First Look With Surveillance: US PPI, Europe Braces
We’re continuing to track the fallout from the Keystone leak as more details emerge on the outage that has knocked the 600,000 barrel per day pipeline offline. Late yesterday, operator TC Energy said it estimates about 14,000 barrels of oil leaked from the pipeline just south of the Nebraska-Kansas border, one of the worst spills in recent memory. If you want to visualize, both a barrel of oil and a standard bathtub coincidentally hold 42 gallons of fluid, so imagine if you will 14,000 bathtubs full of crude lined up in a row. If we step back from my highly scientific metric of Standard Bathtub Units for a moment to look at the economic impact, the bright side is that the spill is south of Keystone’s fork - where crude flows both east to Patoka, Illinois and Cushing, Oklahoma - so there’s some hope the Patoka section could be back in service sooner rather than later, though the system remains entirely shut down for the moment as containment and recovery efforts continue.
LULULEMON DROPS AS OUTLOOK FALLS SHORT
Shares of Lululemon are falling in the premarket – down about seven per cent at last check – after the company’s holiday quarter forecast came in short of the street’s expectations. While the athleisure-wear maker did raise its sales forecast for the full year to some US$8 billion, that wasn’t enough to satisfy the investment community as it digested something of a mixed quarter from the company. About that quarter – Lulu did beat expectations on profit and revenue, but there were some flies in the ointment. Notably, gross margin missed expectations, and inventories surged around 85 per cent, indicating the company is sitting on an excess of unsold goods – never great for business.
RETURN TO OFFICE HAMPERS ROOTS
Sticking to the retail theme, we’ll be keeping an eye on shares of Roots after the company posted somewhat disappointing quarterly results, in no small part due to the return to office trend. Sales fell 8.5 per cent year-over-year to $69.8 million, and there was some significant margin compression in the quarter, both influenced by a shift away from comfy fleece products to the company’s lifestyle products, the latter of which account for a smaller share of Roots’ overall product base. The company also says more pronounced discounting weighed on its results – and expects all of those headwinds to persist into the fourth quarter of the year. Amber’s set to dig into all those details when she speaks to Roots CEO Meghan Roach at 10:20 a.m. EST.
CRESCENT POINT BEEFS UP IN THE DUVERNAY
Crescent Point Energy is opening its wallet to the tune of $375 million, snapping up Paramount Resources’ Kaybob assets in the Duvernay. Those Paramount assets are directly adjacent to Crescent Point’s existing footprint in the Western Canadian formation, and the company says this deal will support its plan to increase production in that field to 55,000 barrels of oil equivalent per day over its five-year plan, up from the current 35,000 boe/day. The deal will be funded through existing credit facilities and is expected to close in January. One more thing to add, Crescent Point is also boosting its payout to shareholders, announcing it will increase its quarterly dividend by 25 per cent to 10 cents per share.
OTHER NOTABLE STORIES
- Laurentian Bank topped fourth quarter earnings estimates, as a six per cent boost to net interest income helped drive results. Laurentian is also increasing its quarterly dividend to $0.46 per share – up two per cent from the prior quarter, and 15 per cent from a year ago.
- Back to the Crescent Point deal for a moment – Paramount Resources is earmarking part of the proceeds from the asset sale for further shareholder returns, announcing a special dividend of $1 per share.
- The U.S. Federal Trade Commission is suing to block Microsoft’s planned US$69 billion takeover of Activision Blizzard, arguing it would give Microsoft a dominant position in the video game market.
- Notable data: : Capacity Utilization, US Producer Price Index, US Wholesale Trade, University of Michigan Consumer Sentiment Index, US Flow of Funds
- Notable earnings: Laurentian Bank of Canada