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Noah Zivitz

Managing Editor, BNN Bloomberg

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The dividend hikes and buybacks are raining down from the Big Six. Royal Bank of Canada and National Bank of Canada this morning announced richer quarterly payouts to shareholders and share repurchase programs. From there, the narrative diverges a bit as National narrowly exceeded the average analyst estimate while RBC trailed expectations despite raking in $16.1 billion for the year and posting a 20 per cent surge in fiscal fourth-quarter profit (thanks in no small part to double-digit growth in its domestic mortgage book.)

MARKETS SEE-SAW, AGAIN

We enter this morning with U.S. futures pointing to a sharply higher open and with major European markets rallying. It’s a reversal from yesterday, when another wave of COVID fear and U.S. Federal Reserve Chair Jerome Powell’s stated willingness to speed up the taper process created discomfort in the market. I’ve been waiting a long time to have an excuse to cite Gremlins in this newsletter; the world’s most influential central banker is somehow affording me that opportunity. “Powell started out as this fuzzy character here to cuddle investors -- but now it looks like somebody fed him after midnight. Maybe getting renominated for a Fed chair is like pouring water on the Gremlin,” AlphaTrAI Chief Investment Officer Max Gokhman told our Bloomberg News partners. Note that Powell has another round of testimony today.

CENOVUS SELLING HUSKY GAS STATIONS

We've been wondering if that would happen ever since the takeover was announced a little more than a year ago. Late yesterday, Parkland Corp. and Federated Co-Operatives Ltd. stepped up to split up the network of 337 gas stations, at a price of $420 million. Cenovus also announced the divestment of some Montney assets for $238 million, without naming the buyer. Cenovus said the $658 million in proceeds will go toward paying down debt and "enhancing [its] capacity to increase shareholder returns."

ATCO LANDS IN HOT WATER

This doesn’t look good. In a release late yesterday, the energy and utilities conglomerate said it had breached its own code of conduct with regard to a contract that was awarded to a First Nation community. The company’s release was light on details, but it acknowledged that the issue was being probed by the Alberta Utilities Commission. The paper trail leads us to the AUC enforcement staff’s allegations of a legal breach tied to the sole-sourced contract that it says was handed to the Simpcw First Nation at above market rates, with the intent of that being parlayed into work for ATCO on the Trans Mountain pipeline expansion project. Lots to dig into here.

OTHER NOTABLE STORIES

  • Quebec’s maple syrup producers have a message to Canadians: our strategic reserve of the sweet stuff is “serving its purpose” after it was tapped amid record-high sales. The group also said this morning that relief is on the way, as it authorizes production from 7 million new taps over the next three years.
  • Birchcliff Energy is doubling its quarterly dividend to a full cent per share, effective with the Dec. 31 payment. In the release, Chief Executive Officer Jeff Tonken said further dividend hikes will be considered. This comes on the heels of third-quarter free funds flow that surged 426 per cent year-over-year.
  • Salesforce.com delivered an underwhelming forecast that could raise concern about enterprise spending. The fourth-quarter profit forecast fell way short of the average analyst, and the first-quarter revenue forecast landed light. The company's shares have been sliding in pre-market trading.
  • Merck shares are rising in pre-market trading after the U.S. Food and Drug Administration said its advisory committee voted 13-10 to approved the drug maker’s COVID-19 antiviral pill.
  • GFL Environmental is on our radar after the Competition Bureau said it will challenge the waste hauler’s acquisition of Terrapure Environmental. In a release, the competition watchdog said the deal would likely lead to higher prices and a deterioration in service quality. As such, it’s calling for divestments to preserve competition. 

NOTABLE RELEASES/EVENTS

  • Notable data: Canadian building permits, ISM U.S. manufacturing index
  • Notable earnings: Royal Bank of Canada, National Bank of Canada, BRP
  • 9:30: TC Energy investor day
  • 10:00: U.S. Federal Reserve Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen address U.S. House Financial Services Committee hearing on oversight of Federal Reserve and Treasury Department's pandemic response
  • 10:00: Ontario Auditor General releases annual report. Includes chapters on Ontario Cannabis Retail Corp. and COVID-19 Economic Response
  • 10:00: Ontario Premier Doug Ford makes announcement in Mississauga alongside provincial Health Minister Christine Elliott
  • 14:00: U.S. Federal Reserve releases Beige Book
  • International Trade Minister Mary Ng begins three-day visit to Washington, D.C. for meetings with congressional leaders and stakeholders "to advocate for Canadian workers and industry in light of harmful Buy America and EV provisions. She will also raise issues important to Canadians including unfair softwood lumber duties, and trade challenges facing potato exports."