The Big Three: Global stocks rally; Trans Mountain clears hurdle; Tilray announces job cuts
Stock markets around the world (and oil) remain in rally mode today, notwithstanding the still-ballooning coronavirus numbers as confirmed cases climb toward 25,000 globally and related fatalities reach at least 492. Our Bloomberg partners note today’s sentiment-lift is coming courtesy of apparent progress on vaccines and other treatments for the respiratory illness.
TAKEAWAYS FROM TRANS MOUNTAIN RULING
Lots to consider in the aftermath of yesterday’s Federal Court of Appeal decision to dismiss the challenge brought forward by a group of First Nations. Notably, the judges made it clear that the duty to consult is not an open-ended obligation that effectively gives any single entity a golden veto. “The process of meaningful consultation can result in various forms of accommodation. But the failure to accommodate in any particular way … does not necessarily mean that there has been no meaningful consultation,” they wrote. We’ll consider the implications for future major energy projects.
Bombardier very much remains on our radar after its shares spiked yesterday on The Wall Street Journal’s report that it’s in talks with Textron about potentially selling its business-jet unit. Fascinating to observe Quebec-based media reporting on this, including La Presse noting that even Quebec economy minister Pierre Fitzgibbon says “it will be hard” for Bombardier to juggle the jet and train businesses while coping with the company’s mountain of debt. We’ll be cautious in avoiding speculation about the reported talks with Textron, but there are important questions to be asked about how it came to this for the once-mighty Canadian plane and train maker.
POT SECTOR SHAKEOUT CONTINUES
David George-Cosh was first to report on the big round of layoffs at Tilray yesterday that’ll see approximately 10 per cent of the B.C.-based cannabis producer let go. CEO Brendan Kennedy said his company will be “better positioned to achieve profitability” after the cuts. Between this and the wave of executive changes that Dave was remarking on last week, what else should we expect from the sector as it works through growing pains and aims to deliver actual earnings? Dave will continue exploring this.
EXPLAINING TESLA’S SURGE
Good luck with that. It seems futile to pin the six-day winning streak that’s seen Tesla shares surge 59 per cent in value on a single factor. Maybe the vehicle maker’s stock really is “the new Wall St. casino,” as Andrew Left’s Citron Research suggested in a tweet yesterday. Or, as our Bloomberg partners suggest, maybe there’s something to be said for “another school of thought emerging … the gist is that the long-held assumption that legacy automakers will catch up to Tesla in the electric-vehicle market is wrong.” Great time to consider that as results from the Detroit Three pour in this week. Late yesterday, Ford’s CEO touted his company’s advances in autonomous and EVs, albeit while fessing up to “operational execution…[that] wasn’t nearly good enough” and led to wide misses on some key financial metrics. General Motors, meanwhile, unexpectedly posted a fourth-quarter profit despite a big hit from the UAW strike and underscored its “commitment to an all-electric future” this morning. Its shares are moving in the pre-market.
OTHER NOTABLE STORIES
-Walt Disney Co. CEO Robert Iger touted early success for his company’s new streaming service as Disney+’s subscriber base hits nearly 29 million after a launch that “exceeded even [Disney’s] greatest expectations.” But building a new business doesn’t come cheap; to wit, Disney’s direct-to-consumer and international unit suffered a nearly US$700-million loss in the latest quarter even as revenue surged.
-Nike has joined the ranks of companies warning on fallout from the coronavirus. The shoe maker said yesterday it’s expecting a “material” hit to its business in China as it temporarily shutters stores in the country and facing “lower than planned” traffic in stores that remain open.
-Mattress-in-a-box juggernaut Casper Sleep has slashed the price range for its initial public offering to US$12-$13 per share from the previous target of US$17-$19.
-Macy’s slapped a fancy name (“Polaris Strategy”) on the three-year plan to bolster profitability that was unveiled late yesterday. Part of the plan includes the shuttering of 125 stores and slashing approximately 2,000 jobs. Can’t help but wonder what the future holds for department-store peer HBC when/if Richard Baker successfully takes it private.
-Notable earnings: Suncor, Norbord, Canaccord Genuity, Genworth MI Canada, General Motors, Merck
-Notable data: Canadian trade balance, U.S. trade balance, ISM U.S. services index
-10:30 a.m. ET: Vaping executives (including JUUL’s CEO) testify before U.S. House Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce
-12:30 p.m. ET: Bank of Canada Senior Deputy Governor Carolyn Wilkins delivers speech in Toronto (remarks on bank’s website at 12:15 p.m. ET)
-5:30 p.m. ET: Canadian ambassador to China Dominic Barton addresses Special Committee on Canada-China Relations
-U.S. Senate vote on impeachment
-Pershing Square Holdings holds first investor presentation in New York
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.