Sep 21, 2022
The Daily Chase: Awaiting U.S. Fed rate decision; Pot sector blues
By Noah Zivitz
First Look With Surveillance: Fed Set, Bank CEOs
Managing Editor, BNN Bloomberg
Everyone knows today’s top story. The question is how hawkish the U.S. Federal Reserve will be in its actions (ie, the possibility of a full-point hike), its words, and its dots — which will illustrate expectations for the policy rate over the next couple of years.
We’ll set the scene with the likes of BMO Global Asset Management Head of Fixed Income and Money Markets Earl Davis at 9:05 a.m. EDT, Ex-Fed Governor Larry Meyer at 10:00 a.m. EDT, and Pimco Portfolio Manager Vinayak Seshasayee. After the announcement at 2:00 p.m. EDT, we’ll hear from ex-Fed Vice-Chairman Richard Clarida and we’ll get insight into the ramifications for the Canadian dollar — which has been at the USD’s mercy — when TD Securities Head of Global FX Strategy Mark McCormick joins us at 3:30 p.m. EDT.
U.S. futures are predictably tame ahead of the Fed. It’s a different story in the commodities market, where the price of Brent and West Texas Intermediate crude jumped more than three per cent this morning after Russia’s minister said up to 300,000 additional troops are being mobilized for the war in Ukraine, while Russian President Vladimir Putin made a veiled threat about the use of nuclear weapons.
HOME OWNERSHIP WANES
Statistics Canada released a deep dive on the housing market this morning, which confirmed much of what we already knew about prices rising in recent years and a surge in renting activity. Still, data like these are telling: the home ownership rate last year was 66.5 per cent, down from a peak of 69 per cent in 2011. As well, StatsCan pointed our rate of home ownership lags the 71.5 per cent average among Organization for Economic Co-operation and Development nations.
ANOTHER BIG POT-SECTOR IMPAIRMENT
Aurora Cannabis's net loss ballooned to almost $619 million in its latest quarter, more than quadrupling the $134-million loss a year earlier, because of half a billion dollars in non-cash impairment charges. The pot producer blamed that on cannabis market conditions, higher borrowing costs, and changes in forex rates. And so, profitability is still off in the distance, though Aurora said it's expecting to be in the black on an (adjusted) annualized run-rate basis by the end of this calendar year. No doubt Dave will have more insight into what's selling, and what isn't, for Aurora and the other major licensed producers.
LOOSENING TRAVEL RULES
CTV News and others are reporting the federal government is preparing to announce the end of COVID-19 vaccination requirements and random testing at the border, in addition to making the maligned ArriveCan app optional, by the end of this month. Presumably, this will be music to the ears of airlines and the broader travel industry, albeit too late for this year’s summer travel season. We’ll aim to gather reaction from the big air carriers.
OTHER NOTABLE STORIES
- Teck Resources slashed its sales forecast for steelmaking coal in the third quarter as a result of an equipment failure in Elk Valley, B.C., and the strike at Westshore Terminals.
- Gold Fields Chief Executive Chris Griffith continues striking an optimistic tone about winning support from his company’s investors for the takeover of Yamana Gold. Today he stated there’s a “sense of comfort around our shareholders supporting the deal.” Gold Fields shareholders will vote on the transaction next month.
- Dialogue Health Technologies is a stock to watch after it forecast third-quarter revenue that would miss the average analyst estimate (though it’s expecting a smaller adjusted loss than the average estimate). In a release, it said a customer that accounted for $4.6 million in revenue in the 12 months through July 31 is cutting ties with Dialogue at the end of this year. As context: Dialogue generated $68 million in total revenue last year.
- Notable data: U.S. existing home sales
- Notable earnings: Lennar, General Mills
- 830: Statistics Canada releases “Canada's housing portrait"
- 1000: U.S. House Financial Services Committee hearing “Holding Megabanks Accountable: Oversight of America’s Largest Consumer Facing Banks”
- 1035: U.S. President Joe Biden addresses United Nations General Assembly
- 1400: U.S. Federal Reserve releases interest rate decision and updated forecasts (plus 1430 news conference)
- 1600: Cineplex CFO Gord Nelson addresses CIBC conference