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Noah Zivitz

Managing Editor, BNN Bloomberg

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The Bank of Canada today left its benchmark rate at 0.25 per cent and stuck with its messaging that the first hike is likely “sometime in the middle quarters” of next year. The central bank acknowledged the Omicron variant of COVID-19 “injected renewed uncertainty” into the outlook and warned about “persistent” supply chain bottlenecks. But it’s weighing those drags against what it calls “considerable momentum” for Canada’s economy. Add it all up, and the Canadian dollar gave up its gains in the immediate aftermath of the policy statement and it looks like the market is now pretty much 50-50 on the possibility of a hike in January.  

STOCKS TAKE A BREATHER

Major European markets and U.S. futures aren’t doing much of anything this morning after two big days of gains as Omicron fears faded. Notably on that front, Pfizer shares initially came under pressure in pre-market trading (as did BioNTech shares in Europe) after the Africa Health Research Institute released an early study showing their COVID vaccine is less effective against Omicron than other virus variants. However, the losses were pared after the two companies released an update touting the effectiveness of their vaccine at neutralizing Omicron when a third dose is administered.

AWS OUTAGE POST-MORTEM

The problem first landed on our radar yesterday when our news director noticed websites alerting users to a “widespread” problem. Then we saw a spike in AWS’s chart on downdetector.ca. By the late morning, AWS notified users that “an impairment of several network devices” was to blame for service disruptions in its US-EAST-1 region. It wasn’t until 7:35 p.m. ET that AWS said the problem was resolved. Between it all, we were reminded of our reliance on the cloud as everything from Amazon deliveries to Christmas lights were affected. We’ll lean on our Bloomberg News partners for the latest on what went wrong, why, and contingencies to shield the Internet of Things from mishaps like that.

RAIL DEAL GOES TO VOTES

Canadian Pacific Railway’s shareholders will have their say today on the company’s planned takeover of Kansas City Southern. The deal requires the consent of not just KCS shareholders (who vote Friday), but also CP’s – who are being asked to approve the required share issuance. Reminder that the offer is for 2.884 CP shares and US$90 for each KCS share. Presuming this week’s hurdles are cleared, the real test will come when the deal goes before the U.S. Surface Transportation Board.    

NUVEI SHARES SINK

The Montreal-based payments processor saw more than one-third of its value wiped out in early trading after short seller Spruce Point Capital came out with a call against it. In summary, Spruce Point criticized Nuvei’s management, second-guessed its deal history, and said it thinks Nuvei shares could sink as much as 60 per cent. Very important to point out that Spruce Point benefits as the share price falls. We’ve asked Nuvei for a statement.

 

OTHER NOTABLE STORIES

  • Cenovus Energy announced a capital budget of up to $3 billion for next year (compared to this year’s range of $2.3 billion-$2.7 billion), and said it will earmark half of excess free funds flow to shareholder returns in 2022. Management has a conference call at 10am.
  • Pembina Pipeline also released its 2022 plans this morning, including $655 million in capital spending and an intention to allocate up to $200 million in initial excess cash flow to share buybacks.
  • Dollarama’s same-store sales growth flat lined in the latest quarter. Those sales at stores that have been open for at least a year rose just 0.8 per cent in the third quarter. It’s a tough comparison, considering same-store sales climbed 7.1 per cent a year earlier. The retailer noted that shopping trends have reversed as the number of transactions rose in the third quarter while the average purchase size fell.
  • Apple is now apparently telling iPhone suppliers to speed up output, according to Nikkei. This changes the narrative after Bloomberg recently reported Apple told suppliers that demand for iPhone 13 was slowing.
  • Resolute Forest Products announced after yesterday’s closing bell that it plans to repurchase up to $100 million of its shares (or 10 million shares, whichever comes first).
  • Ontario-focused miner Harte Gold announced yesterday evening that it has been granted protection from creditors under the Companies’ Creditors Arrangement Act. Debtor-in-possession financing has been lined up, as has a stalking horse bid.
  • Today is the day when Alimentation Couche-Tard’s Class B shares will disappear from the Toronto Stock Exchange as the company’s dual-class share structure is collapsed. Class B holders’ shares will be swapped for Class As, which will trade under the symbol ATD.

NOTABLE RELEASES/EVENTS

  • Notable data: U.S. job openings
  • Notable earnings: Dollarama, D2L, GameStop
  • 10:00: Cenovus Energy investor day presentation
  • 10:00: Bank of Canada rate decision
  • 10:00: U.S. House Financial Services Committee hearing "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States" (speakers include Coinbase CEO Alesia Jeanne Haas)
  • 10:00: Kansas City Southern special shareholders' meeting to vote on takeover by Canadian Pacific Railway 
  • 10:00: Ontario Premier Doug Ford makes announcement in Peterborough alongside Infrastructure Minister Kinga Surma and Finance Minister Peter Bethlenfalvy
  • 11:00: CP Rail special shareholders' meeting to vote on issuance of stock for acquisition of Kansas City Southern
  • 11:00: Pembina Pipeline holds conference call to discuss 2022 forecasts and provide business update
  • 14:10: Alberta Premier Jason Kenney addresses Calgary Chamber of Commerce
  • 14:30: Instagram Head Adam Mosseri addresses U.S. Senate Committee on Commerce, Science, and Transportation subcommittee hearing “Protecting Kids Online: Instagram and Reforms for Young Users”