Oct 15, 2018
The Daily Chase: Sears files for bankruptcy in U.S.; stocks slump
By Noah Zivitz
The retail revolution has claimed one of its largest victims, with Sears Holdings filing for Chapter 11 bankruptcy protection in the United States. The company says it intends to "reorganize around a smaller store platform of EBITDA-positive stores" and that it's in talks with Chairman Eddie Lampert's investment vehicle about a stalking horse bid. But as we've seen before, there are no guarantees.
Today we'll explore what pushed Sears to this point, what it means for the company's landlords, and what retailers can do to avoid the company's fate. Should be pointed out that as of the end of August, Sears Holdings had 866 stores; and, according to the latest annual report, the company had 89,000 employees as of Feb. 3.
STOCKS FALLING
Futures are pointing to a weak open on Wall Street after Friday's strong close to a miserable stretch that had seen the S&P 500 close lower in six straight sessions, while the TSX snapped a five-day losing streak.
ALBERTA POT SNEAK PEEK
With just two days to go before recreational cannabis becomes legal, we’re getting a sneak peek at an Alberta pot store – with a twist. BNN Bloomberg's Tara Weber went behind the scenes of a Newleaf Cannabis store; the only wrinkle is that the company’s founder was putting the finishing touches on a location that hasn’t received the final go ahead from the province. If you want evidence of the last-minute scramble ahead of legalization, this is it. Tara will also monitor a government briefing on the countdown to Oct. 17.
LIVE ON LOCATION
It will be a who’s who of Canada’s cannabis industry at a conference in Toronto today, and BNN Bloomberg's David George-Cosh will be there to update us on what the biggest names have to say as legalization looms. Watch for his reports throughout the day.
SAUDI-U.S. TENSION
More fallout over the weekend amid the disappearance of Saudi journalist Jamal Khasshoggi. U.S. President Donald Trump warned in an interview with 60 Minutes “there will be severe punishment” if the kingdom is found responsible. In turn, the Saudis cautioned they intend to “respond to any measure against it with an even stronger measure” while noting “the kingdom’s economy has an influential and vital role in the global economy.” And moments ago, a Saudi official said King Salman has ordered an internal probe into the matter. Meanwhile, JPMorgan CEO Jamie Dimon is the latest big name to drop out of the Future Investment initiative conference in Riyadh.
OTHER NOTABLE STORIES
-We remain on Western Canada Select watch after last week’s wild ride that saw the Canadian crude benchmark rose almost nine per cent on Friday after getting clobbered earlier in the week.
-Enbridge said in its latest update on the Prince George pipeline rupture that there's no evidence of seepage from the leak into the soil. Less encouraging: the company says it still has no timeline for the necessary repair work on its 36-inch pipeline.
-The Green Organic Dutchman disclosed late Friday evening that an option that would have allowed Aurora Cannabis to pick up an additional eight per cent of TGOD's shares has expired.
-Fortis announced a $17.3-billion five-year capital spending plan this morning and said it will boost its quarterly dividend 5.9 per cent
-U.S. defence contractors Harris Corporation and L3 Technologies will be stocks to watch after they announced yesterday they’re joining forces.
NOTABLE RELEASES/EVENTS
-Notable earnings: Bank of America
-Notable data: Canadian existing home sales, U.S. retail sales
-Three-day Fortune Global Forum begins in Toronto (Speakers include Prime Minister Justin Trudeau, RBC Chair Kathleen Taylor, Starbucks CEO Kevin Johnson, Foreign Affairs Minister Chrystia Freeland, Former U.S. Treasury Secretary Larry Summers)
-10:30 a.m. ET: Bank of Canada releases Business Outlook Survey
-1:00 p.m. ET: Alberta Finance Minister Joe Ceci and AGLC CEO Alain Maisonneuve holds news conference in Calgary re. cannabis legalization
-2:30 p.m. ET: PM Trudeau delivers keynote at Fortune Global Forum
-3:30 p.m. ET onward: Trudeau holds meetings in Toronto with Morgan Stanley co-CEO for Asia Pacific Wei Sun Christianson, RBC CEO David McKay, Cisco CEO Chuck Robbins, SAP CEO Bill McDermott
-Saudi Energy minister Khalid Al-Falih among speakers at India Energy Forum in New Delhi
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.
