Columnist image
Amber Kanwar

Anchor, Reporter


Here are five things you need to know this morning:
About face: U.S. Federal Reserve members are singing a new tune all of a sudden. If “Higher For Longer” were a pop song, it would be plunging on the Billboard charts after spending weeks at number one. Now Fed members have a new earworm: “Rate Hikes, What Are They Good For? Absolutely Nothing.” Yesterday we heard from Atlanta, Minneapolis and San Francisco Fed Presidents all basically saying that the recent sell-off in the bond market means that the Fed doesn’t need to raise rates anymore. It’s the pivot the market has been hoping for. The S&P 500 advanced for a third session in a row, the TSX is up four sessions in a row and put in its best single day in three weeks. While war rages on in Israel and Gaza, investors are instead hanging on to the Federal Reserve’s life raft. Why the change of tune? Maybe bank earnings later this week will offer some clues. We will watch for comments on bankruptcies, credit deterioration and capital outlook. Citi thinks the sell-off in banks is overdone. “We expect the banks can outperform when they report 3Q earnings … as we expect a positive message reiterating timing of (net interest income) bottom, credit quality showing very modest deterioration, and capital outlook remaining largely unchanged,” Citi said in a note to clients this morning.
Party like its 1999: Exxon Mobil is buying Pioneer Natural Resources in all-stock deal valued at US$59.5 billion U.S. This works out to about $253 per share for Pioneer, a modest premium to yesterday’s close. But remember, reports of takeover talks began to surface last week. The agreement paves the way for Exxon’s biggest acquisition since merging with Mobil in 1999. It is the world’s largest takeover announced this year. The backdrop to this deal has been very volatile, but still elevated, oil prices. Energy companies have been loathe to spend their windfall on anything but dividends and buybacks. We will examine whether this could mark a shift in the sector’s thinking.
Is there anything Ozempic can’t do?: A new study of Ozempic, the diabetes and weight loss wonder drug, shows that it was highly effective in treating patients with chronic kidney disease. Shares of Novo Nordisk and Eli Lilly, which makes a rival drug, are soaring on the back of this added usefulness. But companies that sell products or services for kidney care are plunging. Shares of DaVita, which provides kidney dialysis, are plunging nearly 17 per cent right now. Shares of Baxter, which makes medical devices and has a substantial renal business, are also getting hammered down nearly 10 per cent right now.
Melissa & Doug Millionaire Set: Expect this to be the latest kids’ toy after Spin Master just announced it is buying the wooden toy maker Melissa & Doug for an eye popping $950 million dollars. Anyone with kids under five has felt good about purchasing these non-plastic, generally more wholesome toy sets. Obviously Spin Master feels the same. It is the biggest deal Spin Master has done by a mile. Their biggest transaction before this was $85 million for Swimways in 2016. We will see if investors feel as excited at the open.
Who’s hungry?: Profit in the latest quarter at MTY Food Group blew past expectations, driven by recent acquisitions. The company behind Mr. Sub and Mucho Burrito reported a 74 percent jump in revenue compared to the same period last year. Same-store sales advanced by three per cent in Canada and two per cent in the U.S.
Notable Guest: Stay tuned for more of our coverage on the impact of Israel-Gaza war for the energy markets later today, when we speak with Clay Seigle, global oil service director at Rapidan Energy Group. He’ll explain why he sees the risk premium on crude oil prices increasing. Check out the interview at 1:10 p.m.