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Noah Zivitz

Managing Editor, BNN Bloomberg

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Other than the U.S. dollar and world bond yields, it’s hard to find anything that’s trading higher this morning. U.S. futures are suggesting it will be another weak open in New York after three straight days of losses. The Canadian dollar has traded as low as 73.79 cents U.S. this morning, that’s almost two cents below where it was a week ago. And West Texas Intermediate crude has shed upward of four per cent in early trading, and slipped below US$80 per barrel for the first time since January. So, against that kind of backdrop, it’s no surprise to see Bank of America’s strategists saying sentiment is “unquestionably” at its lowest since the 2008-09 financial crisis as central banks race to rein in inflation. 

On that note, there was a smidgeon of encouraging commentary from Costco’s chief financial officer after markets closed yesterday. Speaking on an earnings call with analysts, he said he’s seeing “minor improvement in a few areas … we are seeing just a little light at the end of the tunnel.”

CONSUMERS RETRENCHING

Statistics Canada said sales fell 2.5 per cent in July; that’s the first decline registered this year. It was broad-based, as declines were registered in nine of the 11 major sectors tracked. Interesting to see that one of largest downturns was in home furnishings stores, where sales fell 6.0 per cent. In a brief piece of analysis for clients, Karyne Charbonneau from CIBC Economists said “Canadians may have started to react to higher interest rates.” In an advance look at sales in August, StatsCan estimated sales rose 0.4 per cent in that month.

DYE & DURHAM’S LINK TAKEOVER FALLS APART

It almost seemed like the writing was on the wall after a years-old fund collapse came back to haunt the company that Dye & Durham was trying to acquire. And so, early this morning it became official: Link Administration Holdings Ltd. said it was disappointed to announce that the takeover by Dye & Durham won’t be proceeding. The Toronto-based software consolidator said it has a “robust pipeline of M&A opportunities” that it will turn its attention to.

HURRICANE FIONA

Much of Atlantic Canada is under a hurricane watch as Environment Canada warns of a severe weather event that will hit the region with heavy rain and damaging winds. We’ll look into preparations being made in the agriculture and offshore oil sectors.

CRYPTO DEAL

A couple of Canadian crypto trading platforms are combining as Coinsquare announced it will buy the parent company of Coinsmart. In a release, Coinsquare’s CEO indicated the deal was motivated at least in part by the “ever-increasing cost structure and additional complexity” of navigating the industry’s work-in-progress regulatory landscape. Coinsmart is one of just nine crypto-trading platforms that have registered with the Ontario Securities Commission. Coinsquare, which settled a probe by the regulator in 2020 stemming from inflated trading volumes and transgressions by its former chief executive, chief compliance officer, and founder/president, has made pre-registration undertakings with the OSC. It’s also seeking approval to operate under the Investment Industry Regulatory Organization of Canada’s purview.

OTHER NOTABLE STORIES

  • FedEx — whose shares lost almost one-quarter of their value last Friday after an early release of disappointing first-quarter results — said it’s aiming to cut up to US$2.7 billion in costs during the current fiscal year, largely by adjusting its flight schedule and temporarily taking some planes out of service. It also announced rate hikes that will take effect Jan. 2.
  • Boeing has agreed to pay US$200 million to settle U.S. and Securities and Exchange Commission charges that it misled investors in the aftermath of fatal 737 Max crashes in 2018 and 2019. Dennis Muilenburg, the plane-maker’s former CEO, also settled and will pay a US$1-million penalty. In a release, the head of the SEC said the two parties “failed in this most basic obligation” to make accurate disclosures to markets.
  • Emera said it will raise its annual dividend to $2.75 per share from $2.65 and is now aiming to continue hiking the payout four-to-five per cent through 2025.
  • First Capital Realty announced it’s targeting more than $1 billion in asset sales by the end of 2024, and said it will focus on “grocery-anchored, necessity-based” properties in “thriving neighbourhoods with superior demographics.”
  • Newmont is selling its 18.75 per cent stake in the Mara copper and gold project in Argentina to Glencore for US$124.9 million and up to US$50 million in deferred payments. The deal will leave Glencore with a 43.75 per cent stake; the rest is owned by Yamana Gold. 

NOTABLE RELEASES/EVENTS

  • Notable data: Canadian retail sales and manufacturing sales (flash estimate)
  • 1525: Prime Minister Justin Trudeau holds media avail alongside South Korean President Yoon Suk Yeol