The Big Three: Trade hopes lift stocks; Canada warned not to ban Huawei; hedge fund takes aim at Canada
To be a fly on the wall later today when U.S. President Donald Trump meets with Treasury Secretary Steven Mnuchin. Yesterday, stocks shot higher after The Wall Street Journal reported Mnuchin has proposed “lifting some or all” tariffs on imports from China in a bid to wrench concessions from Beijing and soothe investors’ nerves. A Treasury spokesperson later told Bloomberg News no specific recommendations have been made by Mnuchin or Trade Representative Robert Lighthizer. Nonetheless, futures are pointing to more gains at the start of trading today. We’ll chase insight on the competing interests inside the Trump administration.
CANADIAN INFLATION HEATS UP
The consumer price index rose 2.0 per cent year-over-year in December. The main driver was a 28.1 per cent surge in air transportation costs. Statistics Canada points out it changed its methodology on that front last year and so "interpretation of the 12-month price change indicator should be made with caution".
TSX EXTENDS WINNING STREAK
Make it 10 straight days of gains for the S&P/TSX Composite Index after yesterday’s 99.96-point rise. If the TSX closes higher today, it will match the 11-session winning streak that it notched last May.
GREAT WHITE SHORT ISN’T DEAD
We’re seeing another bet against Canada’s banks by a U.S. investor. This time, it’s Denver-based Crescat Capital, as revealed today by Bloomberg News. “Canadian banks will be left holding the bag and the ones to suffer from what is likely to be a major economic recession,” is what a Crescat analyst told Bloomberg. Bets against Canada’s banks haven’t typically gone in the shorts’ favour. We’ll chase Crescat to find out why it thinks this time is different.
CHINA WARNS CANADA ON 5G FALLOUT
Quite the scene yesterday afternoon when China Ambassador to Canada Lu Shaye held an extended Q&A session with reporters in Ottawa. He addressed Canada’s strategy in the diplomatic feud (“We should not resort to microphone diplomacy because hyping these issues will not be conducive to good resolution”), cautioned Foreign Affairs Minister Chrystia Freeland against trying to rally support for Canada’s case next week in Davos, and had an ominous warning about the potential fallout if Huawei is barred from Canada’s 5G buildout (“There will be repercussions”). Note Ambassador John McCallum is meeting with a House committee later today.
OTHER NOTABLE STORIES
-Elon Musk didn’t sugarcoat Tesla’s reality in a memo to employees today that disclosed the need to cut the company’s workforce by seven per cent. Musk said Tesla’s vehicles “are still too expensive for most people”, acknowledged other companies offer their staff better work-life balance, and said Tesla might post “a tiny profit” this quarter “with great difficulty.”
-International markets are the key to Netflix’s growth these days. 7.3 million non-U.S. customers were added in the fourth quarter, accounting for almost all of the company’s subscriber growth. Shares are down marginally in pre-market trading after a mixed quarterly report and outlook.
-The partial U.S. government shutdown is now into a 28th day. Notably, U.S. President Trump has cancelled his cabinet members’ trip to Davos and informed House Leader Nancy Pelosi he’s delaying a trip she had planned .
-Yesterday afternoon, Unifor announced it was planning to hold a news conference today to announce a “significant escalation” in its fight against GM. Approximately four hours later, Unifor cancelled the news conference without providing any further information. Would be good to know what prompted the reversal.
-Notable data: Canadian CPI, Canadian international securities transactions, University of Michigan consumer sentiment index
-Notable earnings: Schlumberger
-11:00 a.m. ET: House of Commons Foreign Affairs Committee holds briefing with Ambassador to China, John McCallum
-12:45 p.m. ET: U.S. President Donald Trump meets with Treasury Secretary Steven Mnuchin (NOTE: this is supposed to be closed to media, but that could change)
-3:10 p.m. ET: Prime Minister Justin Trudeau holds media avail at cabinet retreat in Sherbrooke
-5:00 p.m. ET: Deadline for Ontario cannabis lottery winners to submit formal application, $50,000 standby letter of credit and $6,000 fee payment
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.