Jan 31, 2023
The Daily Chase: Canadian GDP slows in November; IMF raises global growth forecast
First Look With Surveillance: UBS Tops. Ford Cuts
We’ve got yet another sign of a downshift in domestic economic growth into the end of last year. Year-over-year GDP growth slowed to 2.8 per cent in November – the smallest gain since the outright decline in output back in February 2021. StatsCan says that trend is unlikely to abate – on a month-over-month basis, the flash estimate has growth flatlining entirely in December. Back to November, growth in the service sector was partially offset by a decline in good-producing industries as rising rates appear to be taking a toll on economic activity.
IMF SEES 'TURNING POINT' FOR GLOBAL ECONOMY
The International Monetary Fund is striking a cautiously optimistic tone for the global economy, raising its growth outlook for the first time in a year. The IMF now sees growth clocking in at 2.9 per cent in 2023 – up 0.2 per cent from its prior forecast – before accelerating to 3.1 per cent in 2024. The IMF says resilient U.S. spending and China's reopening should help offset a whole slew of risks, including Russia's invasion of Ukraine. As for Canada, the IMF left its growth forecast for 2023 unchanged at 1.5 per cent and modestly trimmed its view of 2024 to an identical figure (down from 1.6 per cent.)
EQUITY MARKETS DIP, BUT ON TRACK FOR SOLID JANUARY
North American equity market futures are pointing to a lower open as we await tomorrow's key interest rate decision out of the U.S. Federal Reserve, but as always, one session doesn't make a trend. It's been a pretty robust start to the year on all the main indices – the S&P 500 is poised for its best January showing since 2019 (up nearly five per cent), while the tech-heavy Nasdaq has outperformed even that, pushing nearly nine per cent higher. Back here at home, Toronto's benchmark S&P/TSX Composite Index has been nothing to sneeze at, up some six per cent on the month, with all eleven subgroups in the green so far in 2023 (and notably, with the previously-battered info tech subgroup leading the charge.)
SHAREHOLDERS TAKING SIDES IN RITCHIE BROS. FIGHT
The battle lines are being drawn in the fight over Ritchie Bros. plan to snap up rival IAA for US$7.3 billion. A pair of shareholders are coming out in favour of the deal, according to reporting from our Bloomberg News partners, with Independent Franchise Partners LLP and Eagle Asset Management Inc. both declaring they're supportive of the acquisition. That pits them against the likes of Luxor Capital Group and Janus Henderson Investors, who have both opposed the transaction, arguing its deleterious to shareholder value.
OTHER NOTABLE STORIES
- Exxon Mobil has topped quarterly earnings estimates to cap off a year of record profits – an eye-watering US$56 billion in 2022 – as higher fuel-refining margins helped boost the bottom line. Still, shares are drifting lower in the premarket after the company failed to announce plans for additional share buybacks.
- General Motors handily surpassed fourth-quarter earnings estimates and sees no signs of momentum slowing, forecasting full-year earnings per share will come in somewhere in the range of US$6-7, well above analyst estimates.
- Speaking of forecasts, Pfizer is warning earnings will be weaker than what the street was expecting for 2023 – a range of US$3.25-$3.45, compared to analyst estimates of US$4.31 – as sales of its COVID vaccine are expected to tumble.
- We'll be keeping an eye on shares of McDonald's – up more than two per cent in the premarket – after the fast-food purveyor topped fourth-quarter profit and revenue estimates, with new menu items and higher prices driving the beat.
- Our Bloomberg News partners are reporting U.S. President Joe Biden is poised to ban the dumping of mining waste near Bristol Bay, Alaska, in what could prove to be a mortal blow to Northern Dynasty's plans to develop the massive Pebble project.
- Notable data: Monthly Real GDP, S&P CoreLogic Case-Shiller Home Price Index, Chicago PMI, Conference Board Consumer Confidence Index
- Notable earnings: Neighbourly Pharmacy, Imperial Oil, CP Railway, Allied Properties Real Estate, Pfizer, McDonald's, Lennox International, General Motors, Caterpillar, Exxon Mobil, Mondelez International, Snap Inc., Electronic Arts, Advanced Micro Devices, Amgen
- FOMC Meeting Begins