China’s Economy Weakens as Consumers Turn Wary
Inflation in this country is sitting at an 18-year high. The consumer price index surged 4.1 per cent year-over-year in August, according to Statistics Canada. That’s the first time we’ve seen a four-handle on CPI since March 2003. And it’s a sobering pre-election reminder about the rising cost of living that’s been such a hot topic on the campaign trail. Prices rose in all but one of the categories tracked by StatsCan (clothing and footwear was the outlier), and the sharpest increase was in the price of gasoline (+32.5 per cent). If you missed it, check out Amanda’s fabulous conversation with former Bank of Canada Governor Stephen Poloz, who tamed concern about inflation and described what he calls a “tripod of angst” among “regular folks” about debt, taxes and price pressures:
CN RAIL IN A FUNK
First came the devastating regulatory ruling by the U.S. Surface Transportation Board (which now appears to have extinguished dreams of acquiring Kansas City Southern, as our Bloomberg News partners report this morning that CN has decided not to hike its offer). Then came the activist formalizing its intent to sweep out the board and bring in a new CEO. Against that backdrop, shares of Canadian National Railway are mired in a six-day slide that’s wiped out 8.4 per cent of the company’s market value. That seems like a counterintuitive response to an activist campaign; but as Bloomberg Intelligence Analyst Lee Klaskow told us late yesterday afternoon, “the market doesn’t really know what to make of what (activist) TCI is doing.”
The world’s second-largest economy is losing momentum amid a growing threat posed by the COVID-19 Delta variant. Every major metric in the overnight dump of August economic data from China showed slower growth compared to the prior month. Notably, retail sales rose just 2.5 per cent year-over-year, compared to July’s growth of 8.5 per cent. All of this begs questions about potential policy intervention and the implications for the rest of the world (a slew of metals prices are falling this morning, including iron ore, copper and aluminum).
BEHIND THE SCENES PERSPECTIVE ON ENERGY INDUSTRY
Insight into what’s happening in Canada’s oil and gas sectors doesn’t get much better than this: we’ve got Arc Financial Chief Executive Officer Brian Boulanger on the network today. Anyone with an interest in the energy transition that’s underway won’t want to miss this conversation in Commodities at 11:15 a.m.
OTHER NOTABLE STORIES
- Another reminder today that the pandemic has changed the way we think about work. According to a survey for ADP Canada, 31 per cent of working respondents said work-life balance is more important to them now than prior to COVID-19, while only 20 per cent said salary is more important.
- ConocoPhillips has taken another step in whittling down its stake in Cenovus Energy. According to a filing after yesterday's closing bell, that stake is now sitting at 7.4 per cent. It had most recently been reported at 8.4 per cent in August. None of this comes as a surprise: Conoco's management clearly telegraphed its intention to back away from the big position in Cenovus that it picked up in the $17.7-billion asset sale to the Canadian oil sands producer in 2017.
- Microsoft said yesterday evening that its board has approved a dividend hike and buyback program. The quarterly payment to shareholders is rising 11 per cent to US$0.62 per share, and up to US$60 billion in shares will be repurchased. The company’s president, Brad Smith, is also taking on the role of vice chair.
- BHP Group disclosed in a new presentation on its recently-approved Jansen potash project in Saskatchewan that it already has memorandums of understanding with buyers for up to 100 per cent of the mine’s output.
- Westshore Terminals (which let’s keep in mind has a shipping agreement in place with BHP for Jansen) announced a dividend hike last night. The quarterly payout will rise 25 per cent to $0.25 per share.
- Interesting announcement this morning from SNC-Lavalin: it (and a consortium partner) has been tapped to conduct a pre-feasibility study on a 370-kilometre rail link in Northern Quebec that’s being described as an opportunity to offer companies “a possible new northern transport corridor fluid to world markets.”
- Less than three months after its initial public offering, Pet Valu announced a secondary offering after yesterday’s closing bell. Seven million shares are being sold by existing holders for $226 million in proceeds (to them, not the company). The bought deal offering is priced at $32.25 apiece; PET closed at $33.50 on the TSX yesterday.
- Hut 8 Mining is also on our radar after the crypto miner announced plans late yesterday for a public offering of shares. Precise size and pricing are to be determined. The company’s TSX-listed shares have surged 276.5 per cent so far this year.
- S&P Dow Jones Indices has announced that FirstService Corp. is being added to the TSX 60. It’s taking the spot that had been held by Inter Pipeline.
- How many times in the last year have we reported about CI Financial’s expansion in the U.S.? Lots. So it seems only natural this morning to see the company announce it’s establish a U.S. headquarters in Miami.
- Notable data: Canadian CPI, industrial product price index (flash estimate), and existing home sales; U.S. industrial production
- 9:00: Liberal Party Leader Justin Trudeau makes announcement in Halifax (plus avail)
- 9:30: Green Party Leader Annamie Paul holds news conference in Kitchener, Ont.
- 10:00: Ontario Superior Court resumes hearing Cineworld-Cineplex case
- 10:00: Financial Accountability Office of Ontario releases reporting on province's first-quarter spending plans
- 10:30: Conservative Party Leader Erin O’Toole makes announcement in Joquiere, Que. (plus avail)
- 13:30: U.S. President Joe Biden meets with business leaders and CEOs on COVID-19 response
- Amazon hosts first Canadian career day; includes CEO Andy Jassy fireside chat