The prospect of more than one trillion dollars of debt and a $343.2-billion deficit is apparently manageable as far as the world’s most prominent credit rating agency is concerned after S&P affirmed Canada’s AAA rating late yesterday afternoon. It’s a different take on this country’s fiscal situation, after rival agency Fitch stripped Canada of its AAA badge of honour last month. For its part, S&P sees Canada’s massive deficit as a temporary issue and believes the federal government’s emergency relief measures “will likely help the economy and labour market to recover” from COVID-19.

SUNCOR HONES COST CONTROL

Suncor Energy swung to a loss in the second quarter ($1.49 billion on operating basis, $614 million net) as COVID-19’s demand destruction and OPEC+ turmoil weighed on prices. The big oil sands producer has been doing what it can to help shelter itself from the chaos; indeed its expenses fell to $2.16 billion from $2.8 billion a year earlier and Suncor said it’s on track to achieve its goal of reducing operating costs by $1 billion this year.  

LOBLAW’S COVID COSTS OVERWHELM SALES SURGE

Plenty of talk today from the country’s dominant supermarket operator about the hefty costs it incurred in the latest quarter, and I can’t help but wonder if part of it is designed to balance out public perception amid recent negative attention related to the end of “Hero Pay” for frontline workers. Loblaw points out it spent $282 million in the quarter “to protect and benefit colleagues and customers”, including $180 million tied to the temporary premium pay program. While COVID-19 drove a 7.4 per cent jump in total revenue (including a 10 per cent surge in food same-store sales), Loblaw said that was “insufficient to overcome substantial COVID-19 related costs” as adjusted profit sank 27 per cent.  

OTHER NOTABLE STORIES

-Cenovus Energy’s second-quarter operating loss was not as deep as feared ($0.34/share versus $0.57 estimate). And after resorting to taking a detour through the Panama Canal (!) to get its oil to Irving’s refinery in Saint John, Cenovus said today it will keep hunting for “innovative market-based solutions” to allow its oil to be refined in Canada. We’re expecting to speak with CEO Alex Pourbaix around 1:20 p.m. ET.

-ConocoPhillips has scooped up some assets in Canada; it’s paying US$375 for B.C. Montney acreage owned by Kelt Exploration.

-Microsoft shares are slipping in pre-market trading after mixed results. Fourth-quare revenue jumped 13 per cent and exceeded estimates, as did profit, with the company's cloud business standing out as the main growth driver. But its Productivity and Business Processes unit felt a bit short of expectations. Microsoft noted that licensing among small and medium-sized businesses has slowed down and its LinkedIn business was stung by the weak jobs market.

-Tesla shares are rising in the pre-market after Elon Musk's electric vehicle juggernaut delivered yet another quarter of profitability even as revenue slipped year-over-year. The company also reiterated its goal of delivering half a million vehicles this year.

-Teck Resources’ adjusted profit fell sharply in the second quarter (albeit exceeding expectations) as prices for all of its major products tumbled. Its energy unit stood out for all the wrong reasons as the only division to post a loss in the period thanks to the company’s exposure to the Fort Hills oil sands mine. Teck stuck with previous messaging about the project’s owners continuing “to monitor market conditions and may adjust the operating plan for Fort Hills accordingly.”

-Mullen Group said it will resume paying a $0.03/share dividend as of August 17 after suspending the payout in the early days of the pandemic. The trucking firm also reported a nearly 20% drop in second-quarter revenue.

NOTABLE RELEASES/EVENTS

-Notable data: U.S. initial jobless claims

-Notable earnings: Loblaw, Cenovus Energy, Precision Drilling, Teck Resources, Aecon Group, Yamana Gold, Southwest Airlines, American Airlines, AT&T, Twitter, Intel

-9:30 a.m. ET: Suncor conference call

-10:00 a.m. ET: Torstar to seek Ontario Superior Court of Justice's approval for deal with Nordstar

-10:00 a.m. ET: Loblaw conference call

-11:00 a.m. ET: Teck Resources conference call

-Major League Baseball season scheduled to begin

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