Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

The economic pain is spreading deeper into the auto industry as the Ambassador Bridge remains blocked this morning. A spokesperson for Honda said one of the production lines at its plant in Alliston, Ont. will be suspended today due to border delays. And it’s becoming increasingly clear the blockade is creating friction in Canada-U.S. relations; in a release late yesterday, the U.S. Chamber of Commerce said it “respectfully urges the Canadian government to act swiftly to address the disruption.”

We’ll stay tuned to what Magna International’s management has to say about the situation when its management addresses analysts at 8 a.m. [Sidebar: The auto parts maker this morning reported sharp drops in fourth-quarter revenue and profit (blame semiconductor shortages), yet still exceeded expectations.]

One interesting development we spotted this morning is that, as of 5:15 a.m., there were no longer any delays being reported at the Blue Water Bridge, where some Canada-bound trucks have been diverting this week.

MARKET WATCH

U.S. futures are pointing to more losses at the start of trading after yesterday’s sky-high U.S. inflation report and talk of a half-point rate hike by the U.S. Federal Reserve at its next meeting sent stocks tumbling (including the TSX, which closed in the red after earlier trading above its record closing high). We’ll find out today if the Fed is losing control of inflation expectations when we see the University of Michigan’s consumer sentiment report.

WATSA’S STILL GOT IT

Prem Watsa’s investing acumen powered Fairfax Financial in its latest quarter. While profit almost doubled in the company’s core property and casualty insurance and reinsurance operations, it was the US$938-million gain on investments that accounted for the lion’s share of earnings in the fourth quarter. For the year, investing gains surged to US$3.45 billion. We’ll keep an ear on what Watsa tells analysts in a conference call this morning.

OTHER NOTABLE STORIES

• Good thing for Aurora Cannabis that its medical marijuana business is booming. Because the retail side’s revenue sank 48 per cent year-over-year in the fiscal second quarter to $14.9 million. The company chalked that up to price pressure as well a sharp drop in sales volume.
• Similar to Suncor Energy last week, Arc Resources is demonstrating restraint. The oil and gas producer has cut $50 million from its capital expenditure forecast for this year (putting the range at $1.15 billion to $1.25 billion). It said up to 80 per cent of free funds flow this year will go toward dividends and share buybacks. In the fourth quarter, Arc’s free funds flow more than tripled to $458.7 million.
• Cineplex’s revenue soared almost 472 per cent to $300 million in the fourth quarter as the movie theatre operator came back to life with the easing of public health restrictions. Interesting though to see concession revenue per patron fell 17 per cent, which Cineplex blames on certain government restrictions. Chief Executive Ellis Jacob joins us at 1 p.m.
• Definity Financial announced an inaugural quarterly dividend of 12.5 cents per share late yesterday (plus an additional five cents per share for a period last year). That came with fourth-quarter profit that fell 33 per cent, which the property and casualty insurer pins on costs related to its initial public offering and high catastrophe losses in the period (notably due to the flooding in British Columbia). 
• Indigo Books & Music’s revenue jumped almost 17 per cent in its fiscal third quarter to $65.3 million despite ongoing pandemic challenges. In a release, the retailer pointed out it was helped by a “scaled-back promotional strategy.”

NOTABLE RELEASES/EVENTS

• Notable data: University of Michigan consumer sentiment index
• Notable earnings: Enbridge, Magna International, CAE, Fortis, Cineplex, Under Armour
• 830: Fairfax CEO Prem Watsa holds quarterly conference call with analysts
• 1030: Ontario Premier Doug Ford will be joined by Solicitor General Sylvia Jones, Attorney General Doug Downey, and Minister of Transportation Caroline Mulroney to make an announcement
• 1400: White House Press Secretary Jen Psaki holds briefing