The Big Three: Oil nears bear market; Trans Mountain ruling due today; Alphabet earnings
The price of West Texas Intermediate oil is climbing out of bear market territory this morning – albeit just barely – after falling more than 20 per cent from its January peak yesterday. A report from our Bloomberg partners about collapsing demand for crude in China as a result of coronavirus was a primary catalyst yesterday. Today, traders are seemingly finding comfort as OPEC+ officials gather in Vienna to consider their next steps. “The outcome of the discussions may determine whether the group convenes an emergency meeting to consider new output cuts later this month,” according to Bloomberg. Meanwhile, Russia President Vladimir Putin and Saudi King Salman bin Abdulaziz pledged to “continue cooperation” on oil output when they spoke by phone last night, according to a spokesperson for Putin.
At least 427 deaths are now being blamed on the respiratory illness and there are almost 21,000 confirmed cases globally as the numbers once again swelled overnight. A new wave of containment efforts also came to light, including Macau effectively shutting down casinos. Meanwhile, after yesterday’s post-Lunar New Year holiday collapse, stocks posted gains overnight in China.
CRUCIAL DECISION FOR TRANS MOUNTAIN EXPANSION
The Trans mountain expansion project has cleared another hurdle. The federal court of appeal dismissed a challenge from first nations who argued they weren’t adequately consulted before the pipeline was approved for a second time. The court’s ruling was unanimouis – with costs. In their decision, the justices said there was “no evidence” the trudeau government’s ownership of trans mountain influenced the approval … and that there was “no basis” for the court to interfere.
A CALL TO LIGHTEN UP ON CANADIAN BANKS
Canaccord Genuity’s strategy team is advising clients to go underweight on Canadian banks, based on expectations of “constrained” mortgage and personal loan growth due to already-high household debt levels, commercial loan losses, and margin pressure as the Bank of Canada “eventually caves in and cuts rates.” We’ll get more colour on that call from Martin Roberge at 9:35 a.m. ET.
It was an inauspicious start to the process of electing delegates for the Democratic presidential candidate last night in Iowa as “inconsistencies” marred the Iowa caucuses and delayed the release of results. To quote Bloomberg chief Washington correspondent Kevin Cirilli as he updated Paul this morning on The Street: “It’s a mess. A total mess.” As confusion and uncertainty continues into this morning, we’ll watch for developments.
OTHER NOTABLE STORIES
-Canfor is among the day’s top percentage gainers on the TSX after the U.S. Commerce Department indicated yesterday it’s preparing to reduce softwood duties.
-Alphabet is a stock to watch today after fourth-quarter revenue and operating income fell just short of estimates yesterday. For the first time, Google’s parent company also broke out performance in its YouTube and Cloud units, with the former’s ad revenue surging 30 per cent year-over-year.
-What’s up with Tesla? Not to oversimplify things, but how can anyone explain yesterday’s 19.9 per cent surge? And the vehicle maker’s stock is building on those gains this morning in pre-market trading. We’ll hunt for answers.
-Notable earnings: Intact Financial, ConocoPhillips, BP, The Walt Disney Co., Ford
-9:00 a.m. ET: Parliamentary Budget Officer releases report “Reviewing the Fiscal and Distributional Analysis of the Federal Carbon Pricing System”
-1:00 p.m. ET: Federal Court of Appeal decision on First Nations' challenges against Trans Mountain pipeline expansion approval
-9:00 p.m. ET: U.S. President Donald Trump delivers State of the Union address
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.