It’s going to be an inflationary summer and we’ll likely see it recede in the fall: Art Hogan
PricewaterhouseCoopers filed an update late yesterday on its attempt to get to the bottom of whatever happened with Bay Street lender Bridging Finance, which was rushed into receivership a few months ago due to allegations of numerous wrongdoings. And the latest claims are only adding to the scandal. Among them: PwC said 34,200 company emails were deleted between last October and December, with an employee saying the purge was at the behest of now-fired Chief Executive Officer David Sharpe. PwC also identified a number of questionable transactions revolving around Bridging’s top client, Alaska-Alberta Railway Development Corp. and has demanded repayment of the outstanding amount borrowed. We’ll do our best to untangle this.
Price pressure rose more than expected last month in the United States. The consumer price index jumped five per cent year-over-year in May. That’s the highest level since August, 2008. The month-over-month uptick was 0.7 per cent excluding food and energy, compared to the estimate for a 0.5 per cent rise. This will be crucial data for the U.S. Federal Reserve to consider ahead of next week’s policy statement.
TUG OF WAR OVER INTER PIPELINE CONTINUES
Brookfield Infrastructure isn’t going down without a fight. It announced this morning that it’s taking a challenge to the Alberta Securities Commission over what it calls “inappropriate” tactics by Inter Pipeline, including a $350-million break fee in its friendly arrangement with Pembina Pipeline. Brookfield said that if that termination fee is scrapped or reduced, it would be prepared to boost its offer for IPL. Moments after that release went out, Inter Pipe said it was reconfirming its support for the Pembina deal after “careful consideration.”
THE DEATH OF KEYSTONE XL
TC Energy has thrown in the towel on the controversial cross-border pipeline after seeing Joe Biden yank its permit in one of his first actions in office as president of the United States. The pipeline operator said it reached its decision after “a comprehensive review of its options.” Within minutes of that statement going out, the Alberta government (which bought into the project last year) said it will stage an “orderly exit” from the arrangement it struck with TC Energy, and reiterated its view that the whole affair will end up costing the government about $1.3 billion. Perhaps this and other hot issues for the industry will come up when Suncor CEO Mark Little joins Bloomberg Markets at 1 p.m. to discuss the campaign to reach net zero emissions in the oil sands by 2050.
MEME FRENZY ATTRACTS REGULATORY PROBE
GameStop disclosed in a filing yesterday that the U.S. Securities and Exchange Commission has launched an investigation into trading of its securities, as well as those of other unidentified companies. While GameStop said it doesn’t expect to be “adversely impact[ed],” it obviously raises a whole host of questions, and could partially explain why the company’s shares are slipping in pre-market trading. On top of the probe, GameStop also said it’s planning to sell up to five million shares and announced it’s poaching a couple of Amazon leaders to serve as its next chief executive and chief financial officer.
LATEST ON REOPENING
Alberta is moving into the next stage of its “Open for Summer Plan,” which allows for indoor and outdoor dining with up to six people per table, as well as retail and cinemas at 1/3 capacity. We’ll chase local perspective on that ahead of Ontario’s first step in reopening its economy tomorrow.
OTHER NOTABLE STORIES
- Transat AT said this morning it’s aiming to resume some operations on July 30 as it looks to turn the page on pandemic turmoil, its failed deal with Air Canada, and a lifeline from the feds. Its fiscal second-quarter results show a near-evaporation of revenue, with just $7.6 million brought in (down 98.7 per cent year-over-year).
- What happens to the banking industry if overdraft fees go the way of the dodo? That question is being asked after U.S. online lender Ally Bank announced earlier this month it’s scrapping those charges. Credit Suisse Analyst Mike Rizvanovic is out with a report this morning saying if that becomes the industry standard, it could result in a three per cent earnings hit for Toronto-Dominion Bank, based on US$400 million in overdraft fees collected over the last year.
- Potential stock to watch: Enthusiast Gaming is planning to issue sell eight million shares, with pricing to be determined. The company said proceeds may be used for M&A.
- Notable data: U.S. CPI, U.S. initial jobless claims
- Notable earnings: Transat AT
- 7:45: European Central Bank releases interest rate decision
- 9:00: Financial Accountability Office of Ontario releases economic and budget outlook
- 9:30: Privacy Commissioner of Canada releases report on RCMP’s use of Clearview AI facial recognition technology
- 10:00: U.S. President Joe Biden greets with U.K. Prime Minister Boris Johnson
- 13:00: Bank of Canada Deputy Governor Timothy Lane delivers speech to Advocis Western Canada Chapters
- 13:15: Biden delivers remarks in Cornwall, U.K. on COVID-19 vaccination program
- 14:00: U.S. Treasury Secretary Janet Yellen addresses U.S. House Appropriations Subcommittee hearing on FY22 budget request
- Stage two of Alberta reopening expected to begin