North American stocks appear set to extend their gains at the start of trading today after U.S. Federal Reserve Chair Jerome Powell dodged a taper tantrum as he charted a strategy that could see the central bank’s extraordinary asset purchase program wind down by the middle of next year. The Fed was careful to point out yesterday that the taper – which could launch as early as the next meeting in November – is not set in stone. And so between now and then, traders will presumably parse every employment report for certainty that “substantial further progress” has indeed been achieved.
EVERGRANDE WATCH
Shares of China Evergrande Group surged as much as 32 per cent in Hong Kong overnight, snapping a seven-session skid as the financial world remains fixated on the property developer’s plan to survive a US$300-billion burden of liabilities. Most imminently, a US$83.5-million coupon payment is coming due today. Earlier this morning, our Bloomberg News partners reported that Chinese regulators have urged Evergrande to avoid any default on its dollar-based bonds; shortly afterward, The Wall Street Journal reported authorities are telling local governments to prepare for “a possible storm.” A special programming note: don’t miss our Bloomberg TV partners’ deep dive on Evergrande tonight, airing on BNN Bloomberg, at 9:30 p.m. ET.
CONSUMER PULLBACK
But it wasn’t as severe as expected. Retail sales in this country fell 0.6 per cent in July. Economists were expecting a contraction of 1.2 per cent. Speeding through the release, looks like the auto sector helped offset weakness at food/beverage and building materials stores. StatsCan noted however that the uptick in the auto space was in part due to higher prices, which is being attributed to factors tied to the chip shortage. On an encouraging note: the data agency estimated that sales rose 2.1 per cent in August.
IN CONVERSATION WITH MARK CARNEY
The Brookfield Asset Management Vice Chair and former Bank of Canada/Bank of England governor joins Bloomberg Markets today for a potentially wide-ranging conversation about monetary policy in the COVID era and the global ESG movement. Watch for that shortly after 1:30 p.m.
SNC CHARGES
SNC-Lavalin’s checkered history is coming back to haunt it again. The RCMP this morning announced that former VPs Normand Morin and Kamal Francis were arrested and charged today in connection with a longstanding investigation. The RCMP said SNC-Lavalin Inc. and SNC-Lavalin International Inc. were also charged.
OTHER NOTABLE STORIES
- Is there a more loved executive in Canada than Mike Rose? He’s routinely the subject of our guests’ effusive praise (Andrew McCreath is also a big fan), and he’s giving his investors more reason to cheer after Tourmaline Oil announced a special dividend and a bump to its quarterly payment late yesterday as free cash flow booms.
- BlackBerry shares have been up almost 10 per cent in pre-market trading after the company edged past fiscal second-quarter revenue expectations. On a call with analysts, CEO John Chen acknowledged the impact of the global semiconductor shortage on BlackBerry’s Internet of Things business, saying the most recent quarter was likely “the low point” while warning that “significant headwinds” continue to loom the next couple of quarters.
- Inter Pipeline Chief Executive Officer Christian Bayle is going to step down from his role once the company’s sale to Brookfield Infrastructure is completed. The two companies said in a release last night that Brookfield Infrastructure executive Brian Baker will assume CEO duties at that point on an interim basis until a permanent replacement is selected. The deal is going to be voted on at special meeting of Inter Pipeline’s shareholders on Oct. 28.
- We’ll watch Boralex shares today after our Bloomberg partners reported the company is considering selling a stake in its France unit, which is billed as that country’s top onshore wind-power producer and accounted for 42 per cent of the company’s operations as of Aug. 5.
NOTABLE RELEASES/EVENTS
- Notable data: Canadian retail sales and wholesale trade early indicator, U.S. initial jobless claims
- Notable earnings: Sprott Physical Uranium Trust, Nike, Costco
- 7:00: Bank of England releases interest rate decision
- 10:00: Ontario Superior Court resumes hearing Cineworld-Cineplex case
- U.S. Commerce Secretary Gina Raimondo and National Economic Director Brian Deese host semiconductor supply chain meeting at the White House
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