Risk is rippling through global markets today and China is at the middle of it all. Premier Li Keqiang balked at providing a GDP target for this year in his keynote at the National People’s Congress in Beijing, while citing “the great uncertainty regarding the COVID-19 pandemic and the world economic and trade environment.” Meanwhile, Beijing’s plan to impose new security legislation on Hong Kong has prompted calls for another wave of protests in the financial hub. U.S. futures are pointing to a weak open, major European indices are mostly trading lower, Hong Kong’s Hang Seng index tumbled 5.6 per cent overnight, and West Texas Intermediate has been down as much as 9.4 per cent.
POLOZ DISMISSES DOOMSDAY ECONOMIC WARNINGS
Outgoing Bank of Canada Governor Stephen Poloz is not buying into the most dire warnings about the economic outlook. “I do think on balance what I’m hearing, the flow that I’m hearing, is a little too dire, a little overblown,” he told reporters. Have to imagine that includes the Depression calls we’ve heard on BNN Bloomberg from the likes of David Rosenberg, Bruce Heyman and Nouriel Roubini. As for the pandemic’s impact on consumer activity, this morning we saw a record downturn in retail sales, as activity plunged 10% in March, according to Statistics Canada. No surprise seeing as how that’s the month when lockdown measures took effect. In immediate analysis on BNN Bloomberg, TD Securities Chief Canada Strategist Andrew Kelvin told us it’s “somewhat comforting” the plunge in sales wasn’t even worse.
BANK EARNINGS AHEAD
We’ll set the stage today for next week’s hotly-anticipated earnings from the Big Six banks, when loan loss provisions will be the story to watch. Barclays analyst John Aiken joins us a little after 3 p.m. ET. And already this morning we’ve been given some food for thought, courtesy of Mike Rizvanovic at Credit Suisse, who’s predicting earnings for the lenders will sink 46 per cent, on average, on a year-over-year basis. He also trimmed his price targets across the board, while warning he is “very cautious on the Canadian banks despite suppressed valuation multiples.”
OTHER NOTABLE STORIES
-This hasn’t been the best week for sentiment surrounding pipelines that are key to the Canadian energy sector’s future. First, Joe Biden vowed to block Keystone XL if he’s elected U.S. president. And now Enbridge’s Line 3 replacement has hit another hurdle, with Minnesota’s commerce department calling on the state regulator to reconsider its go-ahead for the project.
-BNN Bloomberg has learned that an unspecified number of employees at the Red Lake gold mine in northwest Ontario have been sent home after a worker tested positive for COVID-19. A spokesperson for Evolution Mining, which bought the mine from Newmont last year, said contact tracing is underway and on-site cleaning has ramped up as a result.
-Lululemon said late yesterday it’s aiming to open 200 stores over the next two weeks, in addition to the 150 that have already reopened across North America, Europe, Asia, New Zealand and Australia. Lulu shares have surged 92.5 per cent since bottoming on March 16.
-Notable data: Canadian retail sales
-Notable earnings: CAE, Deere & Co.
-10:30 a.m. ET: Prime Minister Justin Trudeau addresses Canadians from Ottawa
-11:30 a.m. ET: U.S. President Donald Trump participates in White House ceremony honouring veterans
-Alberta Premier Jason Kenney expected to announce whether restaurants in Calgary and Brooks will be allowed to reopen on Monday
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