Author: Consultant

 Published: 2/13/2024 3:14 PM ET | 

Oil prices climbed higher on Tuesday amid concerns about supply due to the ongoing tensions in the Middle East, where Houthi militants continue to attack commercial vessels in the Red Sea.

A drop in Russian crude oil exports also contributed to the increase in oil prices.

Meanwhile, the United States rejected Russian President Vladimir Putin’s suggestion of a ceasefire in Ukraine, Reuters says in a report, citing some sources.

Data showing consumer price inflation in the U.S. rose by more than expected in the month of January has dashed hopes of an early rate cut by the Federal Reserve and lifted the dollar higher. The dollar’s rise capped oil’s advance.

West Texas Intermediate Crude oil futures for March ended higher by $0.95 or about 1.25% at $77.87 a barrel, rising for a seventh straight session.

Brent crude futures settled at $82.77 a barrel, gaining $0.77 or about 0.94%.

The monthly report from OPEC reveals dispersion and non-compliance yet again among OPEC members on the supply cuts that were agreed upon at the end of 2023. Iraq is said to be the biggest group member that is non-compliant.

In U.S. economic news, the Labor Department said its consumer price index rose by 0.3% in January after inching up by 0.2% in December. Economists had expected consumer prices to edge up by 0.2%.

While the report also showed the annual rate of consumer price growth slowed to 3.1% in January from 3.4% in December, economists had expected the pace of growth to slow to 2.9%.

Excluding food and energy prices, core consumer prices climbed by 0.4% in January after rising by 0.3% in December. Core prices were expected to increase by 0.3%.

With Federal Reserve officials repeatedly saying they need more “confidence” inflation is slowing before lowering interest rates, the data has further reduced optimism about a near-term rate cut.

Investors now await weekly oil reports from the American Petroleum Institute (API), due later today, and the Energy Information Administration (EIA), due Wednesday morning.

Published: 2/13/2024 5:39 PM ET | 

The Canadian market suffered one of its worst setbacks in recent months as stocks tumbled on sustained selling pressure on Tuesday after data showing a bigger than expected increase in U.S. consumer price inflation reduced the possibility of a rate cut by the Federal Reserve anytime soon.

Mirroring widespread selling, all the sectoral indices ended in the red. Technology, materials, consumer discretionary, utilities, financials and energy stocks were among the major losers.

The benchmark S&P/TSX Composite Index, which plunged to 20,466.50, ended with a loss of 482.33 points or 2.29% at 20,584.97.

The Information Technology Capped Index dropped 4.59%. The Materials Index tumbled 3.35%, while the Consumer Discretionary Index and the Utilities Index both ended down 2.37% and 2.3%, respectively.

The Healthcare, Communication Services, Energy, Financials and Real Estate indexes shed 1.5 to 2.1%, respectively.

SSR Mining Inc. (SSRM.TO) tanked 53.5%, weighed down by the company’s announcement that it is suspending operations at its Çöpler mine.

Shopify Inc (SHOP.TO) shares plunged 12.5% after the company forecast its Q1 revenue growth rate below estimates.

BRP Inc (DOO.TO), Precision Drilling Corporation (PD.TO), Restaurant Brands International (QSR.TO), Cargojet (CJT.TO) and goeasy (GSY.TO) lost 3.2 to 4.5%.

By RTTNews Staff Writer   ✉  | Published: 2/13/2024 5:39 PM ET | 

The Canadian market suffered one of its worst setbacks in recent months as stocks tumbled on sustained selling pressure on Tuesday after data showing a bigger than expected increase in U.S. consumer price inflation reduced the possibility of a rate cut by the Federal Reserve anytime soon.

Mirroring widespread selling, all the sectoral indices ended in the red. Technology, materials, consumer discretionary, utilities, financials and energy stocks were among the major losers.

The benchmark S&P/TSX Composite Index, which plunged to 20,466.50, ended with a loss of 482.33 points or 2.29% at 20,584.97.

The Information Technology Capped Index dropped 4.59%. The Materials Index tumbled 3.35%, while the Consumer Discretionary Index and the Utilities Index both ended down 2.37% and 2.3%, respectively.

The Healthcare, Communication Services, Energy, Financials and Real Estate indexes shed 1.5 to 2.1%, respectively.

SSR Mining Inc. (SSRM.TO) tanked 53.5%, weighed down by the company’s announcement that it is suspending operations at its Çöpler mine.

Shopify Inc (SHOP.TO) shares plunged 12.5% after the company forecast its Q1 revenue growth rate below estimates.

BRP Inc (DOO.TO), Precision Drilling Corporation (PD.TO), Restaurant Brands International (QSR.TO), Cargojet (CJT.TO) and goeasy (GSY.TO) lost 3.2 to 4.5%.

read moreRTTNews1yTwo-thirds Of NFT Buyers Want To Make Profit FromThem: SurveyTop Biotech IPOs Of 2021 That Soared As Much As 500%-Share Story FacebookLinkedInTwitterTelegramWhatsAppCopyAboutLogin

Bank of Montreal (BMO.TO), Royal Bank of Canada (RY.TO), WSP Global Inc (WSP.TO), George Weston (WN.TO) and Constellation Software (CSU.TO) ended down 1.6 to 2.5%.

Among the stocks that bucked the weak trend, Softchoice Corporation (SFTC.TO) climbed 5.6% and Waste Connections (WCN.TO) surged 2.3%.

The Labor Department said its consumer price index rose by 0.3% in January after inching up by 0.2% in December. Economists had expected consumer prices to edge up by 0.2%.

While the report also showed the annual rate of consumer price growth slowed to 3.1% in January from 3.4% in December, economists had expected the pace of growth to slow to 2.9%.

Excluding food and energy prices, core consumer prices climbed by 0.4% in January after rising by 0.3% in December. Core prices were expected to increase by 0.3%.

With Federal Reserve officials repeatedly saying they need more “confidence” inflation is slowing before lowering interest rates, the data has further reduced optimism about a near-term rate cut.

Canada’s Shopify SHOP-T -10.46%decrease topped Wall Street estimates for fourth-quarter revenue and profit on Tuesday, riding on demand for its ecommerce services from merchants during the holiday shopping season.

However, the company’s shares were down more than 6 per cent in Toronto shortly after the opening bell.

“Shopify reported a strong quarter and exceeded revenue growth expectations. While guidance for the first quarter was also healthy, it may not be enough given high investor expectations,” said Gil Luria, analyst at D.A. Davidson.

Total revenue rose 24% to $2.14 billion for the three months to December, higher than analysts’ average estimate of $2.08 billion, according to LSEG data.

On an adjusted basis, Shopify earned 34 cents per share, beating expectations of 31 cents.

Shopify, which offers tools and services for businesses to set up their online stores, has launched new tools and offerings along with artificial intelligence products to stay ahead in a competitive e-commerce space.

Merchants on the platform reached a record of $9.3 billion in sales over the Black Friday-Cyber Monday weekend, the company had said in November, a 24% increase from a year earlier.

The company expects first-quarter revenue to grow at a low-20s percentage rate, while analysts were expecting a 20% rise.

U.S. consumer prices rose more than expected in January amid a surge in the cost of shelter, but the pickup in inflation did not change expectations that the Federal Reserve will start cutting interest rates in the first half of this year.

The largest increase in prices in four months reported by the Labor Department on Tuesday came against the backdrop of labour market strength and economic resilience. Some economists also blamed difficulties adjusting the data for seasonal fluctuations for the stronger-than-expected inflation readings.

“Today’s data is not what markets or the Fed would have liked to see, but it’s important not to over react and jump to the assumption that an inflationary resurgence is developing,” said Seema Shah, chief global strategist at Principal Asset Management. “A March cut is completely off the agenda, but May could still be in play if economic activity plays ball and finally starts to show the impact from prior Fed tightening.”

The consumer price index (CPI) increased 0.3 per cent last month after gaining 0.2 per cent in December, the Labor Department’s Bureau of Labor Statistics said. Shelter, which includes rents, accounted for more than two-thirds of the rise in the CPI.

New weights, published last week, which saw the housing share rising and that of new and used cars lowered, were used to calculate the January consumer price data.

Companies also push through price increases at the start of the year, which was evident in strong rises in the costs of medical care services and tobacco products.

Food prices rose 0.4 per cent. Grocery food inflation also increased 0.4 per cent, boosted by more expensive sugar and sweets as well as fats and oils. Prices for non-alcoholic beverages shot up 1.2 per cent, while the cost of fruits and vegetables rose 0.4 per cent. But cereals and bakery products were cheaper. Prices for meat, eggs and fish were unchanged. Gasoline prices dropped 3.3 per cent.

In the 12 months through January, the CPI increased 3.1 per cent after advancing 3.4 per cent in December. Economists polled by Reuters had forecast the CPI gaining 0.2 per cent on the month and rising 2.9 per cent year-on-year. The annual increase in consumer prices has moderated from a peak of 9.1 per cent in June 2022.

Annual revisions to the CPI data published last Friday were mixed, but generally showed inflation was on a downward trend after surging in 2022. The BLS updated the seasonal factors, the model it uses to strip out seasonal fluctuations from the data.

Financial markets pushed back their interest rate cut expectations to June from in May on the CPI report. U.S. stocks opened lower. The dollar rose against a basket of currencies. U.S. Treasury prices fell.

Policy-makers have said they are in no hurry to start lowering borrowing costs and want convincing evidence that inflation is on a sustained slow path. Since March 2022, the U.S. central bank has raised its policy rate by 525 basis points to the current 5.25 per cent to 5.50 per cent range.

Excluding the volatile food and energy components, the CPI rose 0.4 per cent last month after increasing 0.3 per cent in December. The so-called core CPI was lifted by a 0.6 per cent surge in shelter after gaining 0.4 per cent in December.

Owners’ equivalent rent (OER), a measure of the amount homeowners would pay to rent or would earn from renting their property, jumped 0.6 per cent after rising 0.4 per cent in the prior month.

Rental inflation has remained elevated despite anecdotal evidence suggesting that rent asking prices were going down. Rent measures in the CPI tend to lag the independent gauges by several months. There is also a large stock of apartment buildings in the pipeline, adding to economists’ expectations that rents will lead inflation lower this year.

While OER’s slightly bigger share in the CPI basket compared to 2023 likely pushed up inflation in January, it is expected to contribute to lower readings this year, if the BLS rent measures start to align with the private gauges, as expected.

There were also increases in the cost of lodging away from home. Motor vehicle insurance prices rose 1.4 per cent. The cost of recreation increased as did those of communication, personal care, airline fares and education. But used car and truck prices dropped 3.4 per cent. Apparel was cheaper and Americans also paid less for prescription medication.

The core CPI advanced 3.9 per cent year-on-year in January, matching December’s increase.

While significant progress has been made in lowering inflation, risks remain, including the potential for renewed supply chain problems due to Red Sea shipping disruptions and drought in the Panama Canal.

Though consumer prices remain elevated, measures tracked by the Fed’s for its 2 per cent inflation target have improved considerably. The increase in the personal consumption expenditures (PCE) price index slowed to an annualized rate of 1.7 per cent in the fourth quarter from a 2.6 per cent pace in the July-September quarter. The core PCE price index rose at a 2.0 per cent rate, unchanged from the third quarter.

Shopify Inc. SHOP-T +3.28%increase is increasing the base price of its advanced merchant subscription plan, a long-expected hike following the increase of its Basic plan prices last year.

Shopify, which provides an online platform for retailers, will raise the fee it charges merchants on its annual Plus plan to US$2,500 a month, up from US$2,000 currently. That amount will be reduced to US$2,300 for those who commit to a three-year plan.

Existing Shopify Plus merchants can lock in their current pricing if they sign up for a three-year plan by April 24, according to a company e-mail to merchants obtained by The Globe and Mail.

The Shopify Plus plan includes priority access to support, lower credit-card fees and greater customization options for checkout. The plan is intended for larger merchants who require more complex tools and are growing quickly.

In its last quarterly report, the Ottawa-based company said that for the nine months ended Sept. 30, 2023, overall subscription revenue increased to US$1.3-billion from US$1.1-billion for the same period the year before and accounted for 27 per cent of total revenue.

Shopify said its Plus subscription revenue contributed US$44-million in the third quarter.

In a Thursday note to investors, Scotiabank analyst Kevin Krishnaratne estimated that if all merchants signed up for a one-year contract at the new price it could result in up to a 3-per-cent gross profit gain for fiscal year 2024.

“Although the subscription pricing changes were likely well expected by investors, we still view the moves as reflecting the pricing power in Shopify’s model, noting very little churn impacts from the Basic plan pricing increases made last year,” Mr. Krishnaratne told investors.

In addition to the subscription price increases, Shopify is raising its online credit-card payment fees for U.S. merchants. Currently, those merchants pay 2.15 per cent, plus a fee of 30 US cents per transaction on domestic cards. That will rise to 2.25 per cent for consumer cards and 2.95 per cent for business cards, plus the same fee.

It’s unclear whether these new credit-card rates also apply to Canadian merchants. Shopify did not respond to a request for clarification by late Friday afternoon.

The company is also increasing its fees for merchants who sell more than US$800,000 within a monthly billing cycle. Merchants will pay the greater of either their fixed platform fee, or a percentage of transactions. Previously, that percentage was 0.25 per cent; now it will be 0.4 per cent.

In an e-mail, Shopify said that the price it charges its Plus merchants has remained largely unchanged since 2017, even in the face of inflation. The company said the pricing update will allow it to help more businesses expand and comes along with hundreds of new features including AI commerce tools.

Shopify will report its fourth-quarter 2023 earnings on Feb. 13. Analysts expect the company to report revenue of US$2.07-billion, a 19.9-per-cent increase over the same quarter last year, and an operating profit of US$390-million, compared with a loss of US$188.7-million in 2022, according to a consensus estimate from Bloomberg.

Monday February 12

China’s markets closed all week

Japan’s markets closed

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

Earnings include: Arista Networks Inc.; PrairieSky Royalty Ltd.; Waste Management Inc.

—

Tuesday February 13

Japan machine tool orders

(8:30 a.m. ET) U.S. CPI for January. The Street expects a rise of 0.2 per cent from December and up 3.0 per cent year-over-year.

Earnings include: Airbnb Inc.; Coca-Cola Co.; CT REIT; Dream Industrial REIT; H&R REIT; Hydro One Ltd.; Mainstreet Equity Corp.; Marriott International Inc.; Restaurant Brands International Inc.; RioCan REIT; Shopify Inc.; Toromont Industries Ltd.; Waste Connections Inc.

—

Wednesday February 14

Euro zone GDP and industrial production

(8:30 a.m. ET) Canadian new motor vehicle sales for December. Estimate is a year-over-year rise of 7 per cent.

(9 a.m. ET) Canadian existing home sales and average prices for January. Estimates are year-over-year increases of 27.0 per cent and 6.0 per cent, respectively.

(9 a.m. ET) Canada’s MLS Home Price Index for January. Estimate is a rise of 0.7 per cent year-over-year.

(2:30 p.m. ET) BoC Deputy Governor Rhys Mendes speaks at the Lazaridis School of Business & Economics at Wilfrid Laurier University.

Earnings include: Barrick Gold Corp.; Birchcliff Energy Ltd.; Choice Properties REIT; Cisco Systems Inc.; Dundee Precious Metals Inc.; Equinix Inc.; Great-West Lifeco Inc.; Keyera Corp.; Kinross Gold Corp.; Kraft Heinz Co.; Manulife Financial Corp.; Primaris REIT; Smart REIT; West Fraser Timber Co. Ltd.

—

Thursday February 15

Japan GDP and industrial production

Euro zone trade surplus

(8:15 a.m. ET) Canadian housing starts for January. Estimate is 240,000, or down 3.7 per cent, on an annualize rate basis.

(8:30 a.m. ET) Canada’s manufacturing sales and new orders for December. Estimates are month-over-month declines of 0.6 per cent and 0.7 per cent, respectively.

(8:30 a.m. ET) Canadian construction investment for December.

(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 10. Estimate is 220,000, up 2,000 from the previous week.

(8:30 a.m. ET) U.S. retail sales for January. Consensus is a decline of 0.2 per cent from December (or up 0.2 per cent excluding automobiles and gas).

(8:30 a.m. ET) U.S. import prices for January. The Street expects a month-over-month decline of 0.1 per cent and down 1.4 per cent year-over-year.

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

(10 a.m. ET) U.S. business inventories for December.

(10 a.m. ET) U.S. NAHB Housing Market Index for February.

Earnings include: Agnico Eagle Mines Ltd.; Applied Materials Inc.; Canadian Tire Corp. Ltd.; Canopy Growth Corp.; Cenovus Energy Inc.; Deere and Co.; Definity Financial Corp.; Fairfax Financial Holdings Ltd.; Iamgold Corp.; IGM Financial Inc.; MTY Food Group Inc.; Mullen Group Ltd.; Sandstorm Gold Ltd.

—

Friday February 16

(8:30 a.m. ET) Canada’s wholesale trade for December. Estimate is a month-over-month increase of 0.8 per cent.

(8:30 a.m. ET) Canada’s international securities transactions for December.

(8:30 a.m. ET) U.S. PPI for January. Consensus is a rise of 0.1 per cent from December and up 0.5 per cent year-over-year.

(8:30 a.m. ET) U.S. housing starts for January. The Street expects an annualized rate increase of 0.7 per cent (versus a decline of 4.3 per cent in December).

(8:30 a.m. ET) U.S. building permits for January. Consensus is an increase of 1.5 per cent on an annualized rate basis.

Earnings include: Air Canada; TC Energy Corp.

March Nymex natural gas (NGH24) on Friday closed -0.070 (-3.65%).

Nat-gas prices on Friday extended their month-long decline and posted a 3-1/3 year nearest-futures low as above-normal temperatures this winter continue to hammer nat-gas prices.  Updated U.S. weather forecasts turned warmer than previously expected, reducing heating demand for nat-gas and keeping U.S. nat-gas inventories elevated.  On Friday, the Commodity Weather Group said forecasts have shifted warmer for the East Coast and much of the southern U.S. from Feb 19-23.  

Nat-gas prices are also under pressure after the Freeport LNG nat-gas export terminal in Texas said on January 26 that it shut down one of its three production units for a month for repairs after extreme cold in Texas damaged equipment.  The closure of one of the units will limit U.S. nat-gas exports and increase U.S. nat-gas inventories.

Lower-48 state dry gas production Friday was 104.8 bcf/day (+4.6% y/y), according to BNEF.  Lower-48 state gas demand Friday was 83.1 bcf/day (-0.4% y/y), according to BNEF.  LNG net flows to U.S. LNG export terminals Friday were 14.0 bcf/day (+1.9% w/w), according to BNEF.

The U.S. Climate Prediction Center said there is a greater than 55% chance the current El Nino weather pattern will remain strong in the Northern Hemisphere through March, keeping temperatures above average and weighing on nat-gas prices.  AccuWeather said El Nino will limit snowfall across Canada this season in addition to causing above-normal temperatures across North America.

A decline in U.S. electricity output is negative for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended February 3 fell -8.1% y/y to 77,013 GWh (gigawatt hours), and cumulative U.S. electricity output in the 52-week period ending February 3 fell -0.4% y/y to 4,099,080 GWh.

Thursday’s weekly EIA report was neutral to slightly bearish for nat-gas prices as nat-gas inventories for the week ended February 2 fell -75 bcf, right on expectations but a much smaller draw than the five-year average for this time of year at -193 bcf.  As of February 2, nat-gas inventories were up +9.2% y/y and were +10.6% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 68% full as of February 6, above the 5-year seasonal average of 54% full for this time of year.

Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ending February 9 rose +4 rigs to a 5-month high of 121 rigs, moderately above the 2-year low of 113 rigs posted September 8.  Active rigs have fallen back since climbing to a 4-1/2 year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).

Thousands of Americans planning to head to the polls this year will use a voting method that has been popularized in recent U.S. history and continues to face backlash from some critics over its effectiveness and fairness.

Ranked choice voting (RCV) comes in multiple forms and is used in a variety of states around the U.S.

Three states — Alaska, Hawaii and Maine — use RCV statewide. In Alaska and Maine, RCV is used for both federal and statewide elections. In Hawaii, RCV is used in certain statewide elections.

https://www.foxnews.com/politics/ranked-choice-voting-election-method-expanding-across-nation

New York Community Bank (NYCB) was hit with its third credit downgrade as fears linger that the regional bank could be in peril nearly a year after the regional banking sector was hit by a crisis that triggered some of the largest bank failures in U.S. history.

Morningstar DBRS on Thursday downgraded NYCB’s credit rating and cited “outsized” exposure to commercial real estate (CRE) that the bank has pledged to reduce in the months ahead. CRE borrowers have been under pressure due to the higher interest rate environment as well as lower occupancy rates due to the rise of remote work.

https://www.foxbusiness.com/economy/regional-bank-hit-with-third-credit-downgrade-as-crisis-concerns-linger