Dec 1, 2016
BNN's Daily Chase: Bank earnings continue, oil climbs on OPEC deal
By Andrew Bell
"The Central Committee must be pitiless” -- Speaker at Moscow district Communist Party meeting, 1934
On this day in 1934, Politburo member Sergei Kirov was shot dead in his Leningrad office, possibly at the behest of dictator Joseph Stalin. Stalin used the killing as a pretext to launch a brutal purge of Soviet society, in which millions of people were imprisoned or killed. Kirov, a former swashbuckling military commander, was renowned for drinking and good living. His popularity drew Stalin’s attention, never a healthy development.
TD, CIBC EARNINGS
Our Top Line this morning: Earnings reports from Canadian Imperial Bank of Commerce (CM.TO) and Toronto-Dominion Bank (TD.TO) after Royal Bank of Canada (RY.TO) disappointed investors yesterday.
Canaccord says mortgage growth was “frothy” once again at CIBC but “enhanced disclosure should alleviate some concerns” and a 2.4 per cent dividend boost “came as a surprise.” Fourth-quarter adjusted profit of $2.60 per share beat consensus by 12 cents. TD earnings matched expectations at $1.22 but Canaccord says softness in Canadian retail banking “overshadows” strong U.S. results.
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OIL SOARS ON OPEC DEAL
Energy investors were in a rollicking mood yesterday as oil prices jumped almost 10 per cent to nearly US$50 as OPEC announced a deal to reduce production. Crude has been trading above the US$50 mark this morning.
Meanwhile, Canadian oil and gas stocks were lifted by Ottawa’s decision to approve two pipeline expansions that would boost Canadian crude exports, although our own Jameson Berkow warns that there’s no guarantee that one of them, the $6.8 billion Trans Mountain pipeline enlargement, will go ahead.
At 11:05 a.m. ET on Commodities, we’ll be joined by Sprott Asset Management portfolio manager and energy specialist Eric Nuttall. He says the OPEC pact “marks the beginning of the next up leg in the oil price. We reaffirm our belief that oil will trade to US$60 a barrel 2017 and US$65 in 2018 and in that context we see very meaningful upside in oil stocks.”
The oil industry has long advocated new pipelines to bolster Canadian economic growth. At 10:10 a.m. ET on BNN, we’ll get analysis from former Bank of Canada Governor David Dodge. He warned us last month that a lack of investment in other forms of infrastructure means Canada is hampered in its ability to attract private investment and boost productivity.
THE EVOLVING POT MARKET
We’re also focusing on the rapidly evolving marijuana market.
Ontario-based medical marijuana producer Canopy Growth (CGC.TO) plans to acquire rival Mettrum Health (MT.V) for $430 million in stock. BNN interviewed Canopy CEO Bruce Linton yesterday, although he didn’t mention the deal.
At 11:30 a.m. ET, we’ll be joined by cannabis producer Denis Arsenault, CEO of Organigram Holdings (OGI.V). M Partners analyst Mason Brown says the company has "sizeable" exposure to the veterans' market so we’ll ask if Ottawa’s move to cut back on its reimbursements for weed used by former members of the military will harsh his mellow.
Finally, the periodic table of elements has four new official members: nihonium (Nh), moscovium (Mc), tennessine (Ts), and oganesson (Og).
Won’t be long before Canadian mining types claim that they’re sitting on world-class deposits.
Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN'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.bnn.ca/subscribe.
