Author: Consultant

The provider of Canada’s major stock indexes is considering a significant change that would allow some companies to appear in multiple countries’ indexes, paving the way for companies such as Brookfield Asset Management Ltd. BAM-T -3.08%decrease, Shopify Inc. SHOP-T -6.90%decrease and the former Ritchie Bros. Auctioneers Inc. RBA-T -1.35%decrease to be both Canadian and American.

S&P Dow Jones Indices, which runs the S&P/TSX Composite Index, the S&P/TSX 60 Index and others, says it could allow companies “with significant ties to Canada” to stay in a Canadian index even if it normally would consider the company “domiciled” in another country. The company would need to be incorporated in Canada to be eligible.

Until now, S&P Dow Jones has said a company can have just one country of domicile – and that country’s stock indexes are where it needs to be. The new Canadian proposal would be a significant move away from that.

In a statement this week, S&P Dow Jones said the proposal is in response to trends and “market inquiries” around its domicile and listing policies. The changes “are intended to enhance the representativeness of S&P/TSX Indices by expanding eligibility to a broader range of companies.”

The changes would allow British Columbia-incorporated Brookfield Asset Management, which recently changed its principal executive office to New York, to remain in S&P/TSX indexes even as it joins American ones. (S&P has not yet designated Brookfield as a U.S.-domiciled company and removed it from Canadian indexes.)

B.C.-incorporated RB Global Inc., formerly known as Ritchie Bros., RBA-T -1.35%decrease after it formally changed its headquarters to a Chicago suburb, but would be able to return.

Federally incorporated Shopify has not made any public statement about its index plans, but it recently introduced a New York executive office, in addition to its Ottawa headquarters, in its securities filings. It makes those securities filings with the U.S. regulators and has the bulk of its business there. Currently, it’s in the Canadian indexes, but would have to exit them if S&P Dow Jones decided it was a U.S. company. The change would mean it could be in both countries’ indexes.

The former Encana, which moved its incorporation and headquarters to the U.S. from Calgary and renamed itself Ovintiv OVV-T -1.35%decrease, would not be eligible. Neither would Vancouver-based Lululemon LULU-Q -3.08%decrease, which has been incorporated in Delaware since it went public in 2007.

In a presentation released Wednesday accompanying a call for consultation on the change, S&P Dow Jones said there are four companies with Canadian incorporations it currently considers domiciled elsewhere, including the U.S., China and the United Kingdom, that could join the Canadian indexes. It does not name them, but provides descriptive information on them.

In addition to RB Global, analyst Jean-Michel Gauthier at Scotia Capital Inc. said China Gold International Resources Corp. Ltd. could be a candidate for inclusion. China Gold operates entirely in that country and is included in the S&P Asian indexes, according to S&P Global Market Intelligence.

RB Global and China Gold match two of the descriptors in the S&P Dow Jones document.

“We count 20 U.S. listed companies with no Canadian listing and a Canadian incorporation that could be tempted to come back home,” Mr. Gauthier wrote in a research note.

Brookfield Asset Management, with a market capitalization of more than $100-billion, “could be the first S&P 500/TSX 60 dual member,” he said.

At stake is the deep pool of investor money chasing U.S. indexes. Any fund that tracks an index needs to buy the shares of a company that joins that index, driving demand, and prices, up.

In the fall of 2023, when The Globe and Mail examined Lululemon’s U.S. index membership, there was US$3.4-trillion in index funds that track the S&P 500, US$118-billion tracking the S&P MidCap 400 and nearly US$97-billion tracking the Russell 2000, according to Morningstar Direct.

Research by Morningstar Direct for The Globe and Mail found Canadian mutual funds and exchange-traded funds with assets under management amounting to $395-billion had returns that were 95 per cent or more correlated with the S&P/TSX Composite over the 12 months ended Dec. 31, 2023. This included funds that explicitly say they track the index.

The core rule in index providers’ domicile rules, historically, has been where the company is incorporated. For many companies, that’s the same country as their headquarters, where they do most of their business and where most of their stock trades. But other companies mix it up in this increasingly globalized world. So all index providers, including the Russell indexes and MSCI Inc., deal with these realities by considering a long list of criteria.

As part of the consultation, S&P Dow Jones is asking whether it is “sufficient that a company be incorporated in Canada and listed on the TSX, or should additional requirements be considered to ensure significant connection to Canada? (e.g., meaningful operational presence in Canada).”

S&P Dow Jones proposes to implement the changes with the June, 2025, rebalancing, which is effective after the close on June 20.

The Big Six banks all performed well during the last few weeks’ earnings reports. And Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) was one of them. However, despite beating analyst estimates, the stock continues to trade down since the earnings report. So, what’s happening, and what should investors do with CIBC stock on the TSX today?

What happened?

CIBC stock announced a strong earnings report yet again for the quarter. The company announced adjusted earnings per share (EPS) of $3.93 — 45% higher than the year before. Net income was also on the rise — up 48% year over year to $1.73 billion — and total revenue was up 7% to $5.06 billion. Meanwhile, the rise in loan demand continued to increase, up 4% since last year. Best yet, CIBC reported a $99 million reversal of credit losses. That’s compared to a credit loss provision of $525 million last year!

The issue came with expenses. CIBC stock had to join the club when it came to decreasing expenses to clients and thus increasing its own. The Big Six bank announced it would reduce trailing commissions and management fees. The company also may see a decrease in the future from low interest rates in the short term on the TSX today.

So what?

The combination of having to continue to be competitive while also modernizing and adjusting for low interest rates put a lot of pressure on CIBC stock. Instead of rising as some of its peers have, there was a pullback in the stock after reaching all-time highs. That’s despite excellent news for the company.

Even though it looks like it can afford the lower rates and taking on lower fees, it’s bound to come back to haunt them in the near future. This could also mean a reduction in share price in the future.

However, analysts believe the pull back is actually more due to the huge share growth that happened on the eve of earnings. So, it’s more likely investors wanted to get in on the action and take their returns. After all, it entered the pandemic behind its peers and is now set to outperform, according to analysts. This comes from above-average mortgage growth, culminating with the best share performance it’s had of any of the Big Six banks over the last six months.

Now what?

Motley Fool investors may want to seize this opportunity to buy some CIBC stock while it’s down. Analysts continue to put the average share price in the next year at $158. That’s a potential upside of 8% as of writing.

You’ll notice that’s definitely not as strong growth compared to the last year. CIBC stock is up 51% in the last year, and that’s simply not share growth that is sustainable. However, if you look back, CIBC stock has proven to be a strong choice for Motley Fool investors. It rebounds quickly after market crashes and has continued to make improvements that drive share growth.

On top of that, Motley Fool investors can pick up CIBC stock on the TSX today with a P/E ratio of 11.2. That’s incredible value considering the past and future growth of this company. Not to mention the stellar dividend yield of 3.99% as of writing. So, while you might see some short-term volatility, this is the perfect stock to have in your long-term portfolio.

Piling pressure onto a Canadian economy already suffering disruption due to new U.S. tariffs and threats of an all-out trade war, China on Saturday imposed new levies against $3.7-billion worth of Canadian agricultural and food products.

In a long-awaited response to Canada’s decision last August to impose a 100 per cent tariff on electric vehicles, Beijing said it was introducing equivalent levies on Canadian canola oil, oil cakes and pea imports, as well as a 25 per cent duty on Canadian pork and aquatic products.

In a statement, China’s State Council said the initial Canadian tariffs, which also included a 25 per cent levy on Chinese steel and aluminium, had “seriously violated the rules of the World Trade Organization” and “damaged China’s legitimate rights and interests,” leaving it with no choice but to respond.

Notably however, while canola oil was included, the much larger sectors of canola seed and meal were not, suggesting Beijing may be leaving room to negotiate — or escalate, said Rosa Wang, an analyst with agricultural consultancy JCI.

More than half of Canadian canola exports go to China, and one of the first responses China announced to the Canadian tariffs last year was an anti-dumping investigation into the $5-billion worth of Canadian canola products exported to China every year.

Beijing previously banned Canadian canola during a period of high bilateral tension following the arrests of Huawei executive Meng Wanzhou and Canadians Michael Kovrig and Michael Spavor. That ban was lifted in 2022 after three years, to the great relief of the canola industry.

“The investigation on Canadian canola is still ongoing,” Ms. Wang said. “That canola was not included in the list of tariffs this time might also be a gesture to leave room for negotiations.”

China is Canada’s second-largest trading partner, trailing far behind the United States. Canada exported $67.5-billion worth of goods to the world’s second-largest economy in 2024, according to Chinese customs data.

Saturday’s measures cover just 5 per cent of that trade, but they come as Canada is facing intense pressure from new U.S. President Donald Trump, who has repeatedly imposed and then paused 25 per cent tariffs against all Canadian and Mexican imports, a potentially devastating blow to the tightly-intertwined North American economy.

On Thursday, Mr. Trump announced yet another a tariff reprieve on all goods compliant with the United States-Mexico-Canada Agreement, which covers a significant portion of Canadian exports to the U.S. But he has promised to introduce 25 per cent tariffs on steel and aluminum imports, including from Canada, and threatened reciprocal tariffs on Canadian lumber and dairy products.

The whiplash announcements out of the White House have left Canadian business and politics reeling, and raised severe uncertainty as the country heads toward a federal election expected this spring.

The timing of the Chinese measures may be aimed at reminding Ottawa to consider relations with its second-largest partner at a time when all attention is focused south of the border.

Canada’s EV tariffs came after a similar move by the U.S. and following consultation with the Joe Biden administration, much to the chagrin of Beijing, which has always complained about Ottawa following the U.S. lead on foreign policy. In late February, current U.S. Treasury Secretary Scott Bessent encouraged Canada to follow Mexico in matching Mr. Trump’s new tariffs against China.

Speaking to the Global Times, a Chinese state-run newspaper, Shi Xiaoli, director of the Beijing-based WTO Law Research Centre, said it was important for China to send the message that “if any nations try to gain U.S. favour by imposing extra tariffs on China in return for the U.S. to lift tariffs on them, then China will also use tools to defend its own interests.”

In a social media post, state broadcaster CCTV for China “it is not difficult to find alternative sources of goods imported from Canada, but for Canada, its alternative market space has been sharply compressed, which means Canada has to bear more losses.”

Dan Wang, China director at Eurasia Group in Singapore, said Saturday’s tariffs seemed to be a “warning shot.”

“By striking now, China reminds Canada of the cost of aligning too closely with American trade policy,” she said, adding however the delayed response to last year’s measures may also reflect “both capacity constraints and strategic signalling.”

“The commerce ministry is stretched thin, juggling trade disputes with the U.S. and European Union,” Ms. Wang said. “Canada, a lower priority, had to wait its turn.”

Saturday’s tariffs come a day before Canada’s next prime minister is chosen by members of the ruling Liberal Party. Some Chinese analysts previously told The Globe and Mail there may be space for a reset in testy Sino-Canadian relations with the exit of Prime Minister Justin Trudeau, during whose period in office ties frayed significantly.

That could follow a pattern seen with Australia: relations between Beijing and Canberra entered a deep freeze in 2020 after then Prime Minister Scott Morrison called for an international investigation into the origins of the COVID-19 pandemic. That year, China imposed tariffs, bans and other restrictions on key Australian exports, including barley, wine, beef, coal, lobster and timber.

Beijing did not begin lifting the bans until 2023, one year after the opposition Labor Party ousted Mr. Morrison’s coalition and Anthony Albanese became prime minister.

While most observers are skeptical of a similar reset taking place between Canada and China — given the Conservatives are traditionally seen as being tougher on China than the Liberals — Mr. Trump’s aggressive posturing has scrambled geopolitics and left many countries seeking friends elsewhere, something Beijing has been keen to capitalize on.

Speaking this week, Chinese Foreign Minister Wang Yi hit out against Mr. Trump’s “America First” policies, saying “might does not make right” and framing China as the more responsible global actor.

“We are living in a changing and turbulent world, where certainty is becoming a scarce resource,” Mr. Wang said. “China’s diplomacy will stand firm on the right side of history and on the side of human progress. We will provide certainty in this uncertain world.”

With files from Alexandra Li in Beijing and Reuters

Monday March 10

China CPI, PPI, aggregate yuan financing and new yuan loans

Japan real cash earnings and bank lending

Germany industrial production and trade surplus

Earnings include: Alaris Royalty Corp.; Franco-Nevada Corp.

—

Tuesday March 11

Japan GDP and machine tool orders

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

(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey.

Earnings include: Altius Minerals Corp.; Endeavour Silver Corp.; Labrador Iron Ore Royalty Corp.; Lumine Group Inc.; Peyto Exploration & Development Corp.; Tourmaline Oil Corp.; Transcontinental Inc.

—

Wednesday March 12

(8:30 a.m. ET) U.S. CPI for February. The Street is forecasting a rise of 0.3 per cent from January and up 3.0 per cent year-over-year.

(9:45 a.m. ET) Bank of Canada policy announcement with press conference to follow.

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

Earnings include: Adobe Systems Inc.; Lennar Corp.

—

Thursday March 13

Euro zone industrial production

(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q4.

(8:30 a.m. ET) Canadian building permits for January. Estimate is a decline of 5 per cent from December.

(8:30 a.m. ET) U.S. initial jobless claims for week of March 8. Estimate is 235,000, up 14,000 from the previous week.

(8:30 a.m. ET) U.S. PPI final demand for February. Consensus is a gain of 0.3 per cent month-over-month and up 3.2 per cent year-over-year.

(10 a.m. ET) U.S. quarterly services survey for Q4.

Earnings include: Empire Co. Ltd.; NFI Group Inc.; North West Co. Inc.; Oracle Corp.; Premium Brands Holdings Corp.; Wheaton Precious Metals Corp.

—

Friday March 14

Germany CPI

England GDP, index of services, industrial production and trade deficit

(8:30 a.m. ET) Canada’s manufacturing sales and new orders. The Street is projecting month-over-month gains of 2.0 per cent and 2.5 per cent, respectively.

(8:30 a.m. ET) Canadian wholesale trade for January. Estimate is an increase of 1.8 per cent from December.

(8:30 a.m. ET) Canada’s new motor vehicle sales for January. Estimate is a year-over-year rise of 5.0 per cent.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Survey for March.

TORONTO — Canadian Tire Corp. Ltd. is rolling out a new strategy that will see it invest $2 billion over four years to restructure the company for growth but will also mean the closure of some stores.

The True North plan launched Thursday is meant to usher in a new era for the Toronto-based retailer, which also owns SportChek, Party City, Mark’s and Pro Hockey Life, as it’s working to fend off the effects of tariffs the U.S. started applying to Canadian and Chinese goods this week.

Canadian Tire said the new plan will move the business away from its holding company model to a more agile organization by aggregating the systems and data it holds across all its banners.

The company declined an interview request but positioned the shift as a way to eliminate silos, redundancies and costly back-office processes.

“We will operate more efficiently and go to market more strategically, harnessing our banners and loyalty system to elevate our scale,” Canadian Tire CEO Greg Hicks promised in a statement.

That quest for operational efficiency will also bring the closure of 17 Atmosphere stores Canadian Tire has deemed “uncompetitive.” Fourteen of the stores selling apparel and outdoor gear will be relocated to SportChek stores in phases throughout 2025.

Canadian Tire spokesperson Joscelyn Dosanjh did not indicate whether any job cuts will stem from the closures, but said in an email that the company is trying to place employees impacted by the changes at other locations as their stores in Western Canada close over the next four months.

In addition to the closures, Canadian Tire’s new plan will see it optimize its SportChek portfolio with new concept stores and expand its loyalty program by adding brand partners that issue Canadian Tire money and striving to acquire more Triangle Mastercard holders.

It will also carry out $400 million in share buybacks, doubling its previously disclosed plans to repurchase $200 million worth.

Guiding each part of the strategy will be a restructured leadership team. Susan O’Brien, the company’s chief brand and customer officer, will now serve as its chief transformation officer, while TJ Flood, the president of its Canadian Tire retail division, will become its chief operating officer.

The series of changes comes weeks after Canadian Tire Corp. signed an almost $1.3-billion deal to sell sportswear company Helly Hansen to Kontoor Brands, which owns Wrangler, Lee and Rock & Republic.

Hicks has also spent time recently warning of the effects of the tariffs. He has said consumers had started to ease up on the frugality they adopted to cope with the economic slowdown, but that progress was likely “substantially erased” when the U.S. started levying tariff threats.

Canadian Tire purchases about 15 per cent of its goods from the U.S. It estimates it could find Canadian suppliers for between 25 and 30 per cent of the items it gets from south of the border.

MDA Space Ltd. MDA-T +10.97%increase reported its fourth-quarter profit rose compared with a year ago as its revenue also climbed higher, helped by strong contributions from its satellite systems business.

The company says it earned $25.1-million or 20 cents per diluted share in its quarter ended Dec. 31.

The result compared with a profit of $13.5-million or 11 cents per diluted share in the last three months of 2023.

Revenue for the quarter totalled $346.6-million, up from $205.0-million a year earlier.

On an adjusted basis, MDA says it earned 28 cents per diluted share in its latest quarter, up from an adjusted profit of 23 cents per diluted share a year earlier.

The company’s backlog stood at $4.4-billion at the end of 2024, up from $3.1-billion at the end of 2023.

Algonquin Power & Utilities Corp. AQN-T -6.30%decrease reported a loss in its fourth quarter compared with a profit a year ago as its revenue edged lower.

The company, which keeps its books in U.S. dollars, says it saw a net loss attributable to shareholders of US$186.4-million or 25 cents US per diluted share for the quarter ended Dec. 31.

The result compared with profit of US$186.3-million or 27 cents US per diluted share for the last three months of 2023.

Revenue for the quarter totalled US$584.8-million, down from US$585.7-million a year earlier.

On an adjusted basis, Algonquin says it earned six cents US per share in its latest quarter compared with an adjusted profit of 12 cents US per share in fourth quarter of 2023.

Shares in the company were down 45 cents or nearly seven per cent at C$6.38 in early trading on the Toronto Stock Exchange.

Canada’s unemployment rate held steady at 6.6 per cent in February while new job additions were only marginally up, data showed on Friday, reflecting the early potential impact of uncertainty over U.S. tariffs on corporate hiring decisions.

The economy added a net of 1,100 jobs, Statistics Canada said, a sharp contrast to the addition of 76,000 jobs in January and a cumulative increase of 211,000 from November to January.

Analysts polled by Reuters had estimated the unemployment rate at 6.7 per cent and net addition of 20,000 jobs in February.

This is the final major data to be released before the Bank of Canada’s monetary policy decision on March 12. Currency swap markets are showing that there is an around 73 per cent chance that the bank will cut interest rates for the seventh time in a row to 2.75 per cent.

The Canadian dollar extended losses after the labour data, trading down 0.3 per cent to 1.4339 versus the U.S. dollar, or 69.74 U.S. cents. Yields on two-year government bonds were down 3.9 basis points at 2.6 per cent.

Canada’s unemployment rate has been improving from late last year since a peak of 6.9 per cent in November, spurred by falling interest rates as inflation came within the Bank of Canada’s 1 per cent to 3 per cent target range and economic activity picked up.

However, uncertainty around U.S. tariffs has taken a toll on the hiring intentions of companies, Statscan’s data shows, and economists say unemployment could worsen if the tariffs are imposed.

U.S. President Donald Trump suspended for a month tariffs of 25 per cent he had imposed this week on almost all Canadian imports.

The employment rate, or the number of people employed out of the total population, was unchanged at 61.1 per cent. This metric has been improving in the last few months even as the population growth rate has been slowing, showing an improving job market.

Growth in the working age population, those aged 15 and older, has slowed in recent months as Prime Minister Justin Trudeau’s government implemented immigration curbs, under pressure from opposition parties who blame migrants for the shortage and high prices of housing.

Population growth in February was 47,000, up 0.1 per cent, which was less than half that recorded 12 months earlier and the slowest since April 2022.

The labour force – or the total number of people employed and unemployed – shrank by 16,800, the highest such drop since June 2022.

The participation rate, the proportion of the population who were employed or seeking jobs, fell to 65.3 per cent in February, the first decrease since September 2024, the statistics agency said.

The average hourly wage growth of permanent employees rose to an annual rate of 4.0 per cent in February from 3.7 per cent in January, it said.

The wage growth figure is closely watched by the BoC and, along with rental prices, has been one of the most resilient items which has not fallen in tandem with easing inflation.

Canada’s trade surplus in January exceeded expectations by a wide margin to post a 32-month record as fears of tariffs from the U.S. pushed exports of cars and energy products higher, especially south of its border, data showed on Thursday.

It posted a trade surplus of $3.97-billion, more than double the upwardly revised $1.69-billion seen in December, Statistics Canada said, and posted a record surplus with top trading partner the United States.

U.S. President Donald Trump has slapped a 25 per cent tariff on almost all Canadian imports and after retaliation by Prime Minister Justin Trudeau, he has threatened to stack up more tariffs on them.

On Wednesday, Trump agreed to exempt automakers from the tariffs for one month as long as they comply with the terms of the Canada-U.S.- Mexico free trade agreement, and agreed to look at other products too for similar relief.

Analysts polled by Reuters had forecast Canada’s trade surplus to be at $1.28-billion and have said that trade balances would benefit from companies front-loading orders in January.

“This uncertainty is creating major swings in the data, and we are just getting started,” Andrew DiCapua, Principal Economist, Canadian Chamber of Commerce.

Total exports increased 5.5 per cent in January to a record of $74.5-billion, following a 6 per cent increase in December. A 1 per cent decline in the value of the Canadian dollar to its U.S. counterpart in January also led to an increase in export value, it said.

In volume terms, total exports rose 4.5 per cent in January, following an increase of 2.6 per cent in December.

The jump in exports was led by an over 12 per cent jump in motor vehicles and parts, followed by a 4.8 per cent increase in exports of energy products, data showed.

The Canadian dollar was largely stable after the data with the local currency trading weaker by 0.18 per cent to 1.4361 to the U.S. dollar, or 69.63 U.S. cents. Yields on the two-year government bond dropped by 1.1 basis points to 2.544 per cent.

Canada’s trade surplus with the U.S. clocked a record of $14.4-billion in January, from $12.3-billion in December. This was led by historically high exports of $58.2-billion to the U.S. Imports from the United States increased 4.7 per cent, Statscan said.

The trade surplus with the U.S. increased for the third month in a row.

Trump has often indicated that he is unhappy that his country imports more from Canada than it exports and analysts have said that tariffs are also a tool for Trump to reverse this deficit.

However, data shows that its deficit with Canada, which is its second biggest trading partner, is much smaller than its other two top trading partners – Mexico and China.

According to U.S. government data the deficit with Mexico is almost 2.5 times that of Canada, while it is just a fifth of what the U.S. has with China.

Stuart Bergman, chief economist with Export Development Canada said that without energy exports, U.S. would actually run a surplus with Canada.

Services imports, another sector where Canada runs a deficit with the U.S., were down 0.4 per cent on a monthly basis led by a slump in travel services of 5.3 per cent, mainly on lower spending by Canadians traveling to the US, he said.

“This is clear evidence that the current situation is impacting consumer choices,” Bergman said.