The Big Three: A call for rate cuts, TD and National Bank earnings, and clearing rail backlogs could take weeks or months
There was another round of heavy selling pressure in early North American trading as stocks tumble from all-time highs amid coronavirus fears. The TSX has shed about five per cent in the last couple of days and erased its 2020 gains in the process. The Dow Industrials meanwhile slid into correction territory this morning. all this amid the relentless news flow tied to the outbreak and concern about the impact for the global economy. and on that front, former u-s federal reserve governor says it's time for the fed to lead major central banks with coordinated rate cuts to help cushion the blow. “the window to contain the virus inside china has long since closed,” kevin warsh wrote in an opinion piece for the wall street journal that calls for 25-basis point cuts by the Fed, ECB, BOE, BoJ, PBOC, and any other banks that care to join. “the window to mitigate its effects on the global economy remains open — but not for long. U.S. trade and investment were poised to accelerate this year after a series of new trade accords. but a sudden stop is a clear and present risk to U.S. economic prospects.”
WRAPPING UP BIG SIX EARNINGS
Let there be no doubt that capital markets was the story in first-quarter earnings season for Canada’s banks. TD put an exclamation mark on that trend this morning as its wholesale division swung to a profit after reporting a surprise loss in that unit a year ago. From there, it was a little choppier for Toronto-Dominion as adjusted profit slipped in its Canadian and U.S. retail banking divisions. Overall, TD’s profit fell a couple cents short of the average estimate but the bank is adding five cents to its quarterly dividend. National Bank of Canada, meanwhile, exceeded profit expectations on growth in most its units – although its gains in capital markets trailed its peers (at 10 per cent compared to 30 per cent+ by the others).
Truly frightening images surfaced yesterday of protestors interfering with rail traffic near Belleville, Ont. -- making it crystal clear that tension is still running high. Transport Minister Marc Garneau described the action as “reckless” and also warned it could take weeks, or more, for rail service to return to normal after all the blockades come down. After mass confusion yesterday, it appears as though a crucial meeting between Wet’suwet’en hereditary chiefs and government officials from B.C. and the feds will finally take place this afternoon.
BUDGET DAY IN ALBERTA (AGAIN)
Less than four months since tabling its first budget, Alberta's United Conservative Party government is back with its second detailed fiscal plan this afternoon. The tone was set in a throne speech earlier this week, when Jason Kenney’s government plainly stated, "We cannot continue to spend more for less while going deeper into debt." Cost-management will be a theme to watch, as will expectations for revenue from the province's resource wealth. We're extending The Close today for special coverage when the budget is tabled a little after 5p ET. Watch for Tara's reporting on location in Edmonton. And keep in mind the last Alberta budget mapped out a plan for a modest surplus ($600 million) in 2022-23.
OTHER NOTABLE STORIES
-Microsoft is one of the last corporate giants to warn on the virus’s impact, warning late yesterday that it’s likely not going to hit a recent sales forecast for its More Personal Computing unit because of supply chain problems.
-We’re on fake meat watch today in a grab bag of earnings on the agenda. Already, Maple Leaf Foods reported a 31.5% sales surge in its Plant Protein Group and CEO Michael McCain said “disciplined investments in advertising and marketing” for that business are taking hold. Overall adjusted profit, however, slid 58.6% and missed analyst expectations. Later today, we’re expecting earnings from industry giant Beyond Meat.
-Husky Energy reported a sharp drop in fourth-quarter funds from operations due to unfavourable pricing and a shutdown at a key refinery. The company also reported a $2.3-billion net loss amid more than $2 billion in impairments and other charges.
-Notable earnings: Toronto-Dominion Bank, National Bank, Maple Leaf Foods, Pembina Pipeline, Husky Energy, Whitecap Resources, B2Gold, Chartwell Retirement REIT, Ritchie Bros Auctioneers, Transcontinental, Stars Group, Beyond Meat, Dell, Best Buy
-Notable data: U.S. GDP
-8:30 a.m. ET: Magna International investor day in Toronto
-9:00 a.m. ET: Parliamentary Budget Officer releases “Fiscal Sustainability Report 2020”
-10:00 a.m. ET: HBC shareholder vote on privatization
-~5:15 p.m. ET: Alberta government tables budget (NOTE: Tara Weber will be in Edmonton to cover and interview the finance minister)
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.