Author: Consultant

The Chinese economy still faces the risk of slipping into a deflationary trap, Capital Economics’ economist Gabriel Ng said.

Data released by the National Bureau of Statistics on Saturday showed that consumer price inflation softened to 0.3 percent in October from 0.4 percent in September. Moreover, this was the weakest in four months. Meanwhile, core inflation that excludes prices of food and energy rose to 0.2 percent from 0.1 percent in the previous month.

Data showed that producer prices continued to decline in October. Prices were down 2.9 percent annually after falling 2.8 percent in the previous month.

Inflation data suggests that recent stimulus efforts are having some effect, the economist said. In the near-term, the fiscal boost from local governments deploying existing funds should lift inflation further, he noted.

However, the economist observed that fiscal support is still over-reliant on investment rather than consumption, suggesting that supply-demand imbalances and overcapacity will remain a persistent structural issue.

Moreover, the government has not revealed any concrete plans for a major fiscal expansion next year without which the economy risks slipping deeper into deflation, he said.

December Nymex natural gas (NGZ24) on Friday closed down by -0.024 (-0.89%)

Dec nat-gas prices posted moderate losses on Friday, weighed down by mild US autumn weather that will reduce heating demand for nat-gas.  Forecaster Maxar Technologies said Friday that forecasts shifted warmer across parts of the central US for November 13-17 and that above-normal temperatures will persist in the eastern half of the country through November 22.

Lower-48 state dry gas production Friday was 100.6 bcf/day (-4.3% y/y), according to BNEF.  Lower-48 state gas demand Friday was 77.2 bcf/day (-0.3% y/y), according to BNEF.  LNG net flows to US LNG export terminals Friday were 13.4 bcf/day (+16.1% w/w), according to BNEF.

An increase in US electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended November 2 rose +1.24% y/y to 73,690 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 2 rose +1.56% y/y to 4,161,739 GWh.

Thursday’s weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 1 rose +69 bcf, above expectations of +68 bcf and well above the 5-year average build for this time of year of +32 bcf.  As of November 1, nat-gas inventories were up +4.2% y/y and were +5.8% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 95% full as of November 3, above the 5-year seasonal average of 93% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending November 8 was unchanged at 102 rigs, modestly above the 3-1/3 year low from September 6 of 94 rigs.  Active rigs have fallen since posting a 5-year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
 

WASHINGTON — President-elect Donald Trump announced late Sunday that Tom Homan, the former acting director of U.S. Immigration and Customs Enforcement who backed his controversial “zero tolerance” policy, will be his administration’s “border czar.”

“I am pleased to announce that the Former ICE Director, and stalwart on Border Control, Tom Homan, will be joining the Trump Administration, in charge of our Nation’s Borders (‘The Border Czar’), including, but not limited to, the Southern Border, the Northern Border, all Maritime, and Aviation Security,” Trump said on Truth Social.

“I’ve known Tom for a long time, and there is nobody better at policing and controlling our Borders,” the post continued. “Likewise, Tom Homan will be in charge of all Deportation of Illegal Aliens back to their Country of Origin. Congratulations to Tom. I have no doubt he will do a fantastic, and long awaited for, job.”

Homan touts hard-line immigration views and previously vowed to “run the biggest deportation force this country has ever seen.”

He was an early supporter of the Trump administration’s “zero tolerance” policy, which led to thousands of families being separated at the southern border. Trump eventually signed an executive order in 2018 reversing the family separation policy after public outcry.

https://www.cnbc.com/2024/11/11/trump-announces-tom-homan-as-incoming-border-czar.html

Oil prices fell about 2 per cent on Monday, after China’s stimulus plan disappointed investors seeking fuel demand growth in the world’s No. 2 oil consumer and as the U.S. dollar edged higher.

Brent crude futures fell $1.48, or 2 per cent to $73.29 a barrel by 1302 GMT while U.S. West Texas Intermediate crude futures were at $68.78 a barrel, down $1.60, or 2.3 per cent.

Both benchmarks fell more than 2 per cent on Friday.

The U.S. dollar index – a measure of its value relative to a basket of foreign currencies – slightly overshot the highs seen right after the U.S. presidential election with markets still waiting for clarity about future U.S. policy.

A stronger dollar makes greenback-denominated commodities such as oil more expensive for holders of other currencies and tends to weigh on prices.

In China, consumer prices rose at the slowest pace in four months in October while producer price deflation deepened, data showed on Saturday, even as Beijing doubled down on stimulus to support the sputtering economy.

“Chinese inflation figures were again weak, with the market fearing deflation, particularly as the yearly change in the producer price index fell further into negative territory … Chinese economic momentum remains negative,” said Achilleas Georgolopoulos, market analyst at brokerage XM.

The latest support measures will not revive China’s oil demand growth or crude oil imports, said Tamas Varga, analyst at oil broker PVM.

“After last week’s U.S. presidential election attention is slowly drifting back to the underlying fundamentals,” Varga said.

Oil prices also eased after concerns about potential supply disruptions from storm Rafael in the U.S. Gulf of Mexico subsided.

More than a quarter of U.S. Gulf of Mexico oil and 16 per cent of natural gas output remained offline on Sunday, according to the offshore energy regulator.

Looking ahead, there were also concerns that U.S. oil and gas output could rise under the new Trump administration although analysts say 2025′s production forecast is unlikely to change.

“We think producers may think twice about turbocharging U.S. supply in an era when OPEC+ has already staked out plans to gradually raise production targets over the course of 2025,” Tim Evans of Evans Energy said in a note.

Trump’s election promise of hiking import tariffs to boost the U.S. economy has clouded the global economic outlook although expectations that he could tighten sanctions on OPEC producers Iran and Venezuela and cut oil supply to global markets partly caused oil prices to gain more than 1 per cent last week.

Monday November 11

Canadian Remembrance Day (stock markets open, bond markets closed)

U.S. Veterans Day (stock markets open, bond markets closed)

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

Japan banking lending

Earnings include: NuVista Energy Ltd.; RioCan REIT; Seabridge Gold Inc.; Sienna Senior Living Inc.

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Tuesday November 12

Japan machine tool orders

Germany CPI

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

(8:30 a.m. ET) Canadian building permits for September. Estimate is a decline of 1.0 per cent from August.

(11 a.m. ET) U.S. New York Fed Survey of Consumer Expectations for October.

(2 p.m. ET) U.S. Senior Loan Officer Opinion Survey for October.

Earnings include: CAE Inc.; Dentalcorp Holdings Ltd.; Finning International Inc.; Headwater Exploration Inc.; Home Depot Inc.; H&R REIT; Linamar Corp.; Occidental Petroleum Corp.; Orla Mining Ltd.; Peyto Exploration & Development Corp.; Shopify Inc.; Spotify Technology SA

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Wednesday November 13

(8:30 a.m. ET) U.S. CPI for October. The Street is projecting a rise of 0.2 per cent month-over-month and 2.6 per cent year-over-year.

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

Earnings include: CCL Industries Inc.; Cisco Systems Inc.; Hudbay Minerals Inc.; Hut 8 Mining Corp.; Loblaw Companies Ltd.; Maple Leaf Foods Inc.; Northland Power Inc.; SmartCentres REIT; Stelco Holdings Inc.; Suncor Energy Inc.

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Thursday November 14

Euro zone real GDP and industrial production

(8:30 a.m. ET) U.S. initial jobless claims for week of Nov. 9. Estimate is 224,000, up 3,000 from the previous week.

(8:30 a.m. ET) U.S. PPI Final demand for October. Consensus is a rise of 0.2 per cent from September and up 2.2 per cent year-over-year.

(3 p.m. ET) U.S. Fed chair Jerome Powell speaks on the economic outlook.

Earnings include: Alibaba ADR; Applied Materials Inc.; Atco Ltd.; Boralex Inc.; Brookfield Corp.; Canadian Utilities Ltd.; Chartwell Retirement Residences; Palo Alto Networks Inc, Walt Disney Co.

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Friday November 15

China industrial production, retail sales and fixed asset investment

Japan real GDP and industrial production

EU Commission’s economic forecasts.

(8:30 a.m. ET) Canadian manufacturing sales and new orders for September. Estimates are month-over-month declines of 0.8 per cent and 1.5 per cent, respectively.

(8:30 a.m. ET) Canadian wholesale trade for September. Estimate is a rise of 0.9 per cent from August.

(8:30 a.m. ET) Canadian new motor vehicle sales for September. Estimate is a year-over-year drop of 3.5 per cent.

(8:30 a.m. ET) U.S. retail sales for October. The Street expects a rise of 0.3 per cent from September.

(8:30 a.m. ET) U.S. import prices for October. Consensus is a decline of 0.1 per cent from September and up 0.4 per cent year-over-year.

(9 a.m. ET) Canadian existing home sales and average prices for October. Estimates are year-over-year increases of 33.0 per cent and 5.5 per cent, respectively.

(9 a.m. ET) Canada’s MLS Home Price Index for October. Estimate is a decline of 2.5 per cent from the same period a year ago.

(9 a.m. ET) U.S. industrial production and capacity utilization for October.

(10 a.m. ET) U.S. business inventories for September. Consensus is a month-over-month gain of 0.1 per cent.

(10:30 a.m. ET) Bank of Canada Senior Loan Officer Survey for Q3.

Earnings include: Fission Uranium Corp.

Third Quarter Financial Highlights ^1,2,3 :

• Total gross transaction value (“GTV”) decreased 7% year-over-year to $3.6 billion.
• Total revenue decreased 4% year-over-year to $981.8 million.
• Service revenue increased 1% year-over-year to $779.9 million.
• Inventory sales revenue decreased 18% year-over-year to $201.9 million.
• Net income increased 20% year-over-year to $76.0 million.
• Net income available to common stockholders increased 22% year-over-year to $66.9 million.
• Diluted earnings per share available to common stockholders increased 20% to $0.36 per share.
• Diluted adjusted earnings per share available to common stockholders decreased 1% year-over-year to $0.71 per share.
• Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) decreased 1% year-over-year to $283.7 million.

2024 Financial Outlook

The Company has updated its full-year 2024 outlook for select financial data, as shown below:

(in U.S. dollars in millions, except percentages)		Current Outlook		Prior Outlook
GTV growth 4		0% to 2%		0% to 2%
Adjusted EBITDA		$1,235 to $1,270		$1,220 to $1,270
Full year 2024 tax rate (GAAP and Adjusted)		25% to 27%		25% to 27%
Capital expenditures 5		$275 to $325		$275 to $325

The Company has not provided a reconciliation of Adjusted EBITDA outlook for fiscal 2024 to GAAP net income, the most directly comparable GAAP financial measure, because without unreasonable efforts, it is unable to predict with reasonable certainty the amount or timing of non-GAAP adjustments that are used to calculate Adjusted EBITDA, including but not limited to: (a) the net loss or gain on the sale of property plant & equipment or other assets, (b) acquisition-related or integration costs relating to our mergers and acquisition activity, including severance costs, (c) other legal, advisory, restructuring and non-income tax expenses, (d) share-based payments compensation expense which value is directly impacted by the fluctuations in our share price and other variables, and (e) other expenses that we do not believe are indicative of our ongoing operations. These adjustments are uncertain, depend on various factors that are beyond our control and could have a material impact on net income for fiscal 2024.

Telus Corp. says its net income attributable to common shares more than doubled during its third quarter despite the company adding fewer net new customers compared with the same time last year.

The telecommunications company says it earned $280 million in its third quarter, up 105.9 per cent from the same three-month period in 2023.

Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year.

Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Telus says it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers.

This report by The Canadian Press was first published Nov. 8, 2024.

After moving sharply higher over the two previous sessions, stocks showed another strong move to the upside during trading on Thursday. With the continued advance, the Nasdaq and the S&P 500 reached new record closing highs.

The tech-heavy Nasdaq led the charge, surging by 285.99 points or 1.5 percent to 19,269.46, while the S&P 500 climbed 44.06 points or 0.7 percent to 5,973.10.

The narrower Dow, on the other hand, spent the day lingering near the unchanged line before closing down just 0.59 points at 43,729.34.

The continued strength on Wall Street partly reflected ongoing optimism about the impact of former President Donald Trump’s return to the White House.

Trump’s policies are expected to be positive for corporations and the U.S. economy, although there are some concerns about the effect planned tariff increases will have on inflation.

The markets also benefited from Trump’s victory over Vice President Kamala Harris being decisive, avoiding the uncertainty that would be created by a prolonged vote counting process and potential legal challenges.

Stocks saw continued strength as the Federal Reserve announced its widely expected decision to lower interest rates by a quarter point.

After aggressively slashing interest rates by half a percentage point in September, the Fed said it has decided to lower the target range for the federal funds rate by 25 basis points to 4.50 to 4.75 percent.

The central bank said its decision to continue lowering rates comes as labor market conditions have generally eased, while inflation continues to make progress towards its 2 percent objective.

However, the Fed said the risks to achieving its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run are roughly in balance.

“The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate,” the Fed said.

In considering future adjustments to rates, the central bank said it will continue to carefully assess incoming data, the evolving outlook, and the balance of risks.

Fed Chair Jerome Powell stressed during his post-meeting press conference that rates are not on “any preset course” and said the central bank will make future decisions “meeting by meeting.”

Powell also said the Fed is “well positioned” to deal with the risks to both sides of its dual mandate, noting the it can cut rates more slowly or more quickly depending on the economic developments.

Sector News

Semiconductor stocks extended the surge seen over the two previous sessions, driving the Philadelphia Semiconductor Index up by 2.3 percent.

Considerable strength was also visible among software stocks, as reflected by the 1.9 jump by the Dow Jones U.S. Software Index.

Gold stocks also saw significant strength amid a sharp increase by the price of the precious metal, moving notably higher along with retail and commercial real estate stocks.

On the other hand, banking stocks pulled back sharply after Wednesday’s spike, dragging the KBW Bank Index down by 2.7 percent. Telecom, oil service and brokerage stocks also gave back ground.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Thursday. While Japan’s Nikkei 225 Index fell by 0.3 percent, Hong Kong’s Hang Seng Index shot up by 2.0 percent and China’s Shanghai Composite Index spiked by 2.6 percent.

Meanwhile, European stocks moved mostly higher on the day. The German DAX Index surged by 1.7 percent and the French CAC 40 Index advanced by 0.8 percent, although the U.K.’s FTSE 100 Index bucked the uptrend and declined by 0.3 percent.

In the bond market, treasuries saw a notable rebound following the sell-off seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.5 basis points to 4.341 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to the University of Michigan’s preliminary report on consumer sentiment in the month of November, which includes readings on consumers’ inflation expectations.

A report released by the Labor Department on Thursday showed a modest rebound by first-time claims for U.S. unemployment benefits in the week ended November 2nd.

The Labor Department said initial jobless claims crept up to 221,000, an increase of 3,000 from the previous week’s revised level of 218,000.

Economists had expected jobless claims to rise to 221,000 from the 216,000 originally reported for the previous week.

The uptick came a week after jobless claims dropped to their lowest level since hitting 216,000 in the week ended May 18th.

Meanwhile, the report said the less volatile four-week moving average fell to 227,250, a decrease of 9,750 from the previous week’s revised average of 237,000.

“Initial claims for unemployment insurance benefits remain low as the biggest issue for the job market isn’t firing but weaker hiring,” said Ryan Sweet, Chief US Economist at Oxford Economics. “For the first time in three weeks, initial claims remained below our estimate of the break-even level, or that consistent with no monthly job growth.”

He added, “Initial claims don’t alter our assessment of the balance of risks to the labor market, which remain tilted toward weaker hiring than a sudden rise in layoffs.”

The Labor Department also said continuing claims, a reading on the number of people receiving ongoing employment assistance, climbed by 39,000 to 1.892 million, reaching the highest level since November 2021.

The four-week moving average of continuing claims also reached a nearly three-year high, rising by 8,500 to 1,875,500.

“Continuing claims have been edging higher, consistent with other signs that hiring has slowed,” said Sweet. “Continuing claims might still be feeling the lingering effects of Hurricane Milton.”

Last Friday, the Labor Department released a report showing employment in the U.S. edged only slightly higher in the month of October.

The Labor Department said non-farm payroll employment crept up by 12,000 jobs in October compared to economist estimates for the addition of 113,000 jobs.

The report also showed a modest downward revision to job growth in September as well as a more significant downward revision to job growth in August.

Employment in September shot up by 223,000 jobs compared to the previously reported surge of 254,000 jobs, while employment in August rose by 78,000 jobs compared to the previously reported jump of 159,000 jobs.

With the downward revisions, employment in August and September increased by 112,000 fewer jobs than previously reported.

Meanwhile, the report said the unemployment rate came in at 4.1 percent in October, unchanged from September and in line with economist estimates.