First Look With Surveillance: China Shift, Musk Bankers
The nation’s largest lenders wasted precious little time in passing along the higher cost of borrowing to consumers in the wake of the Bank of Canada’s half-percentage point hike yesterday. The Big Six raised their prime rates by a matching 50 basis points in quick succession (as per tradition, RBC was first out of the gate, five hours on the nose after the BoC decision,) bringing prime to 6.45 per cent across the board. Now, these moves are pretty key to almost every Canadian, given prime underpins most variable rate products, be it variable-rate mortgages or home equity lines of credit, and will likely push the mortgage stress test to somewhere in the eight per cent range. Also of note – we’ll get some further perspective on what the Bank of Canada is thinking later today, when Deputy Governor Sharon Kozicki delivers a speech at 12:45 p.m. EST.
TC ENERGY SHUTS DOWN KEYSTONE AFTER LEAK
TC Energy has shut down its massive Keystone oil pipeline system after a leak into a creek near Steele City, Nebraska. The company has not detailed the scope of the leak, but says the affected section has been isolated and the system remains shut as crews look to contain and recover the oil. The Keystone system can carry roughly 600,000 barrels per day, and is a key conduit for Canadian oil exports to the United States. Not to muddy correlation with causation, but West Texas Intermediate futures have surged about three per cent in the wake of the news.
FEDS PLAN TOUGHER FOREIGN INVESTMENT LAW
The federal government is proposing some changes to its foreign investment law, creating a new obligation for foreign firms to give the feds more notice on planned investments in certain sectors. As part of the plan, the industry minister will have more authority to place conditions and restraints on those transactions, including limiting access to intellectual property or trade secrets. While the legislation doesn’t name names, Canada has been increasingly wary of Chinese investment in the likes of the critical minerals sector (think lithium and other battery metals) over the last year.
TESLA TUMBLES ON FURTHER CHINA WOES
Shares of Tesla are under some modest pressure in the premarket – down about two per cent – on reports the company’s woes in China aren’t getting any better. Our Bloomberg partners are reporting the electric-vehicle maker will shorten shifts at its Shanghai factory as soon as Monday and will delay new hires, another sign demand in the world’s second-largest economy isn’t meeting expectations. This all comes in the wake of a report earlier this week that Tesla plans to cut production of the Model Y and Model 3 by 20 per cent in China.
OTHER NOTABLE STORIES
- A new survey from CPA Canada says about two-thirds of respondents think inflation will make it harder to buy gifts this holiday season (though worth noting respondents still plan to spend $589 on gifts, similar to prior survey years.
- Peruvian President Pedro Castillo has been impeached and detained after an attempt to suspend congress. Worth keeping an eye on the tone new leader Dina Boluarte strikes when it comes to the mining sector, as Peru is a major copper producer (not to mention one that Canadian miners have exposure to – Hudbay comes to mind off the hop.)
- We’ll be keeping an eye on shares of GameStop after the meme-stock darling posted its biggest quarterly drop in revenue in two years as its efforts to boost digital sales hasn’t offset the decline in physical game purchases.
- Argonaut Gold CEO Larry Radford is stepping down, effective immediately, for personal health reasons. Richard Young has been named as his successor as president and CEO.
- Notable data: U.S. Initial Jobless Claims, US Quarterly Services Survey
- Notable earnings: Major Drilling, Lululemon, Vail Resorts, Costco
- 12:30: Bank of Canada Deputy Governor Sharon Kozicki delivers the Economic Progress Report in Montreal
- Quebec Fiscal Update