Author: Consultant

Elon Musk sued for $258-billion over alleged Dogecoin pyramid scheme

Elon Musk was sued for $258 billion on Thursday by a Dogecoin investor who accused him of running a pyramid scheme to support the cryptocurrency.

In a complaint filed in federal court in Manhattan, plaintiff Keith Johnson accused Musk, electric car company Tesla Inc. TSLA-Q -8.54%decrease and space tourism company SpaceX of racketeering for touting Dogecoin and driving up its price, only to then let the price tumble.

Musk is CEO of both Tesla and SpaceX.

“Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading,” the complaint said. “Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement.”

The complaint also aggregates comments from Warren Buffett, Bill Gates and others questioning the value of cryptocurrency.

Tesla, SpaceX and a lawyer for Musk did not immediately respond to requests for comment.

A lawyer for Johnson did not immediately respond to requests for comment on what specific evidence his client has or expects to have that proves Dogecoin is worthless and the defendants ran a pyramid scheme.

Johnson is seeking $86 billion in damages, representing the decline in Dogecoin’s market value since May 2021, and wants it tripled.

He also wants to block Musk and his companies from promoting Dogecoin and a judge to declare that trading Dogecoin is gambling under federal and New York law.

The complaint said Dogecoin’s selloff began around the time Musk hosted the NBC show “Saturday Night Live and, playing a fictitious financial expert on a “Weekend Update” segment, called Dogecoin “a hustle.”

Tesla in February 2021 said it had bought $1.5 billion of bitcoin and for a short time accepted it as payment for vehicles.

Dogecoin traded at about 5.8 cents on Thursday, down from its May 2021 peak of about 74 cents.

Children’s hospitals across Canada reporting high rates of admissions as viruses return

Hospitals across the country are seeing a record number of children visiting emergency departments,and the reason has everything to do with the particular moment we are in during the pandemic, health experts say.

“What we’re seeing now is completely unprecedented patient volumes for this time of year, and unprecedented patient volumes almost ever. Normally these types of numbers are reserved for the Christmas holidays when family doctors’ offices are shut down,” said Dr. Daniel Rosenfield, staff physician in the division of emergency medicine at the Hospital for Sick Children in Toronto.

“All these viruses that were basically dormant for two years in kids are now just exploding,” he said, referring to viruses that typically afflict children in the winter, such as influenza, rhinovirus and respiratory syncytial virus.

They had been held at bay by pandemic measures such as masking and physical distancing. Now that more people are interacting in larger numbers and not wearing masks, these viruses are “back with a vengeance,” Dr. Rosenfield said.

It comes at a time when emergency departments typically see a spike in childhood injuries: As more children get out on their bikes or climb trees, there are higher numbers of sprains, fractures and other trauma that send them to emergency rooms. Add to that the fact that many families don’t have a primary care physician, or may not be able to see their family doctor right away, and it is no wonder emergency departments are being overwhelmed.

“What’s happening here is the displaced viral season. The viral mountain has moved on top of the natural seasonal injury and accident mountain and they’re happening at the same time,” said Alex Munter, CEO of CHEO, a pediatric hospital and research centre in Ottawa. As well, many people are unable to access care elsewhere, he said. “It just feels like a bit of a perfect storm.”

Last month,CHEO reported its busiest May in the hospital’s 48-year history, with an average of 228 emergency department visits per day. Some days that number climbed as high as 300, Mr. Munter said. It was the second-busiest month ever for the hospital, behind the record of 248 visits per day to the emergency department on average set in December, 2019.

The Hospital for Sick Children saw a 12-per-cent increase inin-person visits to its emergency room last month compared to May, 2019. When factoring in visits to the hospital’s Virtual Urgent Care platform, an online tool to get medical advice remotely,that number jumped to 38 per cent.

McMaster Children’s Hospital in Hamilton averaged 140 patient visits per day in May, 2019; that number was up to 185 visits per day last month and shows no signs of slowing down, said Dr. Christopher Sulowksi, chief of the pediatric emergency department.

A spokesperson for B.C. Children’s Hospital said its emergency department is also experiencing high volumes, but did not providefurther data.

McMaster Children’s Hospital is seeing higher than usual numbers of children coming to the emergency department with sprains, fractures and other injuries, and Dr. Sulowski wondered if some children are more eager to be playing outside and might have lost some skills in the past two years. Both CHEO and the Hospital for Sick Children say the visits for injuries typical of this time of year are not higher than previous years.

It’s the viruses spreading among children that are unusual, Dr. Sulowksi said.

“It’s shocking for us when we look at some of the test results we get back and we’re seeing influenza,” he said. “That’ssomething that just in the Northern Hemisphere in Ontario here at McMaster is unheard of for the month of June.”

The reason is likely because of pandemic measures and our changing behaviours, Dr. Sulowski said.

“We had universal masking and for the most part everyone was masking and schools were requiring masking and so everything just kind of got pushed back. We didn’t eradicate the viruses, I think we just kind of held them at bay with masks,” he said.

The viruses currently circulating have symptoms very similar to COVID-19, and so it’s no wonder worried parents head to the hospital, Dr. Rosenfield said.

“They’re the ones that cause runny nose, coughs, colds, vomiting, diarrhea, all the stuff that would send a parent to the emergency department in the middle of the night,” he said.

Worried parents should know that while a fever is a sign of infection, most can be dealt with at home, and that it is a fever’s duration that is of most concern, Dr. Sulowski said.

“Once you get in to three, five, six days of fever, that’s when we start to worry a lot more,” he said.

To help ease the burden on emergency room visits, several hospitals have created online portals to help guide parents’ decision making, such as McMaster’s www.needadoc.ca and the Hospital for Sick Children’s Virtual Urgent Care platform.

Oil edges down as demand concerns weigh, heading for weekly fall

Oil prices edged lower on Friday and were on track for a weekly decline as interest rate hikes from major central banks fueled worries about a sharp economic slowdown.

Brent crude was down 56 cents, or 0.5%, to $119.25 a barrel at 1204 GMT, and U.S. West Texas Intermediate (WTI) crude fell 78 cents, or 0.7%, to $116.81.

Brent was on track for its first weekly dip in five weeks, and U.S. crude for its first decline in eight weeks, in line with a fall in equity markets amid fears of a possible recession as several central banks delivered big rate hikes.

“The influence of the macro environment has started to take over from oil specific fundamentals in recent days,” said Investec’s head of commodities Callum Macpherson.

“Consistent with the broader market pre-occupation with rates and inflation, the oil market narrative may now turn to focus more on affordability, rather than on supply.”

Both contracts had risen by more than $1 earlier in the session as U.S. sanctions on Chinese and Emirati companies and on a network of Iranian firms that help export Iran’s petrochemicals lent some support to oil prices.

The U.S. government said while it is pursing diplomacy to revive a nuclear deal with Iran, it will continue to use sanctions to limit exports of oil, oil products, and petrochemicals from Iran.

Analysts estimate that a deal and the consequent lifting of sanctions on Iran’s energy sector could add up to 1 million barrels of oil per day to global markets.

“The market has been watching negotiations between the West and Iran in anticipation of a revival of the nuclear deal in recent months. This brought back into focus the ongoing supply side issues in the market,” ANZ Research analysts said in a note.

The global oil market continues to show signs of “turbulence,” Russian Deputy Prime Minister Alexander Novak said on Friday, blaming the uncertainties over oil production recovery in Libya, Iran and Venezuela and a lack of energy infrastructure.

CIBC forecasts higher profits as CEO Victor Dodig pitches bank’s transformation

Canadian Imperial Bank of Commerce CM-T -3.09%decrease raised its profit target in a show of confidence as chief executive officer Victor Dodig made a pitch to investors on Thursday that he has built a different, more reliable bank.

CIBC boosted its target growth rate for adjusted earnings a share to 7 to 10 per cent annually through 2025, from 5 to 10 per cent, and predicted similar levels of revenue growth at an investor presentation held at its new Toronto headquarters. The bank also increased its target for adjusted return-on-equity to 16 per cent from 15 per cent.

Mr. Dodig framed CIBC as “a bank that’s on the rise” on Thursday, as he has repeatedly of late. On his watch, CIBC has invested in its retail banking division with an aim to make it more stable and consumer-friendly, and carved out a niche in the U.S. market, focused on commercial banking and wealth management. It has merged the commercial banking and wealth management units to make sure its business lines refer clients to each other more often, and has branched out into new ventures, ramping up lending to early-stage tech companies and offering no-fee digital banking services.

Mr. Dodig often talks about “the bank that we are today,” pointing to rising client and employee engagement scores and drawing a contrast with a reputation for missteps and uneven performance that has dogged CIBC in the past. Now, faced with an uncertain economic outlook shaped by high inflation and rapidly rising interest rates, Mr. Dodig told investors CIBC will adjust as needed, but that “part of our strategy is to stay consistent, and not volatile.”

“While I recognize the economic volatility that the entire globe is going through because of inflation and interest rates, our strategy is not cyclical, our client focus is not cyclical,” he said in an interview.

CIBC bankers hosted investors at CIBC Square, the bank’s new twin-towered headquarters just south of the financial district in Toronto. It is one of the most visible symbols of the changes at CIBC, which also include a rebrand with a new logo. Those were significant investments – Mr. Dodig hinted Thursday that the rebrand cost nearly $200-million. When challenged Thursday by TD Securities Inc. analyst Mario Mendonca on how he justifies that spending, Mr. Dodig said he feels “very, very good” about the return.

“If you get a better retention of your talent, if you get better retention and more business from clients, you [only] need to have very small improvements to pay off the investments that we’ve made,” he said.

One area where CIBC has improved its retention rates is in its sizeable book of mortgage clients, 92 per cent of whom now renew with CIBC when their terms expire. The bank has alsomade an array of changes to systems and processes to make it easier for clients to open accounts, and for employees to draw them into deeper relationships with other products and services. CIBC’s recent acquisition of retail giant Costco’s credit card portfolio also brings an influx of new customers – 75 per cent of the two million cardholders didn’t bank with CIBC before.

The U.S. banking arm, CIBC Bank USA, is predicted to be the division that grows the fastest, with a target to increase revenue by 10 to 13 per cent annually through 2025. The division now generates 21 per cent of CIBC’s profit, up from just 2 per cent in 2016, and Mr. Dodig hopes it will contribute 25 per cent in three years.

A good deal of that growth has come from $6-billion of acquisitions, mostly notably of Chicago-based PrivateBancorp Inc. But looking ahead, CIBC expects to keep the U.S. unit tightly focused on what it calls the “private economy” – banking for private businesses and high-net-worth families – and has only signalled interest in making smaller deals to add to its U.S. wealth management business.

The bank also put a spotlight on its newer businesses. One is its innovation banking unit, which serves early- to mid-stage tech companies and aims to triple its profit before taxes by 2025, from $59-million last year. Another is the direct financial services (DFS) division, which includes digital bank Simplii Financial, do-it-yourself investing platform Investor’s Edge and a group that offers digital global money transfer, foreign currency conversion and international student payments. The bank thinks DFS revenues could grow by 15 per cent or more annually.

Yet those rapidly growing units, as well as the bank’s core mortgage business, may be facing a period of slower growth as rising borrowing costs sap the momentum from a strong run for real estate and technology. And that could make CIBC’s new, loftier profit target harder to hit.

“If there’s a slowdown, it may slow down some of the growth in certain product categories,” Mr. Dodig said. “But again we’re banking relationships, we’re not banking products.”

Before the Bell (June 17): What every Canadian investor needs to know today

Equities

Wall Street futures rose early Friday as markets looked for stability after yet another deep rout with the S&P 500 looking set for its worst since the onset of the pandemic. Major European markets were also positive in morning trading. TSX futures gained as well.

In early going, futures tied to all three key U.S. indexes were up as rattled markets looked to find their footing after yet another volatile week. The Nasdaq finished Thursday down more than 5 per cent while the S&P 500 lost more than 3 per cent. The S&P 500 is off about 6 per cent on the week so far, marking its worst weekly showing since March 2020. The S&P/TSX Composite Index closed the session down 3.1 per cent, hitting its lowest level in more than a year.

Rate concerns and fears about a possible recession have been key worries for traders this week with the Federal Reserve, the Bank of England and Swiss National Bank all hiking rates. In the case of the Fed, it hiked rates by an outsized three-quarter percentage points, the most in decades. Early Friday, the Bank of Japan bucked the trend, keeping ultra-low interest rates in place and forecast borrowing costs would remain at “present or lower”.

“Shell-shocked investors are thankful for some calm, and for the time being, they are finding solace from lower bond yields via a safe-haven bid due to the persistent equity market sell-off,” Stephen Innes, managing partner with SPI Asset Management, said in a note.

“There is also a sense of relief the BoJ held steady on policy, as the last thing the market needed was another blowdown equity valve to give way,” he said.

In Canada, The Globe’s Mark Rendell and Bill Curry report that Finance Minister Chrystia Freeland did not offer any new prescriptions for taming inflation and alleviating the strains consumers are feeling as prices in Canada rise to their highest levels in decades, but vowed that Ottawa will focus on fiscal restraint and helping those most in need. Ms. Freeland spoke in Toronto on Thursday afternoon.

Many economists are now forecasting that the Bank of Canada will follow the Fed’s lead and raise interest rates in this country by 75 basis points at its next policy meeting as it looks to stem inflationary pressures. Canadians will get their next reading on inflation, measured by the consumer price index, next week.

On the corporate side, Adobe shares were down about 3 per cent in premarket trading after the company’s latest results topped market forecasts but it also trimmed its revenue forecast for the year. Adobe now expects full-year revenue of US$17.65-billion, compared with earlier estimates of about US$17.90-billion.

Overseas, the pan-European STOXX 600 was up 1,13 per cent by midday. Britain’s FTSE 100 gained 1.02 per cent. Germany’s DAX and France’s CAC 40 rose 1 per cent and 0.67 per cent.

In Asia, Japan’s Nikkei fell 1.77 per cent in the wake of Wall Street’s selloff. Hong Kong’s Hang Seng rose 1.1 per cent, recouping losses seen early in the session.

TSX 60 FUTURES

1,157.20+10.90 (0.95%)

S&P 500 FUTURES

3,703.50+32.25 (0.88%)

DOW FUTURES

30,128.00+209.00 (0.70%)

PAST DAY

0.95%0.88%0.70%

CLOSE, JUNE 16

7:32 A.M., JUNE 17

SOURCE: BARCHART

Commodities

Crude prices turned higher, reversing early losses, but looked set for weekly declines as worries about the broader economy and the potential impact on demand capped gains.

The day range on Brent is US$118.59 to US$120.74. The range on West Texas Intermediate is US$116.33 to US$118.64. Both benchmarks were on track for losses for the week. For WTI, it would be the first weekly decline in eight.

“Once again, Brent crude and WTI saw some heavy selling intraday as markets tried to price in a plethora of central bank hikes and potential recessions,” OANDA senior analyst Jeffrey Halley said.

“Unfortunately, none of that changes the fact that despite those risks, the world remains short of crude supply from OPEC+, and global refining capacity, squeezing gasoline and diesel prices higher in a stagflationary embrace.”

In other commodities, gold prices were down in early going, hit by a higher U.S. dollar, and looked set for their biggest weekly decline since the middle of last month.

Spot gold dropped 0.6 per cent to US$1,846.33 per ounce by early Friday morning. U.S. gold futures dipped 0.1 per cent to US$1,849.00. Prices are down more than 1 per cent so far in a volatile week.

“Despite the noise of this week, it still remains anchored in the middle of its one-month range,” Mr. Halley said. “The overnight price action shows that the inverse correlation to the U.S. dollar is as strong as ever.”

SPOT GOLD

US$1,849.80+0.70 (0.04%)

WTI

US$114.73-0.23 (-0.20%)

HIGH GRADE COPPER

US$4.07-0.02 (-0.52%)

PAST DAY

-0.01%-0.45%-0.83%

CLOSE, JUNE 16

7:16 A.M., JUNE 17

SOURCE: BARCHART

Currencies

The Canadian dollar was weaker, trading just above 77 US cents in the predawn period, while its U.S. counterpart gained after recent declines.

The day range on the loonie is 76.99 US cents to 77.29 US cents.

There were no major Canadian economic releases on Friday’s calendar, leaving the loonie to move alongside broader market risk sentiment.

“The CAD is not finding any support this morning from the bounce in risk assets, which has been a stronger correlation driver for the CAD recently,” Shaun Osborne, chief FX strategist with Scotiabank, said in an early note.

On world markets, the U.S. dollar index, which weighs the greenback against a basket of six currencies, rose 0.6 per cent to 104.48.

Meanwhile, Japan’s yen fell after the Bank of Japan went against the tide, holding rates steady while other world counterparts hike borrowing costs.

Against the yen, the U.S. climbed 1.6 per cent to 134.14 yen following volatility in the immediate aftermath of the BOJ’s decision, according to a Reuters report. The yen hit a 24-year low on Wednesday of 135.6 per U.S. dollar.

The Australian dollar, often viewed as a proxy for risk sentiment, fell 0.9 per cent to US$0.6981 amid a mixed session for Asian stocks.

In bonds, the yield on the benchmark U.S. 10 year note was down modestly at 3.212 per cent after a volatile week.

CANADIAN DOLLAR/U.S. DOLLAR

US$0.7693-0.0030 (-0.3885%)

PAST DAY

PREV. CLOSE

0:00 A.M., JUNE 17

US$0.7724

7:16 A.M., JUNE 17

US$0.7693

SOURCE: BARCHART

More company news

The Globe’s James Bradshaw reports Canadian Imperial Bank of Commerce raised its profit target in a show of confidence as chief executive officer Victor Dodig made a pitch to investors on Thursday that he has built a different, more reliable bank. CIBC boosted its target growth rate for adjusted earnings a share to 7 to 10 per cent annually through 2025, from 5 to 10 per cent, and predicted similar levels of revenue growth at an investor presentation held at its new Toronto headquarters. The bank also increased its target for adjusted return-on-equity to 16 per cent from 15 per cent.

Bausch Health Companies Inc said it was suspending plans for the initial public offering of its unit Solta Medical due to challenging market conditions. Bausch, previously known as Valeant Pharmaceuticals, said it would revisit alternative paths for medical esthetics company Solta in future.

Cannabis company Hexo Corp. says Zenabis Global Inc., a wholly owned subsidiary, has filed for protection under the Companies’ Creditors Arrangement Act. The company says Zenabis made the filing in Quebec Superior Court to restructure its business and financial affairs. Hexo says the petition is limited to the Zenabis Group. Neither Hexo nor any of its subsidiaries, other than the members of the Zenabis Group, are petitioners or parties to the proceedings, the company says.

Economic news

(8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for May.

(8:30 a.m. ET) Canadian international securities transactions for April.

(9:15 a.m. ET) U.S. industrial production and capacity utilization for May.

(10 a.m. ET) U.S. leading indicators for May.

With Reuters and The Canadian Press

Powell vows that the Fed is ‘acutely focused’ on bringing down inflation

• Federal Reserve Chairman Jerome Powell on Friday reiterated the central bank’s commitment to bringing down inflation.
• In remarks to a conference on the U.S. dollar, he stressed that the Fed is “acutely focused on returning inflation to our 2 percent objective.”
• Earlier this week, the Fed raised rates three-quarters of a percentage point in an effort to bring down surging inflation.

https://www.cnbc.com/2022/06/17/powell-vows-that-the-fed-is-acutely-focused-on-bringing-down-inflation-.html

China’s property troubles have pushed one debt indicator above levels seen in the financial crisis

• Driving the new record high in risky ratings was a spate of downgrades on Chinese real estate developers as worries grew over their ability to repay debt.
• Moody’s said it issued 91 downgrades for high-yield Chinese property developers in the last nine months.
• That’s a record pace, the agency said, considering it issued only 56 downgrades for such companies in the 10 years ending December 2020.

https://www.cnbc.com/2022/06/17/moodys-china-real-estate-troubles-sent-debt-indicator-to-record-high.html

Airline stocks tumble as economic concerns overshadow travel surge

• Airline stocks have dropped more than the broader market.
• Spring and summer travel demand have surged despite higher fares.
• Economic concerns from inflation and recession risk have weighed on airline stock prices.

https://www.cnbc.com/2022/06/16/travel-demand-is-surging-but-stocks-are-tanking.html

Jolted by the Ukraine war and China’s aggression, Japan looks to boost its defense capability

• Japan “will not rule out any options, including so-called ‘counterstrike capabilities,’ and will realistically consider what is necessary to protect the lives and livelihoods of our people,” Japanese Prime Minister Fumio Kishida said at the Shangri-La Dialogue in Singapore.
• The threat of China is brought close to home because of Taiwan’s proximity to Japan, deputy cabinet secretary in the Japanese prime minister’s office Koichiro Matsumoto told CNBC.

https://www.cnbc.com/2022/06/17/japan-to-boost-its-defense-capability-amid-ukraine-war-china-aggression.html