The buoyant mood that prevailed on Bay Street yesterday is carrying into this morning as U.S. futures suggest we’ll see a bounce when trading resumes in New York this morning after yesterday’s holiday. The risk-on sentiment is evident looking across most markets: the U.S. dollar has been trading lower against every major currency other than the Japanese yen, the price of gold is slipping, oil is rallying (notably: a Kuwait energy executive told our Bloomberg partners he thinks there’s a US$30/barrel “war premium” built into crude), and Bitcoin is moving higher.
We’ll turn to market professionals to reconcile what’s happening in real-time with persistent gloomy commentary from top names. Bloomberg News today highlighted that strategists at Morgan Stanley are warning that “the bear market will not be over until recession arrives or the risk of one is extinguished.” As for the TSX: it rose yesterday the most since June 2, with all but 50 members of the composite index closing higher.
CANADIAN CONSUMERS KEEP ON SPENDING
There was no early indication this morning that Canadian consumers are running for cover amid economic uncertainty. Statistics Canada released a flash estimate indicating that retail sales jumped 1.6 per cent in May. That would mark a near doubling from April, when sales climbed 0.9 per cent, which narrowly outpaced expectations. On top of all that, March’s sales were revised higher to a gain of 0.2 per cent. We’ll parse the details and assess consumer resilience in the face of doom-like economic prognostications.
ALBERTA GETTING THE WORD OUT IN D.C. (AGAIN)
The province’s energy minister, Sonya Savage, is in the U.S. capital for the start of another charm offensive. She’s expected to meet with unspecified U.S. Congress representatives, and Premier Jason Kenney will be joining her in Washington tomorrow. This is part of a continued push to highlight Alberta’s capacity to enhance North American energy security. Now if only there were a pipeline that wasn’t effectively killed by the current administration. But U.S. Treasury Secretary Janet Yellen wasn’t apologizing for that yesterday afternoon when Dave asked her about U.S. President Joe Biden’s de-permitting of Keystone XL. “I don’t see it as a short-term measure to address the current situation,” she said about the pipeline, whose ghost continues to haunt the White House.
OTHER NOTABLE STORIES
- Hydro One announced this morning that Mark Poweska is stepping down as president and chief executive to take a job with another utility company in Western Canada. He’s being replaced on an interim basis by Bill Sheffield, who currently sits on Hydro One’s board. Separately, before that news was announced, an analyst at Credit Suisse upgraded Hydro One to neutral from underperform (the equivalent of sell), citing recent weakness in the stock price.
- Algoma Steel has released new details about its previously-announced US$400-million substantial issuer bid. The company said its buyback will be done as a “modified Dutch auction” where investors can choose to participate in a price range of US$8.75 to US$10.25 per share.
- Mondelez International announced late yesterday that it’s buying Clif Bar & Company for U$2.9 billion (plus potential contingent payments). Clif is ubiquitous in an increasingly competitive space. Clicking randomly on one of its products online, I see its Peanut Butter Banana Dark Chocolate bar has 21 grams of sugar.
- Kellogg is breaking itself up. The company announced it’s going to spin off its North American cereal and plant-based foods units. Kellogg noted those two businesses accounted for 20 per cent of its sales last year.
- Well Health announced this morning it’s paying $1.6 million in cash and stock to acquire Calgary-based health-care provider Inliv.
- Spirit Airlines shares are rallying again in pre-market trading after JetBlue Airlines raised its takeover proposal to acquire the ultra-low-cost airline to US$33.50 per share from US$31.50 as it attempts to disrupt the takeover agreement that Spirit reached with Frontier Group Holdings earlier this year.
- Pro Real Estate Investment Trust said it’s paying $114 million to acquire a 50 per cent stake in a portfolio of 21 industrial properties in Atlantic Canada. It’s partnering on the acquisition with Crestpoint Real Estate Investments, which is picking up the other 50 per cent stake, and also paying Pro REIT $113.5 million to acquire an ownership stake in a basket of 21 properties already owned by the REIT.
- Trevali Mining confirmed late yesterday the last of its two missing workers in Burkina Faso were found deceased. “All of us at Trevali grieve the loss and offer our deepest condolences to our colleagues’ families and friends during this difficult time,” said Trevali CEO Ricus Grimbeek in a release.
- Some developments of note at TSX-listed names associated with commodities that have been in high demand: Gensource Potash announced this morning it’s planning to double the capacity of its Tugaske project in Saskatchewan to 500,000 tonnes annually, and NexGen Energy said it submitted the draft Environmental Impact Statement for its proposed Rook I Project to the Saskatchewan Ministry of Environment and the Canadian Nuclear Safety Commission. NexGen highlighted in a release that its plans have been endorsed by three bands of the Dene First Nation.
- Notable data: Canadian retail sales and job vacancies, U.S. existing home sales
- Notable earnings: Reitmans, Lennar
- 1100: Funeral for Loretta Rogers (The Cathedral Church of St. James, 106 King Street East) https://www.legacy.com/ca/obituaries/thestar/name/loretta-rogers-obituary?pid=202206638
- 1200: Cleveland Federal Reserve President Loretta Mester participates in panel at Women in Leadership event in Cleveland
- 1430: British Columbia Auditor General Michael Pickup holds call to discuss report on oversight of major mines (report being released by 1300 here)
Source: BNN Bloomberg