Canada posts $2.6-billion merchandise trade surplus in January as imports fall to start year
Statistics Canada says the country posted a merchandise trade surplus in January compared with a deficit in December as imports fell to start the year.
The agency says Canada posted a merchandise trade surplus of $2.6-billion for January compared with a revised deficit of $1.6-billion in December.
The swing came as total imports fell 7.4 per cent to $54.0-billion.
Imports of motor vehicles and parts dropped 13.9 per cent in January as imports of passenger cars and light trucks fell 12.4 per cent. Imports of engines and parts decreased 15.4 per cent.
Meanwhile, total exports edged down 0.2 per cent to $56.6-billion as exports of motor vehicles and parts fell 9.6 per cent.
In real or volume terms, total imports fell 8.5 per cent in January, while exports posted a 4.6 per cent drop by volume.
Financial Highlights for the Three Months Ended December 31, 2021
Total volume(1) increased 127% to $31.5 billion from $13.9 billion
eCommerce represented 88% of total volume
Revenue increased 83% to $211.9 million from $115.9 million
Organic revenue growth(2) was 55% with Organic revenue(2) increasing to $179.1 million from $115.9 million
Net income decreased to $12.3 million from $22.6 million, primarily due to a $29.7 million increase in share-based payments to employees who joined the Company as part of acquisitions completed during the third quarter and other employee incentive grants
Adjusted EBITDA(2) increased 78% to $91.5 million from $51.3 million
Adjusted net income(2) increased 52% to $70.6 million from $46.5 million
Net income per diluted share was $0.07 compared to $0.16
Adjusted net income(2) per diluted share was $0.47 compared to $0.33
Convenience store giant Alimentation Couche Tard Inc. is suspending operations in Russia, the latest Canadian company to break off ties with the country as the invasion of Ukraine continues.
Couche-Tard will wind down operations effective immediately and implement plans to take care of its employees in a responsible and safe manner, the Laval, Que.-based company said in a statement early Monday.
“We condemn Russia’s aggression against Ukraine and the huge human impact it is having for both Ukrainians and Russians,” Couche-Tard Chief Executive Brian Hannasch said in the statement.
Couche-Tard has had stores in Russia for nearly three decades and currently employs 320 people there. At the moment, it has 38 outlets operating under the Circle K banner in the cities of St. Petersburg, Murmansk, and Pskov.
The company is the latest Canadian corporation to take a stand against Russia and pull back operations.
Toronto-based miner Kinross Gold Corp., which has operated in Russia for more than 25 years, suspended operations at its Kupol mine as well as all activities at its Udinsk development project. Auto-parts manufacturer Magna International idled its Russian plants, luxury parka maker Canada Goose suspended all sales in Russia. And Bombardier Inc. said Friday it is breaking off all dealings with Russian customers, including wealthy individuals who’ve already bought its jets and might want them serviced.
One hundred business leaders signed an open letter to the Canadian government urging Ottawa to step up sanctions on Russia. They also vowed to unwind commercial relationships with the country. The signatories included John Chen, executive chairman of BlackBerry Ltd., and Walied Soliman, chair of Norton Rose Fulbright Canada LLP.
Couche-Tard said it has already donated over US$1.5-million to the Red Cross and has instituted a global campaign to raise further funds for the Ukrainian people. The company said since the beginning of the crisis, local Circle K teams in Poland, the Baltics, and across the European network have been supporting refugees with free fuel, food and beverages, housing, and donations to children’s charities.
Couche-Tard has close to 14,200 stores globally in 26 countries, including about 10,800 offer road transportation fuel. The stock has been under pressure in recent days as investors assess the impact to the company of higher crude oil prices related to the war in Ukraine.
As gold tops $2,000, a company’s chair invests over $1.3-million in this stock yielding 2.8%
Featured below are companies that have experienced recent insider trading activity in the public market through their direct and indirect ownerships, including accounts they have control or direction over.
The list features insider transaction activity; it does not convey total ownership information as an insider may hold numerous accounts.
Keep in mind, when looking at transaction activities by insiders, purchasing activity may reflect perceived value in a security. Selling activity may or may not be related to a stock’s valuation; perhaps an insider needs to raise money for personal reasons. An insider’s total holdings should be considered because a sale may, in context, be insignificant if this person has a large remaining position in the company. I tend to put great weight on insider transaction activity when I see multiple insiders trading a company’s shares or units.
Listed below are two stocks that have had buying activity in the public market reported by insiders.
On Feb. 28, executive chair and former chief executive officer Sean Boyd invested over $1.3-million in shares of Agnico Eagle. He acquired 20,000 shares at an average cost per share of approximately $66.43, after which this specific account held 188,269 shares.
On that same day, president, chief executive officer and director Ammar Al-Joundi bought 3,200 shares at a price per share of $64.229, lifting this particular account’s position to 153,703 shares. The cost of this purchase exceeded $205,000.
Last month, the company announced a 14 per cent dividend increase, raising its quarterly dividend to 40 US cents per share or US$1.60 per share yearly, equating to a current annualized yield of 2.8 per cent.
On Monday morning, the price of gold topped US$2,000 an ounce.
On Feb. 25, co-founder and executive chairman of the board of directors Alain Lemaire bought 40,000 shares at an average cost per share of approximately $12.24 for an account in which he has indirect ownership (Gestion Alain Lemaire inc.), taking this specific account’s holdings up to 4,900,090 shares. The cost of this investment totaled over $489,000.
Mr. Lemaire is the company’s former president and chief executive officer.
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Listed below are three stocks that have had recent selling activity in the public market reported by insiders.
On March 3, president and chief executive officer George Burns exercised his options, receiving 329,075 shares at an average cost per share of $5.90, and sold 329,075 shares at an average price per share of approximately $14.18, with 555,838 shares remaining in this particular account. Net proceeds exceeded $2.7-million, excluding any associated transaction charges.
Rate hikes will hit Canada’s key growth engine hardest.
The day after the Bank of Canada raised its policy interest rate off its pandemic-emergency floor, the central bank’s Governor, Tiff Macklem, faced down worried questions about the strains rising borrowing costs were about to place on the backs of Canadians.
“The economy can handle higher interest rates,” he told the House of Commons finance committee Thursday.
“The economy can handle higher interest rates,” he told reporters in a news conference.
“The economy can handle it,” he said in a speech to the CFA Society of Toronto.
The fact that he repeated his response almost word for word throughout the day showed not only that he had prepared for the question, but that he wanted to be adamant in his answer. He sent an unequivocal message that he believes the Canadian economy is not only healthy enough to weather a series of rate increases over the next year, but will be healthier for it.
Mr. Macklem’s confidence is underpinned by the bank’s faith that the economy can pivot away from the bloated housing sector. It’s no given. The bank has tied its hopes to such a growth rotation before, and has been disappointed.
Last week’s gross domestic product report from Statistics Canada did, indeed, show economic strength: growth in the fourth quarter was at an annualized pace of 6.7 per cent, and the economy grew by 4.6 per cent in 2021 as a whole, lifting it above its prepandemic levels. The GDP data, combined with months of impressive employment numbers and widespread reports of labour shortages, are compelling evidence that the economy has reached full capacity. These are textbook conditions for a central bank to raise interest rates in order to keep a full-speed economy from racing ahead of itself.
But those GDP numbers also showed that investment in residential structures accounted for a quarter of the year’s growth – from a sector that makes up only about 8 per cent of the economy. The housing sector is also among the most sensitive to interest rates. The implication is that Bank of Canada rate hikes will apply the brakes to the economy’s growth engine particularly hard this time around.
Mr. Macklem indicated that the bank is counting on business investment and exports – both of which posted strong fourth quarters – to pick up the slack as rising rates inevitably weigh on housing momentum.
“There’s good reason to believe we’re going to see both stronger investment and stronger exports. That will broaden the recovery. That really is key to sustaining solid growth,” he said after the CFA speech.
That’s remarkably similar to the script embraced by Mr. Macklem’s predecessor, Stephen Poloz, as he attempted to guide the economy to a full recovery and return interest rates to normal levels during the lost decade after the 2008-2009 global financial crisis. Almost from the day Mr. Poloz started as governor in 2013, he talked optimistically about the economy pivoting from consumer-led growth fuelled by ultra-low-rate monetary policy and a soaring housing market, to a more “self-sustaining” phase driven by growing export demand that would spur businesses to spend on new equipment and expanded facilities. He often referred to this as bringing the economy “home.”
After a while, “home” was supplanted by a new catchphrase: “serial disappointment.” Mr. Poloz was forced to keep interest rates low for years as the economy lurched along, that elusive next phase of growth always just over the next hill.
Now, 2022 is not 2013. There are a lot of differences between the lingering after-effects of the global financial crisis that weighed on the world economy long after that recession had ended and the sudden shutdown and rapid (if incomplete) restart of the economy in the COVID-19 pandemic. Critically, strong policy actions taken both in Canada and abroad have been more effective in safeguarding the economy from more severe outcomes, and in lifting it back to its feet.
In fact, the current situation is almost the opposite of what we faced by 2013: we’re struggling with supply shortages as demand has raced ahead of current global capacity. The business case for investment is everywhere.
Still, the export growth and business investment Mr. Macklem is counting on have failed to materialize in the past when new sources of uncertainty have emerged, and it doesn’t take a major leap to see it happening again. The war in Ukraine poses a massive risk that could sideline demand and shake business confidence. The pandemic is still with us.
And if those other sources of growth stall, rising rates will pose an oversized burden on an economy that has relied heavily on debt-fuelled housing and consumer demand to keep it afloat.
“The fact of the matter is that we have a tremendously leveraged economy on our hands. It’s much more interest-rate sensitive than it has ever been in the past,” economist David Rosenberg, head of Toronto-based Rosenberg Research, told BNN Bloomberg last week. “That’s going to thwart the extent to which central banks can raise interest rates without crushing the economy.”
Hong Kong and Japan drop 3% as Asia-Pacific stocks slip
Shares in Asia-Pacific declined in Monday trade as oil prices surged, with the ongoing Russia-Ukraine war continuing to weigh on investor sentiment globally.
The Hang Seng index in Hong Kong led losses regionally, dropping more than 4% at one point before seeing a slight recovery. The city’s benchmark index last traded 3.34% lower as shares of HSBC plummeted 6.02%.
In Japan, the Nikkei 225 also saw heavy losses as it tumbled 3.15%, with shares of robot maker Fanuc plunging 7.28%, while the Topix index shed 2.88%.
South Korea’s Kospi fell 2.28%. Over in Australia, the S&P/ASX 200 dipped 0.93%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 2.07% lower.
Oil prices continue surging
Oil prices soared in the morning of Asia trading hours on Monday, with international benchmark Brent crude futures up 8.63% to $128.30 per barrel. U.S. crude futures also surged 7.33% to $124.16 per barrel.
Brent had earlier skyrocketed to as high as $139.13 per barrel — its highest since July 2008.
The sharp rise in oil prices, which already recently spiked, came after U.S. Secretary of State Antony Blinken said Sunday Washington and its allies are considering banning Russian oil and natural gas imports.
“We now see the likelihood of Russian exports being directly impacted by sanctions as very high,” said Daniel Hynes, senior commodity strategy at ANZ. “The move also suggests the market was not factoring in the potential for direct sanctions on Russia oil.”
Meanwhile, Commonwealth Bank of Australia’s Vivek Dhar said it’s plausible for Brent to rise as high as $150 per barrel in the current environment.
“Before the crisis, oil markets were particularly vulnerable to an oil supply shock with global oil stockpiles at 7-year lows and OPEC+ spare capacity under question given disappointing OPEC+ oil supply growth over the last few months,” said Dhar, who is mining and energy commodities analyst at CBA.
Shares of oil firms in Asia-Pacific also saw big gains on Monday, with Beach Energy in Australia rising 4.95% while Woodside Petroleum soared 9.17% while the S&P/ASX 200′s energy subindex climbed 5.06%.
China’s exports rose 16.3% year-on-year in dollar-denominated terms in the January-February period, official data released Monday showed. That was above expectations by analysts in a Reuters poll for a 15% rise.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.077 — having risen recently from levels below 97.6.
The Japanese yen traded at 114.91 per dollar, after strengthening sharply late last week from levels above 115.20 against the greenback. The Australian dollar was at $0.7407, following a general upward trek last week from below $0.72.
U.S. crude oil surged more than 7% in Sunday evening trade as the market continued to react to supply disruptions stemming from Russia’s ongoing invasion of Ukraine and the possibility of a ban on Russian oil and natural gas.
West Texas Intermediate crude futures, the U.S. oil benchmark, traded 7.34% higher to $124.17 per barrel. At one point the price rose to $130.50 Sunday evening, its highest since July 2008, before retreating.
The international benchmark, Brent crude, spiked 8.54% higher to $128.20. Brent hit a high of $139.13 at one point overnight, also its highest since July 2008.
“Oil is rising on the prospect for a full embargo of Russian oil and products,” said John Kilduff of Again Capital. “Already high gasoline prices are going to keep going up in a jarring fashion. Prices in some states will be pushing $5 pretty quickly.”
“We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil while making sure that there is still an appropriate supply of oil on world markets,” he said. “That’s a very active discussion as we speak.”
Meanwhile, Speaker Nancy Pelosi said in a letter to Democratic colleagues on Sunday evening that the U.S. House of Representatives is “exploring strong legislation” to ban the import of Russian oil — a move which would “further isolate Russia from the global economy.”
“Our bill would ban the import of Russian oil and energy products into the United States, repeal normal trade relations with Russia and Belarus, and take the first step to deny Russia access to the World Trade Organization. We would also empower the Executive branch to raise tariffs on Russian imports,” she wrote.
While Western sanctions against Russia have so far allowed the country’s energy trade to continue, most buyers are avoiding Russian products already. Sixty-six percent of Russian oil is struggling to find buyers, according to JPMorgan analysis.
The U.S. average for a gallon of gas topped $4 on Sunday, according to AAA, in a rapid move due to the conflict. The underlying cost of oil accounts for more than 50% of the cost of gas that consumers put in their cars.
Ukraine war hits farmers: Global food prices were already at around a 10-year high before the Russian invasion of Ukraine
Brazil is searching for new fertilizer suppliers as the war in Ukraine threatens to cut off shipments to one of the world’s breadbaskets, with potential ripple effects on already high global food inflation.
The Latin American country is the largest producer of coffee, soybeans and sugar, and the most dependent of the world’s agricultural superpowers on imported fertilizer. Brazil imports some 85% of its fertilizers and about a fifth of those imports come from Russia. The Russian trade ministry has called for a broad suspension of fertilizer exports, state news agency TASS reported Friday.
“Brazil depends on fertilizers…it’s a sacred question for us,” President Jair Bolsonaro told reporters earlier this week, defending his decision to maintain cordial relations with Moscow as Russia attacks Ukraine. Mr. Bolsanaro was one of the last world leaders to visit Russian President Vladimir Putin before the invasion of Ukraine began on Feb. 24, meeting with him at the Kremlin on Feb. 16.
If Brazil’s farmers have to pay significantly more for fertilizer or are unable to produce as many crops, the cost of its agricultural products is likely to climb, driving up world food prices.
Brazil is also an important supplier of corn and beef. Higher grain prices increase animal-feed costs, which are passed on to consumers, who have to pay more for meat and other animal products.
Before the Ukraine conflict, farmers across the world were struggling to buy enough fertilizers, some of which more than doubled in price last year. Higher natural-gas prices hampered production of the ammonia needed for nitrogen fertilizers, while power outages at Chinese fertilizer plants and Hurricane Ida in the U.S. curtailed global production.
War in Ukraine and sanctions on Russia have made the situation worse, industry analysts said, raising the prospect of a prolonged global supply crunch that would further stoke inflation and hunger among the world’s poor.
Russia, which accounts for about two-thirds of the world’s ammonium nitrate production according to commodity analysts at S&P Global, has halted exports until April to guarantee supplies for farmers at home. Higher natural-gas prices as a result of the conflict have also pushed up prices for the product, which is used to increase the yields of crops such as corn and wheat.
Soybeans are harvested on a farm near Brasilia, Brazil, on Friday, March 4, 2022. (Andressa Anholete/Bloomberg via Getty Images / Getty Images)
“No one knows what’s going to happen,” said Ricardo Arioli, a soybean farmer from Brazil’s center-west state of Mato Grosso. “War means a total lack of certainty. The cost of production becomes a big unknown,” he said.
Brazilian Agriculture Minister Tereza Cristina Dias said she was planning to travel to Canada this month to secure more supplies. Canada is the world’s largest producer of potash fertilizers, followed by Russia and Belarus.
Ms. Dias said Brazil has enough stocks to last farmers until October. Not everyone agrees.
The Brazilian National Fertilizer Association, which represents fertilizer companies in this country, has warned that local fertilizer stocks will only last for another three months. Sanctions and travel restrictions have hampered shipments to Brazil, the group said.
Fertilizer stored in a warehouse at a farm near Brasilia, Brazil, on Friday, March 4, 2022. (Andressa Anholete/Bloomberg via Getty Images / Getty Images)
“We are now experiencing firsthand what it means to depend on imported fertilizer,” said Jeferson Souza, a fertilizer analyst at Agrinvest Commodities, a brokerage in Brazil. Sluggish productivity has kept Brazil from developing a bigger domestic fertilizer industry, he said.
Brazil’s government said it would launch a national fertilizer plan to stimulate investment in potash and phosphorus mines. It would take years for farmers to reap any benefits, analysts said.
Global food prices were already at around a 10-year high before the Russian invasion of Ukraine, as the coronavirus pandemic hampered shipments and heavy rains in some growing regions curtailed production. That is translating to higher rates of hunger among the world’s poorest families, who are also dealing with the economic impact of the pandemic, national governments and aid groups have warned.
A Case IH combine harvests soybeans on a farm near Brasilia, Brazil, on Friday, March 4, 2022. | Getty Images
The problem is particularly acute in Latin American countries such as Brazil, where inflation is pushing up daily costs including rent and electricity, leaving families with even less cash for food. By the end of 2020, one in three people in Latin America and the Caribbean—226 million people—were unable to afford a nutritious diet or were skipping meals to feed their children, said Julio Berdegué, regional representative for Latin America and the Caribbean at the Food and Agriculture Organization of the United Nations.
That was before food inflation gripped the region. “It would be a miracle if the situation doesn’t get worse,” Mr. Berdegué said.
Higher fertilizer costs also prevent Brazil’s farmers from increasing production of grains to make up for shortfalls from Ukraine and Russia, a major growing area.
“Brazil has the technology to produce,” said Antonio Galvan, a farmer and head of Brazil’s Soybean Producers Association. “Now with these embargoes, the price of fertilizers could go up so much that it’s not even worth planting.”
Calendar: What investors need to know for the week ahead
Monday March 7
China foreign reserves and trade surplus
Germany factory orders and retail sales
(3 p.m. ET) U.S. consumer credit for January.
Earnings include: Cargojet Inc.; Vermilion Energy Inc.
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Tuesday March 8
China aggregate yuan financing, new yuan loans and money supply
Japan current account balance and bank lending
Euro zone GDP
Germany industrial production
(8:30 a.m. ET) Canada’s merchandise trade balance for January.
(8:30 a.m. ET) U.S. goods and services trade deficit for January.
(10 a.m. ET) U.S. wholesale inventories for January.
Earnings include: Ag Growth International Inc.; Evertz Technologies Ltd.; Ero Copper Corp.; InterRent REIT; Ivanhoe Mines Ltd.; Nuvei Corp.; Spartan Delta Corp.; Transcontinental Inc.
—
Wednesday March 9
China CPI and PPI
Japan GDP and machine tool orders
(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for January.
Earnings include: Franco-Nevada Corp.; Granite REIT; LifeWorks Inc.; Linamar Corp.; NuVista Energy Ltd.; Pet Valu Holdings Ltd.; Peyto Exploration & Development Corp.; Pipestone Energy Corp.; Stella-Jones Inc.; WPT Industrial REIT; WSP Global Inc.
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Thursday March 10
China foreign direct investment
ECB Monetary Policy meeting
(8:30 a.m. ET) U.S. initial jobless claims for week of March 5. Estimate is 220,000, up 5,000 from last week.
(8:30 a.m. ET) U.S. CPI for February. The consensus forecast on the Street is a rise of 0.5 per cent from January and 7.9 per cent year-over-year.
(2 p.m. ET) U.S. budget balance for February.
Earnings include: Docebo Inc.; Empire Company Ltd.; Endeavour Silver Corp.; First Majestic Silver Corp.; Northwest Healthcare Properties REIT; Headwater Exploration Inc.; Intertape Polymer Group Inc.; Kelt Exploration Ltd.; NFI Group Inc.; Paramount Resources Ltd.; Premium Brands Holdings Corp.; Pretium Resources Inc.; Wesdome Gold Mines Ltd.; Wheaton Precious Metals Corp.
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Friday March 11
Japan household spending
Germany CPI
(8:30 a.m. ET) Canadian employment for February. The Street is forecasting an increase of 0.7 per cent, or 125,000 jobs, from January with the unemployment rate sliding 0.2 per cent to 6.3 per cent.
(8:30 a.m. ET) Canada’s capacity utilization for Q4.
(8:30 a.m. ET) Canada’s national balance sheet and financial flow accounts for Q4.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for March.
Earnings include: Energy Fuels Inc.; Trillium Therapeutics Inc.
