Feb 1, 2023
The Daily Chase: Awaiting U.S. Fed rate decision; TC Energy’s Coastal Gaslink price rises
First Look With Surveillance: Fed to Slow, UK Strikes
It’s decision day for U.S. Federal Reserve Chair Jay Powell, as the world’s most-influential central bank is poised to deliver its latest rate decision. Powell & Co. are widely expected to slow their roll when it comes to the scale of rate increases, with average economist forecasts calling for a quarter point hike after a string of super-sized increases. Still, that would bring the target range for the Fed to 4.5-4.75 per cent, pushing the Fed further into restrictive territory at levels not seen since just before the Great Financial Crisis. Of particular interest will be the commentary coming out of Powell’s presser, where we’re looking for clues on just how far the fed will go in its fight to quash inflation before taking its foot off the gas when it comes to rate increases.
COSTS KEEP CLIMBING FOR COASTAL GASLINK
Well, we knew the price tag was going to keep climbing for TC Energy’s Coastal Gaslink pipeline project, now we know by just how much. The company is estimating the project will now cost $14.5-billion – up another $3.3 billion from its prior estimate from last summer. TC is blaming a few factors, including a shortage of skilled labour and contractor underperformance. While the company did warn back in November that costs would climb materially, this is clearly yet another setback for TC Energy – that earlier $11.2 billion estimate was already a 70 per cent increase from the original price tag for the project, which will deliver natural gas from the Dawson Creek area to the LNG Canada export facility on the west coast.
CP TOPS Q4 ESTIMATES, BUT KEY EFFICIENCY RATIO DETERIORATES
Looks like a mostly positive quarter for CP Rail, which topped fourth-quarter earnings estimates on the back of a 21 per cent rise in revenue. Sort of the usual suspects when it comes to what was behind that rise, with grain freight revenues up 49 per cent from a year ago and intermodal – those long steel containers that can be loaded from ship to train to truck – revenue up 31 per cent. Now for that fly in the ointment – CP’s operating ratio – basically a key efficiency measure, where like gold, a lower number is better – rose on an adjusted basis to 59.1 per cent from 57.5 per cent, in part due to some harsh winter weather conditions.
EMORY STEPS BACK FROM CEO ROLE AT ALLIED
One of Canada’s most visible real estate executives is shifting roles, with Allied Properties CEO Michael Emory announcing plans to relinquish his current role and move into the Executive Chair office. Emory, who founded the company and has held the top job for some two decades, will hand the reins to CFO Cecilia Williams as of May 2 at the company’s annual general meeting – Williams has been a longtime deputy, having taken her current role back in 2015. Emory, of course, has had some unique insight into how the pandemic has shaped the office landscape – the company is known for its chic low-rise office space in the downtown core – has been a vocal proponent for companies bringing workers back to the office, notably urging bank CEOs to “find a backbone” in taking the lead in getting workers back.
OTHER NOTABLE STORIES
- Yamana Gold shareholders have voted in favour of the company’s planned US$4.8 billion sale to Pan American Silver and Agnico Eagle. Once the deal is officially done, Agnico will have full operational control of the massive Malartic mine in Quebec, building on its Canadian-focused mining footprint.
- U.S. Trade Representative Katherine Tai is doubling down in America’s fight against Canadian dairy import policies, launching yet another challenge to how Ottawa distributes dairy tariff rate quotas (basically, the quantity of certain dairy products that can be exported to Canada at lower duty levels.)
- Shares of Snap Inc. are taking it on the chin – down 15 per cent in the premarket – after the social media company forecast its first-ever quarterly revenue decline as advertising concerns mount. For what it’s worth, that seems to be souring sentiment across the board – other ad-dependent businesses like Meta and Pinterest are posting modest declines, seemingly in sympathy.
- Shares of AMD are rising in the premarket, up about four per cent, after the maker of computer processors delivered a better-than-expected forecast for the first quarter.
- Notable data: S&P Global Manufacturing PMI, ADP National Employment Report, S&P Global Manufacturing PMI, U.S. Construction Spending, U.S. Job Openings and Labor Turnover Survey
- Notable earnings: CGI Inc., NuStar Energy, Peloton Interactive, T-Mobile US, Meta Platforms
- 1400: FOMC Announcement
- 1430: U.S. Fed Chair Powell’s Press Briefing