The Big Three: Markets under pressure; Canopy reports loss; Trudeau under fire over conflict of interest
Markets get top billing again today. In a headline-driven world, investors (algorithms?) are being pushed and pulled this morning: first as China indicated it will have to retaliate against the U.S. tariffs taking effect in September, then by some more conciliatory comments that helped push U.S. futures into positive territory.
And for all the headlines about the Dow’s 800-point (3.05 per cent) plunge yesterday, let’s not lose sight of the fact Canada’s very own S&P/TSX Composite suffered its biggest single-day loss since last October. Amid the turmoil, worth pausing to consider this perspective from Oanda’s Craig Erlam: “It seems everyone is an expert in yield curve inversions these days. Apparently a trade war, economic slowdown and Brexit, among other things, are not reason to panic but the moment the 10-year yield drops below the two-year, all hell breaks loose.”
Profitability is still outside the grasp of Canada’s largest licensed cannabis producer. Canopy Growth’s quarterly revenue slipped sequentially and its adjusted loss widened to $92 million as expenses surged. The net loss is even more substantial thanks to a $1-billion+ hit on “the extinguishment of warrants” held by Constellation. Investors are responding by sending the stock down more than 10 per cent in pre-market trading even though CEO Mark Zekulin said Canopy is “fixated on the process” of eventually having a “sustainable, high margin, profitable Canadian business.” We’ll keep tabs on the 8:30 a.m. ET conference call.
The retailer’s shares are up more than five per cent in pre-market trading on the back of a more optimistic full-year profit forecast. And check out the 37 per cent jump in U.S. ecommerce sales for the latest quarter. Interesting, however, to see management call out “weaker performance” in Canadian general merchandise sales (not unlike what we heard from Indigo earlier this week).
As much as I prefer to leave politics to others, there’s no escaping it in this case with an election looming. But aside from the question of how much the ethics report will stick in voters’ minds on Oct. 21, what about where this leaves SNC-Lavalin? With so many behind-the-scenes details documented (hat tip to The Globe’s Andrew Willis for his piece on BMO becoming part of the conversation), what does this do to morale/staff retention? What does this do to any hope that might still exist for a DPA? Plenty for us to consider.
OTHER NOTABLE STORIES
-Just Energy shares collapsed in early trading (down ~30 per cent). The company suspended its dividend and fell way short of sales estimates in its latest quarter. It also added a new director and said it plans to sell U.K. assets while a broader strategic review continues.
-Shares of General Electric came under pressure in pre-market trading after a critical report by Harry Markopolos, best known for his whistleblowing on Ponzi schemer Bernie Madoff. In a statement, GE dismissed allegations in the report as “entirely false and misleading.”
-Lots to sift through in yesterday’s regulatory filings on what some of America’s best-known investors have been up to. Of note: Warren Buffett’s Berkshire Hathaway boosted its bet on Amazon. And Bill Ackman’s Pershing Square has taken a stake in Berkshire.
-Our Bloomberg partner Doug Alexander has a piece up this morning on the terminal about WealthSimple’s attempt to prove it’s about more than millennials by partnering with Grayhawk Investment Strategies, which caters to some of Canada’s wealthiest families.
-Notable earnings: Walmart, Alibaba, Nvidia
-Notable data: Canadian existing home sales, U.S. retail sales
-10:00 a.m. ET: Finance Minister Bill Morneau and Science Minister Kirsty Duncan make announcement at Ryerson University.
-12:00 p.m. ET: Ontario Finance Minister Rod Phillips makes announcement in Toronto on province’s first-quarter finances
-3:00 p.m. ET: Alberta Labour Minister Jason Copping announces plan to assess province’s minimum wage
-Norway central bank releases interest rate decision
-Mexico central bank releases interest rate decision
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.