May 25, 2020
The Daily Chase: Bank earnings loom; CECRA applications open
By Noah Zivitz
It’s bank earnings eve in Canada, with the billions upon billions in cumulative loan loss provisions expected to be presented to investors starting tomorrow when Bank of Nova Scotia and National Bank launch reporting season for the Big Six. Beyond the state of their loan books, we look forward to management insight into the federal government’s pandemic emergency response, the latest on mortgage deferrals, and their dividends. We’ll set the stage throughout the day, including with Nigel D’Souza from Veritas Investment Research – who has sell recommendations on each of the Big Six - shortly after the closing bells. A quick snapshot of market data:
| YTD performance | Dividend yield | |
|---|---|---|
| Scotia | -30.3% | 7.05% |
| National | -27.3% | 5.42% |
| BMO | -36.3% | 6.61% |
| Royal | -19.9% | 5.25% |
| CIBC | -23.8% | 7.10% |
| TD | -23.8% | 5.69% |
CECRA TAKING APPLICATIONS
The government’s emergency commercial rent assistance program is open for applications as of today, offering the potential of offloading 75 of small-business tenants’ monthly rent obligations to the feds, provinces and the mortgaged property owner – who, as we’ve pointed out, has to be willing to apply for the program and also be willing to eat a quarter of the rent. We have the CEO of Colliers lined up at 10:40 a.m. ET to address the outlook for Canada’s commercial real estate market, with much riding on CECRA uptake.
GLOBAL STOCKS RISE
Protests flared up again in Hong Kong over the weekend and China’s foreign minister warned the U.S. is running the risk of sparking another “cold war.” Despite the tension, global equities are moving higher. We’ll go to Hong Kong a little after 8 a.m. ET for the latest on the geopolitical uncertainty with Bloomberg Television anchor Rishaad Salamat.
OTHER NOTABLE STORIES
-Shares of Transat A.T. slumped in early trading after the European Commission announced it's launching an in-depth investigation of the airline's planned sale to Air Canada. The regulator is concerned about potential implications for competition on trans-atlantic flights.
-Vermilion Energy President & CEO Anthony Marino has stepped down with immediate effect. No reason was given. Rather than hunt for a new chief executive, the oil and gas producer affixed “executive” to Chairman Lorenzo Donadeo’s title and said the company will be led by an executive committee. In the release announcing the changes, Donadeo touts ~$3.8 billion that has been paid out in dividends over nearly two decades. Vermilion shareholders are aware however that the company’s monthly payout was suspended in April.
-After recently likening the tug-of-war over Cirque du Soleil to a “battle royale”, founder Guy Laliberté announced late yesterday he plans to participate in the “relaunch” of the entertainment company. While the short release doesn’t detail precisely what that means, Laliberté clarified in an interview with La Presse that he’s seeking to purchase Cirque with the support of a group of investors.
-Shares of Bayer have been up as much as 8.8 per cent in Germany after our Bloomberg News partners reported the company has verbal agreements to potentially resolve upward of 70 per cent of the roughly 125,000 lawsuits it faces tied to the Roundup product it inherited in the 2018 purchase of Monsanto.
NOTABLE RELEASES/EVENTS
-11:15 a.m. ET: Prime Minister Justin Trudeau addresses Canadians from Ottawa
-1:30 p.m. ET: Bank of Canada Governor Stephen Poloz delivers University of Alberta lecture via videoconference
-Canada Emergency Commercial Rent Assistance opens for applications
-Retailers with street-front entrance allowed to reopen in Montreal
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe
