It appears some cautious optimism is creeping into equity markets this morning, with futures pointing to some gains at the open after a couple painful days to start the week. For all intents and purposes, it looks like yesterday’s FOMC minutes assuaged concerns the terminal rate south of the border — essentially, the point when the U.S. Federal Reserve finishes up this rate hiking cycle – would rise above market expectations. That relief is on full display in the distribution of gains – Nasdaq futures, which are more sensitive to rate expectations are leading the way, up the better part of one per cent, and if this holds, the S&P 500 would snap four straight days of declines.

LOBLAW TOP Q4 ESTIMATES AS FOOD PRICES RISE

Call it a solid quarter out of Loblaw, which got a boost from higher food prices in Q4 (which actually might be a thorny issue onto itself, but more on that later.) Overall, revenue increased 9.8 per cent to about $14 billion in the quarter, with sales at Shoppers Drug Mart locations open for at least a year up 8.7 per cent (mostly cosmetics and cold and flu remedies,) and food same-store sales at Loblaw’s were up 8.4 per cent. It’s the latter increase that could prove incendiary – the company (and its peers) have been in the spotlight over the rising cost of groceries, even sparking a summons from the House of Commons on the matter, an issue Loblaw seemed acutely aware of in how it phrased price increases (framing it against an 11.2 per cent increase in food consumer price index.) Now, let’s be clear – Loblaw is not a charity, you should not expect Galen Weston to show up at your door with a turkey in tow – but the optics are tough for a grocer and an industry already under close scrutiny.

RENT SURGE BOOSTS CAPREIT

Earnings season can feel like an endless stream of numbers, but my word, did this one grab me: rents on turnover apartments at CAPREIT, the nation’s largest residential landlord, surged 24 per cent in the fourth quarter. A few factors at play here – keep in mind there’s no rent control when tenants move out and are replaced by new renters – but the main one appears to be the impact of higher interest rates and subsequently tougher stress tests keeping potential buyers out of the market and into rentals, driving results. Sticking with that affordability trend, it’s interesting to see this play out at a time when Canada is trying to figure out its purpose-built rental strategy and simultaneously planning to bring in a record number of immigrants to shore up economic growth, without a clear-cut plan on how to house everyone.

FIRST QUANTUM HALTS PANAMA PROCESSING

Things appear to be coming to a head when it comes to First Quantum Minerals ongoing battle with the government of Panama. The miner says it has halted processing at that massive Cobre Panama operation after the Central American government essentially turfed the company’s ability to export ore. At issue is the matter of taxes and royalties. Panama is seeking guarantees of US$375 million worth of payments a year, while First Quantum is seeking downside protection on that figure if the price of copper declines precipitously (worth noting Cobre accounts for about 1.5 per cent of global copper output, a fairly significant figure.)

NOTABLE RELEASES/EVENTS

  • Notable data: Survey of Employment, Payrolls and Hours, U.S. Initial Jobless Claims, U.S. Real GDP
  • Notable earnings: MCAN Mortgage, Keurig Dr Pepper, Cascades, Papa John’s Int’l, Wayfair, Moderna, Quebecor, Domino’s Pizza, Emera, TransAlta Corp., Bausch Health, Bath & Body Works, Loblaw Cos, Lundin Gold, Eldorado Gold, Sienna Senior Living, Jamieson Wellness, Hudbay Minerals, Live Nation Entertainment, Centerra Gold, Beyond Meat, Enerplus, Warner Bros Discovery
  • G20 Finance Ministers and Central Bank Governors Meeting in Bengaluru, India (Feb. 23-25)