Here are five things you need to know this morning:
Inflation and consumer spending are in focus today: U.S. producer prices rose in July by less than forecasted, reflecting an ongoing moderation in inflationary pressures. The producer price index increased 0.1 per cent from a month earlier. Economists were forecasting a 0.2 per cent gain. The result gave U.S. stock market futures a boost, and caused traders to increase their bets that the U.S. Federal Reserve will cut interest rates at its next meeting. The wholesale inflation numbers precede the more closely-watched consumer price index, which is expected to show a modest increase in data due Wednesday.
Meanwhile, cautious behaviour from consumers is showing up in the latest results from Home Depot: The home-improvement retailer lowered its forecast of a key sales metric for the year on expectations that consumers will continue to hold back spending in the coming months. The retailer says it now sees comparable sales falling three to four per cent for the year. In the quarter just ended, comparable sales fell 3.3 per cent, the seventh straight quarter of declines. Adjusted profit came in above analysts’ estimates.
There is some boardroom drama afoot involving two of the best-known names in the food and drink sector: The CEO of Chipotle is leaving the burrito company to take the top job at Starbucks. Brian Niccol will become CEO of the coffee chain on September 9. Starbucks’ current CEO is leaving the company effective immediately. Activist investor Elliot Investment Managementhas been pushing for changes at Starbucks, as the company faces slowing sales and operating problems. Starbucks shares rose about 10 per cent in the premarket on the news; Chipotle fell by a similar amount.
Montreal-based engineering firm WSP Global is taking over an American rival: WSP is buying Power Engineers Incorporated for $2.44 billion. Power Engineers is based in Idaho. It specializes in consulting to power-generating companies and renewable energy firms. To finance the deal, WSP is taking on new loans and issuing one billion dollars in stock.
Hudbay Minerals will be a stock to watch on the TSX today: The Canadian copper miner posted disappointing Q2 results, hurt by a higher tax expense and revenue that widely missed expectations. Copper production declined compared to the previous quarter. In their earnings release, Hudbay said the elevated expense was due to mining taxes that are calculated based on profits in each operating jurisdiction, the limited deductibility of certain expenses and foreign exchange fluctuations on deferred tax balances.
