The Big Three: RBC hikes payout; Pembina buys Kinder Morgan assets; Alberta extends oil curtailment
Royal Bank of Canada has kicked off earnings with steady growth — albeit falling slightly short of expectations — and a richer dividend. RBC posted double-digit profit gains in most of its major divisions, with Capital Markets falling behind as a weak spot. And for all the doom and gloom warnings about credit quality, Royal's provisions for losses actually ticked down from the previous quarter. We’ll frame performance against the myriad of global and domestic risks that were on everyone’s radar heading into fiscal third-quarter reporting season.
PEMBINA PIPELINE BUYING KINDER MORGAN CANADA
The remnants of Kinder Morgan Canada (KML) are being scooped up by Pembina Pipeline in an all-stock deal valued at $2.3 billion. It’s also buying the U.S. portion of Kinder Morgan Inc.’s Cochin pipeline for $2.05 billion. The deals come almost a year to the day since KML closed the Trans Mountain pipeline expansion sale to the federal government. Also worth keeping in mind KML just wrapped up a strategic review a few months ago.
EXTENDING ALBERTA CURTAILMENTS
Jason Kenney’s government announced yesterday it’s prepared to stretch its curtailment program until the end of next year, citing ongoing pipeline delays. And the base deduction threshold is being doubled to 20,000 barrels per day; meaning more producers will be excluded from the program. We’ll gather industry reaction and watch Western Canada Select prices today.
CHINA VS CANADA
A trove of court documents were released late yesterday documenting behind-the-scenes details (and video) on the arrest of Huawei CFO Meng Wanzhou. Also notably, a Chinese government official warned on the fallout from the incident as well as Canada’s recent comments about Hong Kong protests. “We seriously demand the Canadian side to deeply reflect upon its mistakes, put itself in a right position and stop its wrongdoing before it’s too late,” a Foreign Ministry spokesperson is quoted as saying by the Wall Street Journal.
Andy is going wall-to-wall with insight on gold’s remarkable run north of US$1,500 per ounce. He'll get industry insight on everything that's working in gold's favour from Equinox Gold's Ross Beaty and Wesdome CEO Duncan Middlemiss. Actionable perspective is lined up with Bob Thompson from Raymond James. And we'll round out coverage with a look at the risk of activism with Ian Robertson from Kingsdale Advisors. Watch for all of that on a special edition of Commodities today at 11.
OTHER NOTABLE STORIES
-Canada's annual inflation rate unexpectedly held steady at 2.0 per cent in July. Economists were expecting a moderation to 1.7 per cent. Of all the major categories, food prices rose at the fastest pace (3.8 per cent).
-Our Bloomberg partners have picked up on a warning about corporate debt levels in Canada. The Institute of International Finance says Canadian companies have the highest debt-to-cash ratios among all mature market nations. And just minutes after Shaw’s release, Videotron said in a release it’s pegging the cost of the CRTC’s decision at $50 million.
-Target and Lowe’s have given investors plenty to cheers. For its part, Target has raised the full-year profit outlook after easily exceeding second-quarter estimates. And the CEO of Lowe’s is touting his company’s “bright” outlook after outpacing second-quarter profit and same-store sales estimates. Both stocks are up more than 10% in pre-market trading.
-Germany has learned there are limits to investor demand for low-yielding products. An auction for 30-year, zero-coupon bonds failed today, with less than half of the offering finding buyers.
-Notable earnings: Royal Bank of Canada, Lowe's, Target, Nordstrom, L Brands
-Notable data: Canadian CPI, U.S. existing home sales
-11:00 a.m. ET: Finance Minister Bill Morneau announces support for young social entrepreneurs (plus avail)
-1:00 p.m. ET: House of Commons Ethics Committee holds emergency meeting on Conflict of Interest Act violation by Prime Minister Trudeau
-1:00 p.m. ET.: Prime Minister Justin Trudeau delivers keynote at Council of Foreign Relations event in Montreal
-130 p.m. ET: Natural Resources Minister Amarjeet Sohi discusses progress on Trans Mountain expansion at media avail in Sherwood Park, Alberta
-2:00 p.m. ET: U.S. Federal Reserve releases minutes from last meeting
-2:45 p.m. ET: Prime Minister Trudeau meets with mayor of Montreal
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.