The U.S. Fed might need to pause, given the volatility in the markets: Chief economist
North American equity markets are in rally mode following a couple rocky sessions, with the Dow Jones Industrial Average tracking to snap five straight days of declines. It’s a couple of factors – U.S. inflation slowed in February to a 6.0 per cent annualized pace (0.4 per cent month-over-month,) matching expectations, and we’re seeing some signs of life in the bank stocks. Back to that inflation print south of the border – six per cent is still triple the target rate, but that *is* a moderation from the prior 6.4 per cent print. It all sets the stage for next week’s Fed meeting, where the central bank will have to weigh the confluence of slowing but still-too-hot inflation against concerns about exacerbating the problems in the banking sector caused by the collapse of Silicon Valley Bank late last week.
BACK TO THOSE BANKS…
What a difference a day makes – shares of some of yesterday’s hardest-hit regional banks are rebounding sharply in the premarket (albeit not nearly enough to recoup yesterday’s losses.) To run through a couple names: shares of First Republic are up 60 per cent and KeyCorp shares have gained 17 per cent after a combination of contagion fears and just overall skittishness over the regionals hammered shares in yesterday’s trade. Worth noting that back here at home, TD was the lead laggard on the TSX, dragging the index to a negative showing, but RBC wasn’t far behind.
TEACHERS' RIDES PRIVATE EQUITY TO GAINS
The Ontario Teachers’ Pension Plan rode its massive private equity and infrastructure portfolios to a four per cent gain last year, outperforming its own benchmark by 1.7 percentage points (net assets now stand at about $247 billion.) Those gains were partially offset by some weakness in public equity, real estate and investments in early-stage companies, all of which have felt the effects of the rising rate environment.
OTHER NOTABLE STORIES
- Cannabis company TerrAscend is looking to graduate to the S&P/TSX Composite Index, applying for a listing on the big board, which, if approved, would make it the first U.S. multi-state operator to list on a major exchange.
- The Globe and Mail is reporting OSFI is taking steps towards daily check-ins with Canadian financial institutions to monitor their liquidity in the wake of SVB’s collapse.
- Cineplex says things are slowly creeping back to normal, reporting box office revenues in February were 88 per cent of their 2019 levels as studios ramp up the release of blockbuster films.
- Notable data: Construction Investment, Manufacturing Sales & Orders, U.S. NFIB Small Business Economic Trends Survey, U.S. Consumer Price Index, U.S. Quarterly Services Survey
- Notable earnings: Groupon, Ivanhoe Electric, Guess?