Noah Zivitz

Managing Editor, BNN Bloomberg

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The record-breaking stock market rally is hitting a wall this morning amid rising concern about COVID-19 variants. Traditional perceived safe havens like gold and the 10-year U.S. treasury (price, not yield – that’s sub-1.3 per cent) are among the few major assets that are above water in early trading. The Canadian dollar, conversely, has dropped below 80 cents U.S. for the first time since April as oil comes perilously close to falling below US$70 per barrel.

We’ll gather insight on whether this is just a pause or something that will drag on. And we’re looking forward to getting a better idea of what’s happening behind the scenes when BMO Capital Markets Chief Executive Officer Dan Barclay joins us at 2:30 p.m.

IT’S THE ECONOMY …

Based on the parade of campaign-style announcements lately, it seems like it’s only a matter of time before an election is triggered. And a new Nanos Research survey for CTV News shows the economy is the top priority for Canadians: 28 per cent say it’s the most important policy issue, compared to 17 per cent for the environment (COVID-19 is fifth on the list of top-ranking issues). We’ll get tapped-in perspective shortly after 9 a.m. when CTV News Ottawa Bureau Chief Joyce Napier joins Jon on The Open.

CENTRAL BANKS WRESTLE WITH INFLATION

Yesterday, it was the U.S. Federal Reserve in the spotlight with minutes from its last policy-setting meeting highlighting the challenge that central bank faces in making sense of the outlook. “Some participants saw the incoming data as providing a less clear signal about the underlying economic momentum and judged that the Committee would have information in coming months to make a better assessment of the path of the labour market and inflation,” according to the recap of last month’s meeting. Today, it’s the European Central Bank making headlines by unveiling what it’s calling a “symmetric” target of hitting two per cent inflation over the medium term. Previously, the ECB aimed for inflation “below, but close to, two per cent over the medium term.” And let’s keep in mind that in the coming months we’ll find out if the Bank of Canada’s inflation target will be extended or adjusted. This is all admittedly wonky stuff, but the consequences are profound for consumers and markets.

OTHER NOTABLE STORIES

• British Columbia has lost its top-notch credit rating after S&P cut the province’s debt to AA+ from AAA while pointing to the cost of containing COVID-19. In a report late yesterday afternoon, the agency said the province’s deficit and debt have hit levels that are “incompatible” with an AAA rating.
• Centerra Gold is pouring more fuel on its dispute with Kyrgyzstan stemming from the expropriation of its Kumtor mine. The company is now claiming that Kyrgyzaltyn JSC (described by Centerra as a “gold refining monopoly) “conspired” with the government to take control of the mine.
• Big Tech is facing yet another antitrust challenge: Google is being sued by 36 U.S. state attorneys general for allegedly anticompetitive practices tied to its Google Play app store.
• Dye & Durham is back at it with some M&A this morning. It announced it’s buying real estate specialist TM Group (U.K.) Limited for $156 million in cash on hand.
• Descartes Systems also announced a deal this morning. The Waterloo, Ont.-based logistics expert is buying GreenMile (which caters to the food and beverage industry) for up to $40 million.
• Canadian entrepreneur Michele Romanow has brought one of the world’s most prominent tech financiers into her corner with news this morning that Softbank has led a US$215-million round of funding by Clearco. 
• Shares of Kansas City Southern tumbled this morning; no doubt one of the factors is a Wall Street Journal report that the Biden administration is planning an executive order to crack down on perceived anticompetitive behaviour in certain highly-consolidated industries – like rail. KCS, of course, is the subject of a tug of war between CP Rail and CN Rail. 

NOTABLE RELEASES/EVENTS

• Notable data: U.S. initial jobless claims
• 7:00: European Central Bank releases result of strategy review (plus 8:30 briefing by ECB President Christine Lagarde)
• 9:00: Parliamentary Budget Officer releases costing note "Extending the temporary enhancements to the Work-Sharing program for employers and employees affected by COVID-19"
• 13:00 Prime Minister Justin Trudeau makes announcement in Coquitlam, B.C., alongside Premier John Horgan (plus avail)