Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

Canada’s telecommunications companies just spent almost $9 billion in the long-awaited auction of 3500MHz spectrum that’s so key to this country’s 5G future. Rogers was the biggest spender at $3.3 billion, followed by Bell at $2.1 billion and Telus at $1.9 billion. The nearly $1 billion spent by Quebecor’s Videotron business forces us to wonder about what Pierre Karl-Péladeau has up his sleeve. Likewise Cogeco, which laid claim to a couple dozen licences for $295 million.

CANADIAN GDP UPDATE

"I think Statistics Canada has it spot on." That was the immediate reaction from Macquarie Head of North America Economics David Doyle after the agency delivered a flash estimate pointing to a return to growth in June. Indeed, StatsCan is estimating GDP rose 0.7 per cent last month. That's after two consecutive months of contraction. And of course the brighter view is thanks to far more relaxed COVID-19 public health restrictions. We'll focus on the outlook in our coverage today.  

AMAZON DISAPPOINTS

Amazon.com is still growing by leaps and bounds, but it's not managing to keep up with investors' lofty expectations. The e-commerce and cloud giant's sales surged 27 per cent in the second quarter down from 44 per cent in Q1), and it's forecasting another quarter of double-digit gains in this quarter. Nonetheless, investors are punishing Amazon for only expecting US$112 billion in revenue in Q3. Shares have been down more than five per cent pre-market, which is putting a damper on U.S. futures. We’ll see if there’s spillover to the S&P/TSX Composite Index, which closed at a record high yesterday.

CHINA FLEXES

The clampdown in Beijing continues this morning. A short time ago, our Bloomberg partners moved a story saying the Chinese Ministry of Transport is planning to target ride-hailing companies for alleged monopolistic behaviour. No surprise then to see Didi Global shares down more than five per cent in New York pre-market trading. And it doesn’t end there: China’s Politburo is reportedly planning to tighten supervision of international stock listings, and Reuters just reported that the U.S. Securities and Exchange Commission is halting registrations of Chinese listings. All of this comes one month after Didi went public on the NYSE.

OTHER NOTABLE STORIES

• Back to telcos for a moment: Telus CEO Darren Entwistle didn’t mince words in this morning’s second-quarter earnings release: “Canada’s position as a global leader in broadband networks is vulnerable to burdensome regulations governing access to spectrum,” he said. We’ll keep that in mind, and note that Telus’s adjusted EBITDA jumped almost 10 per cent in Q2 amid 89,000 net new wireless subscribers.
• Tim Hortons all of a sudden is the star performer for Restaurant Brands International. The coffee and doughnut chain's comparable sales surged almost 28 per cent in the second quarter. That's well ahead of the gains posted by RBI's Burger King business, and in sharp contrast to Popeyes Louisiana Kitchen, where the key sales metric fell. It's a major reversal for Tim Hortons, which suffered a long stretch of underperformance as the pandemic battered demand for its grab-and-go products.
• Canadian Pacific Railway is formally trying to bust up Canadian National’s purchase of Kansas City Southern. CP announced yesterday afternoon that it filed a proxy urging KCS’s shareholders to vote against the friendly deal. And it’s not shying away from fear tactics: CP pointed to “severe consequences” if shareholders approve the deal but ultimately are left in limbo if CN fails to secure the voting trust that’s key to the takeover. The KCS shareholder vote is set for Aug. 10.
• Markets very much worked in Prem Watsa’s favour in the second quarter. His Fairfax Financial Holdings conglomerate registered a nearly US$1.3-billion gain on its investments, largely thanks to its long positions in equities. Overall, Fairfax’s net income nearly tripled as profit also climbed in the company’s core insurance businesses, where losses due to COVID-19 were much lower than a year ago.
• Canfor’s second-quarter sales more than doubled to $2.5 billion and operating profit hit an all-time high above $1 billion thanks to surging lumber prices in the period. But the company isn’t hiding from the current reality, saying in a release that it’s facing a “more challenging” outlook in North America after the recent correction in prices. Canfor also said it’s prepared to take further action as needed amid Western Canadian wildfires that recently led to production cuts.
• Interfor also addressed the wildfires in a release last night, saying it expects to curtail at least 50 million board feet of production in B.C. next month, with additional adjustments possible in September.

NOTABLE RELEASES/EVENTS

• Notable data: Canadian GDP (May) and industrial product price index, U.S. personal income and spending
• Notable earnings: Enbridge, Imperial Oil, SNC-Lavalin, Telus, Telus International, George Weston, Restaurant Brands International, Exxon Mobil, Chevron, Caterpillar, Expedia Group, Procter & Gamble
• 8:30: Fairfax Financial holds quarterly conference call
• 10:00: Deputy Prime Minister and Finance Minister Chrystia Freeland and Industry Minister François-Philippe Champagne make announcement in Hamilton, Ont. to support steel industry