Noah Zivitz

Managing Editor, BNN Bloomberg

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U.S. Federal Reserve Chair Jerome Powell aimed for a hawkish tone in his long-awaited speech today in Jackson Hole, Wyoming. “We will keep at it until we are confident the job is done,” he said, after pointing out the September decision will be based on the “totality” of data and that a single month’s improvement in inflation “falls far short” of what the Fed needs to see before declaring mission accomplished.

But the hawkish talk fell on at least one set of skeptical ears. “We will believe Powell is a dove in wolf’s clothing and when you have the unemployment number start to tick up toward 4, 4.25 per cent, I think Powell will run for the hills and start easing,” Andy Brenner from National Alliance Securities told us in instant analysis.

EYES ON THE BANKS

Toronto-Dominion Bank is getting some new love from the analyst community. Darko Mihelic at RBC Capital Markets upgraded the stock to outperform from sector perform on the back of yesterday’s third-quarter results, saying “it is getting too hard to ignore the growth.”

And Canadian Western Bank is the lone lender reporting today; its adjusted profit fell 11 per cent year-over-year and matched expectations. There was also a continuation of a recent trend as Central Canada takes on greater importance: Ontario-based loans rose 13 per cent year-over-year, and lending in Quebec accelerated 14 per cent. We’ll speak with CWB CEO Chris Fowler at 1:10 p.m. EDT. 

OPEN TEXT DOES ANOTHER DEAL

And this is a big one at a hefty premium. The Canadian software firm is buying U.K.-based Micro Focus International with an offer that's almost double yesterday's closing price. Toss in Micro Focus's cash on hand and debt, and the deal has an enterprise value of US$6 billion. According to Micro Focus's website, the company has US$2.9 billion in annual revenue and more than 11,000 employees across 48 countries. The deal is all about growth: Open Text said it will double its total addressable market to US$170 billion and allow it to tap into a “marquee customer base.” We’re expecting to speak with Open Text CEO Mark Barrenechea around 9:40 a.m. EDT.   

OTHER NOTABLE STORIES

• A global hunt for rare earths is the driving force behind some deal news this morning: Australia’s Hastings Technology Metals said it’s paying Oaktree $135 million for a 22.1 per cent stake in Toronto-based Neo Performance Materials. Hastings is bringing a familiar name into its corner to help fund the investment: Wyloo Metals. We got to know Wyloo last year when it duked it out with BHP in a bidding war for Noront Resources.
• Gap yanked its full-year forecast as it tries to find a way forward while digging its way out from way too much clothing. Case in point: it took a US$58-million impairment in the second quarter on what it calls “unproductive inventory.” That contributed to a sharp downturn in margins. Meanwhile, its sales at stores that were open for at least a year in the quarter tumbled 10  per cent. And yet its shares have been up close to 10 per cent in pre-market trading amid a surprise adjusted profit.
• Inventory-management is also part of the story at Dell Technologies, as the computer-maker’s vice-chairman and co-COO Jeffrey Clarke said on a call with analysts that “macro-dynamics have become more challenging, as customers are taking a more cautious view of their needs.” Dell said its consumer revenue fell nine per cent year-over-year in the second quarter, while revenue from commercial operations rose 15 per cent.

NOTABLE RELEASES/EVENTS

• Notable data: U.S. personal income, spending, and PCE deflator
• Notable earnings: Canadian Western Bank
• 1000: U.S. Federal Reserve Chair Jerome Powell delivers speech at Jackson Hole Economic Policy Symposium (1000)
• 1200: Ontario premier Doug Ford and transportation minister Caroline Mulroney make announcement in Niagara Falls
• 1400: Deputy prime minister and finance minister Chrystia Freeland holds media avail in Grande Prairie, Alta., after meeting with farmers