We’re two days away from finding out if the Bank of Canada delivers the interest rate bump that markets are counting on. The implied probability of rates rising 25 basis points on Wednesday is 93.1 per cent. Over the 52-some-odd hours to go before the bank’s decision, we’ll remain focused on what the first round of tightening since 2010 would mean for consumers, the housing market, and the broader economy. We also need to consider the stakes for the bank’s credibility.
After the parade of speeches and interviews over the last couple weeks, can the central bank afford not to raise rates? Interesting to note that the C.D. Howe Institute’s monetary policy council is split on what the bank should do. We’re chasing insight from the “hold” camp.
And in case we needed a reminder about what's at stake here, some unsettling findings in a survey released today by MNP. Twenty-seven per cent of Canadians say they're in "over their head" with their current mortgage payments, while 77 per cent of respondents say they'd have difficulty if their monthly interest rates rise by $130 per month.
LAMPERT CIRCLES SEARS
Eddie Lampert is circling Sears Canada. Lampert's ESL and Bruce Berkowitz's Fairholme Capital Management announced this morning they're "evaluating, discussing and considering a potential negotiated transaction" with Sears Canada. ESL and Lampert hold a 45.3 per cent stake in the embattled retailer. Fairholme has a 20.8 per cent stake. So, lots of skin in the game.
The federal government said yesterday it received and accepted a funding request from British Columbia to help fight the 200+ wildfires in the province, while Premier Christy Clark has pledged $100 million in government aid to help those affected by the state of emergency. We'll track developments and also seek insight from the insurance industry. Note that it was only last week that Intact Financial pegged its second-quarter catastrophe losses at $77 million after tax (or 58 cents per share).
COUNTDOWN TO NAFTA
With a week to go before the U.S. releases its formal objectives for NAFTA negotiations, this weekend’s closing communique from the G20 illustrates the international balancing act on trade. The group noted the "importance of reciprocal and mutually advantageous trade" and vowed "to fight against protectionism" while also acknowledging "the role of legitimate trade defence instruments" and calling "for the removal of market-distorting subsidies and other types of support by governments and related entities." We’ll factor this into our coverage as we ramp up toward the start of NAFTA 2.0 talks between Canada, Mexico and the U.S.
After declaring the G20 summit a "great success for the U.S.", President Donald Trump returns home to another bombshell. Multiple reports this morning that his son, Donald Jr., was promised allegedly "damaging information" about Hillary Clinton prior to meeting with a Russian lawyer during last year's campaign. Trump Jr. said in a statement the lawyer's comments in that meeting "made no sense." Still, it’s another distraction for an administration that’s already dealing with fallout from Trump’s tweets about collaborating with Russia on cybersecurity. CTV’s Richard Madan will lay the groundwork for our coverage and we’ll ask guests how/if this could affect the rest of the president’s agenda.
OTHER NOTABLE STORIES:
- We've got a takeover this morning. Cogeco Communications is building out its U.S. footprint, announcing it's buying MetroCast for US$1.4 billion. MetroCast operates in New Hampshire, Maine, Pennsylvania, Maryland and Virginia, with full-year revenue this year pegged at US$230 million. The deal comes with the Caisse de Depot's backing.
- Reuters is reporting Desjardins Group is suspending financing for pipeline projects. BNN is seeking confirmation from Desjardins and checking if its CEO is available for an interview. If it puts an end to funding pipelines, we’ll need to consider the potential snowball effect.
- Clearly PrivateBancorp hasn't satiated CIBC's appetite for M&A. The bank just announced it's buying Chicago-based wealth management firm Geneva Advisors for up to US$200 million.
- From Coleman grills to Vivere hammocks, Amazon.com will do its best to lure customers into its Prime ecosystem with its annual sales bonanza that gets started at 9 p.m. ET in Canada. Watch for coverage on BDAM over the next couple days.
- World Petroleum Congress in Istanbul (speakers include BP CEO Ben Van Beurden, OPEC Secretary General Mohammad Sanusi Barkindo, Saudi Aramco CEO Amin Nasser, Exxon Mobil CEO Darren Woods, Russian Energy Minister Alexander Novak)
- Governor General David Johnston travels to China for official visit along with business delegation
Every morning BNN's Managing Editor Noah Zivitz 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.