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Sept 27: TSX Fails To Hold Early Gains, Ends Marginally Down

After opening higher and staying firm till a little before noon, the Canadian market turned subdued and moved along the flat line on Tuesday and finally ended the session on a slightly weak note.

Slowing global economy, and tighter monetary policy stance of several central banks rendered the mood cautious.

Energy and materials shares moved higher on firm crude oil and gold prices. Shares from utilities and financials sectors were weak.

The benchmark S&P/TSX Composite Index, which climbed nearly 230 points to 18,546.76 earlier in the session, ended with a loss of 19.13 points or 0.1% at 18,307.91, about 60 points off the day’s low of 18,247.74.

Athabasca Oil Corporation (ATH.TO) rallied 8%. Tamarack Valley Energy (TVE.TO), MEG Energy (MEG.TO), Whitecap Resources (WCP.TO), Crescent Point Energy (CPG.TO) and Baytex Energy (BTE.TO) gained 4.5 to 6%.

Lundin Mining (LUN.TO), Cenovus Energy (CVE.TO), Suncor Energy (SU.TO) and Canadian Natural Resources (CNQ.TO) also posted notable gains.

Dye & Durham (DND.TO) soared 17.3%. Vermilion Energy (VET.TO) surged 10.1%. Cameco Corporation (CCO.TO), Methanex Corporation (MX.TO), CargoJet (CJT.TO), Sprott (SII.TO), Aritzia Inc (ATZ.TO) and Imperial Oil (IMO.TO) gained 3 to 5%.

Canadian Imperial Bank of Commerce (CM.TO) and Shopify Inc (SHOP.TO) ended lower by 2.2% and 1.2%, respectively, on strong volumes.

WSP Global (WSP.TO), CCL Industries (CCL.B.TO), Bank of Montreal (BMO.TO), Waste Connections (WCN.TO) and Fairfax Financial Holdings (FFH.TO) were among the other prominent losers.

Australian Federal Police Gathers Crucial Evidence In Optus Data Breach

The Australian Federal Police has revealed that it is gathering “crucial evidence” from the breach of Optus data. The officials said that “working closely” with overseas law enforcement authorities to identify the offenders behind the hack of telecom provider Optus.

“Operation Hurricane has been launched to identify the criminals behind the alleged breach and to help shield Australians from identity fraud,” the AFP said in a statement.

Optus, Australia’s second-largest telecommunications company, last week disclosed that it was hacked. The company faced $1 million extortion demand to prevent the sale of what an attacker says are up to 11.2 million sensitive customer records.

The information includes a customer’s name, dates of birth, phone numbers, email addresses, physical addresses, driver’s licenses, and passport numbers, but no account passwords or financial information.

Optus is a subsidiary of the Singaporean telecommunications conglomerate Singtel Group. The company claimed that it “immediately shut down the attack” as soon as it came to light.

According to reports, the hacker has also released a sample of 10,200 records from the breach on dark web.

Assistant Commissioner Cyber Command Justine Gough said while the investigation was going to be extremely complex and very lengthy it was important to note that the AFP specialized in investigations of this type.

“This is an ongoing investigation, but it is important the community knows the AFP and our partners are doing everything within scope to identify the offenders responsible, and to also ensure we can protect individuals who are now potentially vulnerable to identity theft,” Assistant Commissioner Gough said.

“We are aware of reports of stolen data being sold on the dark web and that is why the AFP is monitoring the dark web using a range of specialist capabilities. Criminals, who use pseudonyms and anonymizing technology, can’t see us but I can tell you that we can see them.

Apple To Make IPhone 14 In India

Tech giant Apple Inc. (AAPL) has shifted some production of its flagship smartphone iPhone 14 from China to India.

“The new iPhone 14 lineup introduces groundbreaking new technologies and important safety capabilities. We’re excited to be manufacturing iPhone 14 in India,” the company said in a statement.

Foxconn, which is Apple’s key iPhone assembler, will manufacture the smartphone at its Sriperumbudur factory on the outskirts of Chennai, India.

This is the first time the company will be manufacturing its latest smartphone model in India, although it had been building older models in the country since 2017.

Apple launched the iPhone 14 earlier this month. The company will sell India-produced phones locally but also export them to other markets globally.

Apple assembles most of its iPhones in China, however, the continuing tensions between the US and China has prompted the company to transfer some of its production outside the country.

World Bank Cuts East Asia & Pacific Growth Outlook

The World Bank downgraded its growth projections for the East Asia and the Pacific region as the zero-COVID approach dampened China’s economic growth, while most of the other countries of the region rebounded in the first half of 2022.

The Washington-based lender forecast East Asia and Pacific to expand 3.2 percent this year instead of 5.0 percent projected in April. The growth rate is expected to improve to 4.6 percent in 2023.

China, which constitutes around 86 percent of the region’s output, is forecast to grow only 2.8 percent this year versus the prior outlook of 5.0 percent. The government targets around 5.5 percent growth for this year.

This was also much weaker than the 8.1 percent growth estimated for 2021 as the zero-COVID measures disrupted supply chains, industrial and services production, domestic sales, and exports. GDP growth is seen at 4.5 percent next year.

By Renju Jaya   ✉  | Published: 9/27/2022 7:07 AM ET

The World Bank downgraded its growth projections for the East Asia and the Pacific region as the zero-COVID approach dampened China’s economic growth, while most of the other countries of the region rebounded in the first half of 2022.

The Washington-based lender forecast East Asia and Pacific to expand 3.2 percent this year instead of 5.0 percent projected in April. The growth rate is expected to improve to 4.6 percent in 2023.

China, which constitutes around 86 percent of the region’s output, is forecast to grow only 2.8 percent this year versus the prior outlook of 5.0 percent. The government targets around 5.5 percent growth for this year.

This was also much weaker than the 8.1 percent growth estimated for 2021 as the zero-COVID measures disrupted supply chains, industrial and services production, domestic sales, and exports. GDP growth is seen at 4.5 percent next year.

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Most of the other region is projected to grow faster and have lower inflation in 2022 than other regions. The robust recovery of private consumption in the first half of 2022, sustained global demand for EAP goods and commodities and the limited tightening so far of fiscal and monetary policy helped the region to post strong growth during much of 2022.

Global deceleration, rising debt and policy distortions could be a drag on growth. The bank observed that measures to contain inflation and debt are adding to existing distortions in a way that could hurt growth.

“Policymakers face a tough tradeoff between tackling inflation and supporting economic recovery,” said World Bank East Asia and Pacific Chief Economist Aaditya Mattoo.

“Controls and subsidies muddy price signals and hurt productivity. Better policies for food, fuel, and finance would spur growth and insure against inflation,” Mattoo added.

U.S. Consumer Confidence Improves Much More Than Expected In September

Consumer confidence in the U.S. improved much more than expected in the month of September, the Conference Board revealed in a report released on Tuesday.

The Conference Board said its consumer confidence index climbed to 108.0 in September from an upwardly revised 103.6 in August.

Economists had expected the consumer confidence index to inch up to 104.3 from the 103.2 originally reported for the previous month.

“Consumer confidence improved in September for the second consecutive month supported in particular by jobs, wages, and declining gas prices,” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

The bigger than expected increase by the headline index came as the present situation index increased to 149.6 in September from 145.3 in August, while the expectations index rose to 80.3 from 75.8.

“Concerns about inflation dissipated further in September—prompted largely by declining prices at the gas pump—and are now at their lowest level since the start of the year,” said Franco. “Meanwhile, purchasing intentions were mixed, with intentions to buy automobiles and big-ticket appliances up, while home purchasing intentions fell.”

She added, “Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term.”

On Friday, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of September.

The consumer sentiment index for September is expected to be unrevised from the preliminary reading of 59.5, which was up from 58.2 in August.

UK lenders halt mortgage deals to customers after market chaos

• The British bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarteng announced his “mini-budget” on Friday.
• The yield on the U.K. 10-year gilt soared to levels not seen since 2008 on Monday, while the British pound plummeted to an all-time low against the dollar.
• Markets have begun pricing in a base rate rise to as high as 6% for next year, from 2.25% currently, raising concerns among mortgage lenders and borrowers.

UK lenders halt mortgage deals to customers after market chaos (cnbc.com)

A new CEO doesn’t make Scotiabank a buy – but this does

Bank of Nova Scotia’s BNS-T -0.80%decrease share price has underperformed its peers this year by a wide margin, raising the question of whether investors should embrace the upcoming leadership change at Canada’s third-largest bank.

The better approach: Worry less about changes in the C-suite and take a closer look at the stock’s compelling valuation.

On Monday, Scotiabank announced that Brian Porter, the bank’s chief executive officer, will step down from the position on Jan. 31. His replacement: Scott Thomson, currently CEO of Finning International Inc., the world’s largest dealer in Caterpillar equipment used in mining, forestry, agriculture and construction.

The change will likely draw attention to Scotiabank’s lagging performance.

This year, the share price is down nearly 25 per cent, making it the worst performer among the biggest six Canadian banks. On average, the Big Six are down 14 per cent in 2022.

Scotiabank’s longer-term performance looks equally dismal. The shares are down 10.2 per cent over the past three years, making it the only member of the Big Six in negative territory over this period.

That’s ugly, especially given that big banks – outside of major downturns – are often relied upon for steady returns that reflect economic activity.

The problem for Scotiabank in recent years is that the stock market has been less than enthusiastic about the bank’s significant exposure to emerging markets.

Scotiabank’s peers have stayed largely within Canada or expanded into the United States.

Bank of Montreal announced a deal to acquire San Francisco-based Bank of the West for US$16.3-billion in 2021; Toronto-Dominion Bank announced a US$1.3-billion deal to acquire New York-based investment bank Cowen Inc. this past August.

But Scotiabank in 2021 generated 18 per cent of its profit from the Pacific Alliance countries of Mexico, Peru, Chile and Colombia.

This large exposure has been a tough sell to investors who have witnessed the halting performance of emerging markets since BRICS – Brazil, Russia, India, China and South Africa – failed to live up to economic expectations in recent years.

The MSCI Emerging Market Index, which tracks stocks in 24 countries including China, India and Brazil, has produced an annualized gain of just 2.9 per cent over the past 10 years (to the end of August). The comparable figure for the S&P 500 Index is 9.7 per cent (to Sept. 23).

Bank of Nova Scotia has a more specific challenge with its exposure: While rising interest rates are supposed to add a significant tailwind to a bank’s loan profitability, Scotiabank has seen its international net interest margins – which compares interest it is making on loans to payments it is making on deposits – decline slightly.

“It appears that the bank is having difficulty managing interest rates in the Pacific Alliance,” Darko Mihelic, an analyst at RBC Dominion Securities, said in a note in August, after Scotiabank released its fiscal third-quarter financial results.

The decline was serious enough for Mr. Mihelic to trim his target price on the stock – or where he expects the share price to be within the next 12 months – to $83, from $94 previously. He also lowered his recommendation to “sector perform” from “outperform.”

Can new leadership make Scotiabank’s Pacific Alliance exposure a reason to embrace the stock?

Perhaps. But a better reason to take a closer look at the stock is its low valuation.

Its price-to-earnings ratio is the lowest among the Big Six, at just eight times estimated earnings, according to RBC Dominion Securities. That is the stock’s lowest valuation in 15 years and well below its average P/E of 11 over this period.

Another standout figure: The dividend yield is 5.9 per cent, the highest among peers and well above the sector average of 4.5 per cent.

A bet on Scotiabank hasn’t paid off in recent years. But the beaten-up share price and low valuation are hard to ignore.

Green group influencing Biden admin has deep ties to Chinese government

The Natural Resources Defense Council (NRDC), a major U.S. green group that has influenced Biden administration policymaking, has deep ties to the Chinese government.

The NRDC, a non-profit organization based in New York City with total assets exceeding $450 million, has worked on climate issues extensively in China since the mid-1990s and several of its top officials have worked for the Chinese Communist Party (CCP) or government-sponsored institutions. 

The NRDC also maintains a close working relationship with President Biden’s administration. The NRDC’s former president, Gina McCarthy, served as Biden’s climate czar up from January 2021 until earlier this month current president, Manish Bapna, has attended at least two White House meetings, visitor logs reviewed by Fox News Digital show. 

The NRDC regularly communicates with Special Presidential Envoy for Climate John Kerry’s office on policy issues, according to internal State Department emails obtained by the watchdog group Protect the Public’s Trust and shared with Fox News Digital. 

On its website, the NRDC highlights its collaboration with a “wide range of Chinese and international partners” to boost green policies and “fortify” environmental regulations in the country.

https://www.foxnews.com/politics/green-group-influencing-biden-admin-deep-ties-chinese-government

Sept 25: Stock futures are little changed as investors prepare for the S&P 500 to test its June low

U.S. equity futures were little changed Sunday evening after surging interest rates and foreign currency turmoil pushed the major averages to near their lows of the year.

Dow Jones Industrial Average futures were down by just 12 points. S&P 500 futures and Nasdaq 100 futures were each lower by 0.1%.

On Friday stocks ended a brutal week with the blue-chip Dow finding a new intraday low for the year and closing lower by 486 points. The broad-market S&P 500 temporarily broke below its June closing low and ended down 1.7%. The tech-heavy Nasdaq Composite lost 1.8%.

Investors were reacting to the Federal Reserve’s commitment to its rate hiking plan to help tame inflation. At the conclusion of the FOMC meeting, chair Jerome Powell said the central bank could raise rates as high as 4.6% before pulling back. The forecast also shows the Fed plans to stay aggressive this year, hiking rates to 4.4% before 2022 ends.

“A lot of traders expected hints of a Fed pivot at Jackson Hole or at the September FOMC policy, but that never happened,” said Edward Moya, senior market analyst at Oanda. “A hard landing is becoming the base case scenario for many and that means more economic pain along with a much weaker stock market is coming.”

Bond yields soared after the Fed enacted another rate hike of 75 basis points. The 2-year and 10-year Treasury rates hit highs not seen in over a decade. On Friday, Goldman Sachs slashed its year-end target for the S&P 500 to 3,600 from 4,300.

“How far we go below the summer lows is anyone’s guess,” said Oanda’s Moya. “It doesn’t seem like any economic data release or Fed speak will convince markets that a downshift from this aggressive tightening campaign will be happening anytime soon.”

Looking ahead, traders are anticipating the release of personal consumption expenditures data, the Fed’s preferred inflation gauge, on Friday. Durable goods and consumer sentiment numbers will also come out this week.

A slew of Fed speakers — including Fed Vice Chair Lael Brainard, St. Louis Fed President James Bullard, San Francisco Fed President Mary Daly and Fed Governor Michelle Bowman — and Chair Powell are also scheduled to speak at various events this week.

3 MIN AGO

Stocks prepare to test their lows in the final week of trading for September

Heading into the final week of trading for September, the Dow and S&P 500 are each down about 6% for the month, while the Nasdaq has lost 8%.

Both the Dow and S&P are now sitting 1.2% and 1.6%, respectively, above their lows from mid-June. The Nasdaq is 2.9% above its low.