First Look With Surveillance: FDIC, Bond Market Fallout
Canadian inflation continued to cool in February, with price pressures rising a smaller-than-expected 5.2 per cent year-over-year in the month – the largest deceleration in headline inflation since April 2020. While the headline figure is encouraging, when it comes to the Bank of Canada’s ongoing fight to get inflation back to target, there are still some sticky issues at play. Core inflation, which strips out the most volatile items, remains stubbornly at around five per cent, and the pain persists in the produce aisle – food prices rose 10.6 per cent year-over-year in the month, the seventh straight month of double-digit increases.
CALM BEGINS TO RETURN TO EQUITY MARKETS
It appears the turmoil on global equity markets is receding for the time being. Futures are pointing to further gains this morning, building on yesterday’s modest rally. It remains a financial stability story for the most part as investors assess contagion risk among the regional banks, with these gains coming on the back of reports U.S. officials are studying ways to temporarily guarantee all bank deposits, assuaging fears of further collapses. You can see that bear out in some of the individual stocks – shares of First Republic have been up as much as 20 per cent in the premarket, after several tumultuous sessions in the wake of SVB’s implosion.
BLACKBERRY STRIKES NEAR-BILLION DOLLAR PATENT DEAL
BlackBerry has found a new buyer for its sprawling patent portfolio, announcing a deal to sell substantially all of its non-core patents to Malikie for up to US$900 million. The deal for those 32,000 patents comes alongside an announcement the company’s previous agreement to sell said portfolio to Catapult for US$600 million fell apart due to Catapult’s inability to secure adequate financing, an outcome we knew was a distinct possibility as of late last year. The discrepancy in the price tag is interesting, and perhaps partially explained by the disparate structures of the two deals – while the Catapult agreement would’ve put more cash in BlackBerry’s pocket immediately (in the neighbourhood of US$450 million, with the balance paid in installments), Malikie is going a royalty-heavy route. BlackBerry will receive US$170 million upfront, another US$30 million no later than three years after the close of the transaction, then will pay an escalating royalty on profits from the portfolio to reach that US$900 million figure.
OTHER NOTABLE STORIES
- First Majestic Silver is suspending mining operations at its Jerritt Canyon mine in Nevada – which accounts for about a fifth of the company’s overall production – citing higher costs due to inflationary pressures, contractor “inefficiencies” and extreme weather events.
- Canaccord Genuity has named Amy Freedman and former Ontario Finance Minister Rod Phillips to its board of directors, partially replacing those directors that departed due to a schism over management’s take-private plan for the company.
- Notable data: Consumer Price Index, U.S. Existing Home Sales
- Notable earnings: Canadian Solar, Nike, GameStop
- FOMC Meeting Begins
- Quebec Budget
- New Brunswick Budget