Aug 25, 2020
The Daily Chase: BMO, Scotia kick off bank earnings
By Noah Zivitz
We’re getting a mixed picture on Canada’s banks this morning as earnings season gets underway. Bank of Nova Scotia missed profit expectations in the fiscal third quarter as provisions climbed to $2.18 billion, largely due to uncertainty facing the company’s sprawling international operations – which reported an outright loss in the period. Meanwhile, Bank of Montreal exceeded profit estimates in the latest quarter as provisions inched down to $1.05 billion. There are some common denominators: both banks saw their profit from core Canadian banking slide by more than half, and both reported substantial gains in their capital markets units.
GFL SLAMS SPRUCE POINT
GFL Environmental has released a more fulsome, and sharply worded, statement in response to last week’s critical take-down by short-seller Spruce Point Capital Management. “The board, led by its independent directors and after discussions with the company's external auditors and consultation with its other advisors, reviewed the short seller's allegations and found them deeply flawed and singularly meant to inflict damage to the company's business, its leadership and its shareholders,” director Dino Chiesa said in a release that also confirmed the closing of a US$750-million financing.
TRADE OPTIMISM STOKES STOCKS
In a short statement issued last night following a call with China’s vice premier, the office of U.S. trade representative Robert Lighthizer said both sides are “committed to taking the steps necessary to ensure the success” of their Phase One trade agreement. Surely this is one of the reasons futures are pointing to gains at the start of trading in New York.
EXXON BOOTED FROM DOW
It’s a sign-of-the-times shuffling for what’s arguably the world’s best known basket of stocks. Exxon Mobil is being removed from the Dow Jones Industrial Average, and will be replaced by cloud-based software giant Salesforce.com. Other changes next week will see Pfizer replaced by Amgen, and Raytheon replaced by Honeywell. The changes were prompted by Apple’s stock split; in a release, S&P Dow Jones Indices said it also took advantage of the opportunity to “diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy.”
OTHER NOTABLE STORIES
-Best Buy will be a stock to watch today after the electronics retailer beat estimates in the second quarter while warning that early sales strength thus far in the current quarter is likely to fade. Shares are slipping in pre-market trading.
-SNC-Lavalin announced it’s hiring Robert Alger as its new president of infrastructure projects. Alger joins SNC after spending four decades at The Lane Construction Company.
-Toronto-based TransPod this morning announced a memorandum of understanding with the Alberta government to explore the development of hyperloop system connecting Edmonton and Calgary. The 1,000-kilometre per hour system is by no means a slam dunk: it’s going to be a multi-year process, starting with a two-year feasibility study.
-Superior Plus says it’s paying US$159 million to acquire New Hampshire-based Rymes Propane and Oil.
NOTABLE RELEASES/EVENTS
-Notable data: U.S. new home sales
-Notable earnings: Bank of Montreal (5:30 a.m. ET release, 7:15 a.m. ET conference call; Bank of Nova Scotia (6 a.m. ET release 8:15 a.m. ET conference call), Best Buy, Nordstrom
-11:00 a.m. ET: Conservative Party of Canada leader Erin O’Toole holds news conference in Ottawa
-1:30 a.m. ET: Bank of Canada deputy governor Lawrence Schembri addresses Canadian Association for Business Economics
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.
