and first nine months of 2022 adjusted EBITDA increased compared to the prior year due to higher net realized selling prices that more than offset higher natural gas costs and lower ammonia and urea sales volumes.
• In the third quarter of 2022, we recognized a non-cash impairment reversal of $330 million associated with our Phosphate operations and $780 million for the first nine months due to a more favorable outlook for phosphate margins.
• Nutrien repurchased approximately 40 million shares year-to-date as of November 1, 2022, under our share repurchase programs, for a total of approximately $3.5 billion. Nutrien plans to allocate approximately $4 billion to share repurchases in 2022. While some repurchases may now extend into the first quarter of 2023 due to lower forecasted operating cash flow in 2022, we still intend on completing our existing 10 percent share repurchase program prior to its expiry in February 2023.

Agriculture and Retail

• Global grain stocks-to-use ratio, excluding China, is projected to decline to the lowest level in more than a quarter century, driven by reduced corn and wheat production expectations in the US and Europe. As a result of historically tight supply and demand balances, spot prices of corn, soybeans and wheat are up 25 to 50 percent compared to the 10-year average and we expect strong futures prices will provide an incentive for growers to boost production in 2023.
• The re-opening of the Black Sea to Ukrainian grain exports positively impacted exports from the region but there is uncertainty over the continuation of the United Nations brokered agreement with Russia. The US Department of Agriculture (USDA) projects that Ukrainian grain exports will decline by 44 percent year-over-year in 2023, in large part driven by reduced production levels.
• Weather has been favorable in North America and we anticipate that the rapid pace of harvest will support strong fall ammonia demand and normal application rates of potash, phosphate and crop protection products.
• South American spring crop planting is proceeding with a mix of planting conditions. Argentina continues to be impacted by La Nina-related drought, while planting conditions in much of Brazil have generally been favorable. We expect that Brazilian soybean acreage will increase by 3 to 4 percent, which is also expected to support a proportional increase in safrinha corn acreage.

Crop Nutrient Markets

• Potash shipments from Belarus are projected to be down 50 to 60 percent and Russia down 20 to 25 percent in 2022 compared to the prior year, in line with our previous expectations. We have lowered our global potash shipment forecast to between 60 and 62 million tonnes in 2022, largely due to the impact of higher-than-expected inventory and cautious buying in North America and Brazil during the second half of 2022.
• We expect robust agricultural fundamentals will support increased potash consumption in 2023 and believe pent-up demand will emerge as inventories are drawn down and prices stabilize. We expect potash supply from Eastern Europe will continue to be constrained in 2023, with shipments from Belarus projected to be down 40 to 60 percent and Russia down 15 to 30 percent compared to 2021 levels. Global potash shipments are forecast between 64 to 67 million tonnes in 2023, with projected Nutrien potash sales volumes of approximately 15 million tonnes.
• Nitrogen prices continue to be supported by historically high European natural gas prices that have led to significant curtailments of ammonia and downstream nitrogen products. Shifts in global nitrogen trade flows have led to higher US exports and lower import volumes, which we expect will result in a tight North American supply and demand balance entering 2023.
• Chinese urea and phosphate export restrictions have limited exports in 2022 and are expected to persist into 2023. The restrictions have led to low Chinese phosphate operating rates, maintaining relatively tight global phosphate supplies, while contributing to lower global sulfur prices and supporting phosphate production margins.

Financial Guidance

• Nutrien revised its full-year 2022 adjusted EBITDA guidance and full-year 2022 adjusted net earnings per share guidance primarily due to lower expected Potash earnings as a result of lower potash sales volumes and realized prices, which more than offset stronger expected Retail earnings. Adjusted net earnings per share guidance includes our plan to allocate approximately $4 billion to share repurchases in 2022.
• Nutrien lowered potash sales volume guidance primarily to reflect the impact of the compressed spring application season in North America that resulted in higher inventory carry-over and cautious purchasing.
• Nutrien lowered nitrogen sales volume guidance to reflect the impact of Trinidad gas curtailments during the second half of 2022.

https://www.theglobeandmail.com/investing/markets/stocks/NTR-T/pressreleases/11289547/nutrien-delivers-earnings-growth-and-expects-strong-market-fundamentals-in-2023/

Dow closes 500 points lower, Nasdaq sheds 3% as Fed Chair Powell signals intent to continue hiking rates

Stocks tumbled Wednesday after Federal Reserve Chair Jerome Powell said inflation was still too high and indicated that the central bank has more rate hiking ahead.

The Dow Jones Industrial Average slid 505.44 points, or 1.55%, to settle at 32,147.76. The S&P 500 dropped 2.5% to close at 3,759.69, while the Nasdaq Composite dove 3.36% to finish at 10,524.80.

The Fed implemented another 0.75 percentage point rate increase Wednesday afternoon, and Powell said in a press conference that its inflation fight was far from done.

“We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.

Powell added that it was “premature” to talk about pausing hikes.

“We have a ways to go,” said the central bank chair.

Stocks initially rallied following the rate hike when the Fed’s accompanying statement hinted at a possible policy change in the future. “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the statement read.

https://www.cnbc.com/2022/11/01/stock-market-futures-open-to-close-news.html

Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead

• The Federal Reserve, in a well-telegraphed move, raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75%-4%, the highest level since January 2008.
• The central bank’s new statement hinted at a potential change in how it will approach monetary policy to bring down inflation.
• However, stocks fell as Fed Chair Jerome Powell dismissed the idea that the Fed may be pausing soon though he said he expects a discussion at the next meeting or two about slowing the pace of tightening.
• Still, Powell reiterated that there may come a time to slow the pace of rate increases.

https://www.cnbc.com/2022/11/02/fed-hikes-by-another-three-quarters-of-a-point-taking-rates-to-the-highest-level-since-january-2008.html

Fox News crushes CNN, MSNBC viewership combined to finish October as No. 1 cable network

‘The Five’ has been the most-watched cable news program for seven-straight months

Fox News Channel finished October as the most-watched cable network among total day viewers for the 20th straight month, crushing CNN and MSNBC viewership combined among key categories. 

Fox News averaged 1.5 million total day viewers, while no other networks cracked the one-million viewer benchmark. ESPN finished second with 885,000 average total viewers, followed by 751,000 for MSNBC and a gloomy 533,000 for CNN. 

During the primetime hours of 8-11 p.m. ET, Fox News averaged 2.3 million viewers compared to 1.2 million for MSNBC and only 624,000 for CNN. It was CNN’s smallest monthly primetime audience of the year. 

https://www.foxnews.com/media/fox-news-crushes-cnn-msnbc-viewership-combined-finish-october-1-cable-network