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Canadian Imperial Bank of Commerce CM-T +2.74%increase reported lower first-quarter profit but beat analysts’ estimates as the lender set aside fewer loan loss reserves and benefited from a boost in trading activity.

CIBC earned $432-million or 39 cents per share, in the three months that ended Jan. 31. That compared with $1.9-billion or $2.01 per share, in the same quarter last year.

Adjusted to exclude certain items, including a provision for a lawsuit with a New York hedge fund, the bank said it earned $1.94 per share. That beat the $1.73 per share analysts expected, according to Refinitiv.

The bank kept its quarterly dividend unchanged at 85 cents per share.

CIBC is the first major Canadian bank to report earnings for the fiscal first quarter. The rest of the Big Six banks release financial results next week.

In the quarter, CIBC set aside $295-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was lower than analysts anticipated and included $36-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, CIBC had recorded $75-million in provisions.

Total revenue rose 8 per cent in the quarter, to $5.9-billion. But expenses ticked higher to $4.5-billion, which the bank said was driven by higher compensation for staff and strategic investments.

“We have clear momentum in attracting and deepening client relationships, a resilient capital position, and strong risk management and credit quality,” chief executive officer Victor Dodig said in a statement.

Profit from Canadian personal and small business banking was $589-million, down 14 per cent from a year earlier, largely on higher provision for credit losses, as well as expenses related to the bank’s acquisitions of the Costco credit card portfolio in Canada and employee compensation. But loan balances were up 8 per cent year over year.

The Canadian commercial and wealth management division generated $469-million of profit, up a slight 2 per cent as higher revenue and lower expenses were offset by bigger loan loss provisions. Commercial loan balances increased by 14 per cent from a year earlier.

Capital markets posted $612-million of profit, rising 13 per cent as activity in its global markets and direct financial services businesses offset a slower investment banking quarter.

Profit from the bank’s U.S. arm fell to $201-million as the unit set aside more money for potential bad loans.

CIBC took a previously-announced legal provision of $1.17-billion after a U.S. court found the bank liable for losses incurred by a New York hedge fund in debt deals related to the 2008 U.S. housing crisis. Last week, the lender said that it agreed to pay US$770-million Cerberus Capital Management LP, less than the amount it had set aside. CIBC said that the difference will be reflected in the bank’s second-quarter financial results.

U.S. stocks fell sharply Friday after the Federal Reserve’s preferred inflation gauge showed a stronger-than-expected increase in prices last month.

The Dow Jones Industrial Average fell by 364 points, or 1.1%. The S&P 500 and Nasdaq Composite slid 1.4% and 2.0%, respectively. The Dow fell as much as 510 points, or 1.54%, earlier in the trading session.

Boeing shares slipped more than 4% after the company temporarily halted delivery of its 787 Dreamliners over a fuselage issue. Shares of Microsoft and Home Depot also fell more than 1%.

The major averages are headed for a losing week. The S&P 500 is down 2.9% and is set for its worst week since Dec. 9. The Dow is down nearly 3% this week and headed for its fourth straight losing week. The Nasdaq is 3.5% lower, and on pace for its second negative week in three.

The core personal consumption expenditures price index, the Fed’s preferred measurement of inflation, rose 0.6% in January and 4.7% from the prior year, coming above economists’ expectations.

The report added to worries that the Fed may have to keep rates higher for longer to quell inflationary pressures.

However, B. Riley’s chief market strategist Art Hogan doesn’t expect the market to remain in a protracted downturn.

“This market has been pretty jittery this week, so any disappointing data is going to have an outsized impact as we’re seeing in the early movements,” Hogan said. “This may test its recent lows, but I don’t think it’s going to push us to new lows. I think it’s just more confirmation that the Fed is likely going to go to 5% and 5.25%, which is consensus.”

“Therefore, I don’t think this is enough to say the rally of 2023 is over. I just don’t think that’s the case. I think a lot of this is baked into what our expectations are for monetary policy already,” he added.

A measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. The PCE price index is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior.

https://www.bea.gov/data/personal-consumption-expenditures-price-index

CI Financial Corp. (“CI”) (TSX:CIX.TO) today released financial results for the quarter ended December 31, 2022.

“CI’s strong performance during an extended period of financial market volatility reflects the continued successful execution of the three pillars of our corporate strategy,” said Kurt MacAlpine, CI Chief Executive Officer.

“In the fourth quarter, robust net flows in our Canadian and U.S. businesses, along with the acquisition of three best-in-class U.S. registered investment advisor firms, drove double-digit asset growth.

“In Canadian asset management, we continue to see the benefits of the transformation of our investment management function from a group of independent boutiques into an integrated, global platform,” Mr. MacAlpine said. “In the fourth quarter, our Canadian retail business delivered $1.6 billion in positive net flows, versus net redemptions of more than $10 billion for the Canadian industry overall. Our relative investment results continue to be strong and our investment professionals received extensive industry recognition for their performance, winning 14 Refinitiv Lipper Fund Awards and 39 FundGrade A+ Awards for 2022.

“Our wealth management businesses had total net flows in 2022 of $6.6 billion in the U.S. and $3.8 billion in Canada, a testament to the excellence of our advisor teams and our differentiated approach to wealth management – which offers exceptional value to clients, especially during these uncertain times,” Mr. MacAlpine said. “We continue to make significant investments into advancing the technology, support and services of our Canadian wealth platform.

https://www.businesswire.com/news/home/20230224005170/en/

Oil prices fell by $2 per barrel to their lowest in two weeks on Wednesday, as investors became more concerned that recent economic data will mean more aggressive interest rate increases by central banks, pressuring economic growth and fuel demand.

Brent crude futures settled $2.45, or 3%, lower at $80.60 per barrel. The West Texas Intermediate crude futures (WTI) dropped $2.41, or 3%, to end at $74.05 a barrel.

The settlement levels were the lowest for both benchmarks since Feb. 3.

https://www.cnbc.com/2023/02/22/oil-steadies-as-investors-await-us-fed-reserve-comments.html

Oil prices rose on Friday and were close to trading positive for the week as the prospect of deeper-than-expected cuts in Russian supplies largely offset concerns that rising interest rates will dampen demand this year. 

Crude prices marked a strong recovery from recent losses on Thursday as a Reuters report suggested that Russia plans to cut up to 25% of oil exports from its western ports in March, which is more than the 500,000 barrel per day supply cut announced earlier.

Brent oil futures rose 0.3% to $82.75 a barrel, while West Texas Intermediate crude futures jumped 0.8% to $75.97 a barrel by 21:06 ET (02:06 GMT). Both contracts were trading down less than 0.5% each for the week, having largely trimmed their initial losses.

The prospect of deeper Russian supply cuts also helped markets look past a bigger-than-expected build in U.S. crude inventories, which grew for a ninth consecutive week amid slowing consumption in the country.

Fears of a further slowdown in crude demand weighed on oil prices this week, amid a flurry of hawkish signals and economic data. Signs of resilience in the U.S. jobs market, coupled with high inflation readings for January and the fourth quarter bolstered the Fed’s hawkish stance. 

Strength in the dollar also weighed on crude markets, given that a stronger greenback makes oil more expensive for international buyers.

Focus is now on a reading on the Personal Consumption Expenditures price index– the Fed’s preferred inflation gauge- for more cues on monetary policy. The reading is expected to reiterate that inflation remained elevated through January. 

Fourth-quarter U.S. GDP data was revised lower on Thursday, indicating that rising interest rates may have had a deeper than expected impact on the U.S. economy so far. While slowing growth bodes poorly for crude demand, it could also reduce the economic headroom the Fed has to keep raising rates.

High inflation readings from Singapore, the Eurozone and Japan this week also raised concerns over tightening monetary conditions in the rest of the globe. Oil prices are trading lower for the year amid persistent fears of a global recession this year.

Still, oil bulls are holding out for a recovery in Chinese demand after the world’s largest oil importer relaxed most anti-COVID measures earlier this year.

But early economic indicators from the country show that parts of the economy are still struggling in the aftermath of the pandemic. 

By Julianne Geiger – Feb 03, 2023, 12:19 PM CST

Crude oil prices fell on Friday afternoon following reports of strong U.S. jobs data, with WTI crashing by more than 2.5% to $73.88

The U.S. January jobs report indicates that the jobs market is stronger than expected, with employers adding 517,000 in January. This compares to economists that had expected employers had added 185,000 jobs in January.

https://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Crash-After-Perky-Jobs-Data.html

• Growth cycles in the global economy are incredibly important for commodities markets in general, and oil an gas prices in specific.
• According to the Kitchin cycle, the current slowdown in energy is likely to be a mid-cycle soft patch.
• Barring a full global economic slowdown, gas and especially oil prices are likely to get stronger in the latter half of 2023.

The oil and gas markets are currently in the throes of yet another downturn, with Brent crude down 34% from its May 2022 peak while U.S. Henry Hub natural gas has crashed 73% from the August 2022 peak. Energy stocks and crude oil futures have also come under pressure after the latest weekly U.S. data showed commercial crude inventories spiked by a whopping 16.3M barrels. 

According to the U.S. Energy Information Administration (EIA), crude stockpiles rose to 471.4M barrels, ~8% above the five-year average and way above the Wall Street consensus of just 800K barrels. 

Meanwhile, refinery activity slowed down unexpectedly, with the weekly capacity utilization rate falling by 1.4 percentage points to 86.5%, compared to the consensus of a 0.2 percentage point increase.

Whereas the current oil and gas price trends do not look very encouraging, zooming out and looking at the bigger picture reveals that the current slump is part of a boom and bust cycle that repeats itself with alarming regularity. Indeed, Reuters market analyst John Kemp has argued that the ongoing selloff is part of the Kitchin cycle that lasts for 3 to 4 four years. 

https://oilprice.com/Energy/Oil-Prices/What-The-Business-Cycles-Tell-Us-About-Oil-Prices.html

Compiled by the U.K.-based Financial Times and dubbed the “debt monsters in the downturn,” the report lists just over 200 companies and includes Canadian miners Iamgold Corp., New Gold Inc. and Taseko mines as well as other Canadian firms such as Telesat Corp., Gran Tierra Energy Inc., Ensign Energy Services Inc. and Husky III.

https://financialpost.com/fp-finance/seven-canadian-companies-make-fts-list-of-debt-monsters-that-have-bond-markets-fretting