Feb 21, 2019
The Daily Chase: TSX climbs above 16,000 points; Canadian bank earnings loom
By Noah Zivitz
The S&P/TSX Composite Index closed above 16,000 points yesterday for the first time since Oct. 4. Almost two full calendar months into the year, the TSX has only suffered eight losing sessions in 2019 and is now up nearly 12 per cent year-to-date.
BANK EARNINGS LOOM
Heavyweights like Toronto-Dominion and Royal Bank of Canada have contributed the most to the TSX’s run higher this year – and they’re about to be put to the test, with bank earnings season starting tomorrow. Check out Paul Bagnell’s preview piece here.
POLOZ SPEECH
Bank of Canada Governor Stephen Poloz makes his first public remarks today since the bank’s monetary policy report in early January. Since then, the already slim odds of rates going up at the next policy-setting meeting have drifted lower and the Canadian dollar is little changed. Who knows what to expect from Poloz’s speech, considering it’s titled “Monetary Policy.” Here’s CIBC’s perspective, courtesy of North American Rates Strategist Ian Pollick: “This will not be the easiest event to trade into. The fact that the BoC is – relatively speaking – the most hawkish DM central bank makes us a bit nervous that there could be scope to further course correct expectations to the downside.”
SNC LATEST
Rarely has there been such a dramatic backdrop to a corporate earnings release. With SNC-Lavalin set to table year-end results tomorrow, The Globe and Mail has more behind the scenes reporting on the political scandal surrounding alleged interference in the engineering company’s corruption case. According to Globe sources, ex-attorney general Jody Wilson-Raybould told cabinet earlier this week that pressure from the Prime Minister’s Office was improper. Perhaps most amazing in the report, another source told the Globe that SNC warned in mid-September it “might have to move to Britain or that it could face a takeover bid.”
TEAM CANADA IN D.C.
Federal and provincial officials will be making the rounds in Washington over the next couple days. Presumably, they’ll pound the table to have steel and aluminum tariffs lifted while touting cross-border ties as the new North American free trade deal awaits ratification. The likes of Transport Minister Marc Garneau, Ontario Premier Doug Ford, Saskatchewan Premier Scott Moe and New Brunswick Premier Blaine Higgs will be on the ground. We'll track developments and look forward to speaking with Premier Ford from D.C.
OTHER NOTABLE STORIES
-Hydro One gave a nod to the latest flare up over its executive compensation structure in today's earnings release, saying "discussions of the framework is ongoing." The power company's fourth-quarter revenue and profit was in line with estimates. '
-Gildan Activewear could be a stock to watch today after fourth-quarter sales came in healthily above estimates (albeit alongside a full-year profit forecast where the midpoint falls short of the average analyst estimate).
-Shoppers Drug Mart was a standout for Loblaw in the company's latest quarter, with same-store sales in that division climbing 1.9 per cent in Q4. Loblaw is clearly trying to trim some fat, saying in the release "many initiatives are underway to reduce the complexity and cost of business operations."
-Bloomberg is reporting China Vice Premier Liu He will meet with U.S. President Donald Trump tomorrow in D.C. as trade negotiations continue. Today, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to be involved in high-level talks ahead of the March 1 tariff standstill deadline.
-Royal LePage's latest report on luxury real estate markets across Canada is blunt: "Provincial measures to dampen foreign buyer activity in Toronto and Vancouver have increased demand for luxury property in Montreal." According to LePage, luxury house and condo sales in Montreal surged 21.4 per cent and 28.9 per cent, respectively, in the 12-month period ending Jan. 31.
-Shares of global shipping giant Maersk are down more than 10 per cent today after a profit warning. This is about as good of an economic bellwether as you can find.
-Gran Tierra Energy announced after yesterday’s closing bell it’s paying $104.2 million for assets in Colombia’s Putumayo and Llanos basins
NOTABLE RELEASES/EVENTS
-Notable earnings: Loblaw, Hydro One, Finning International, Canfor, Newmont Mining, Eldorado Gold, Gildan Activewear, Domino's Pizza, Kraft Heinz
-Notable data: Canadian wholesale trade, StatsCan EI report, U.S. durable goods orders, U.S. existing home sales
-8:45 a.m. ET: Border Security and Organized Crime Reduction Minister Bill Blair and Health Minister Ginette Petitpas Taylor speak at Cannabis Opportunities for Indigenous Nations conference in Ottawa
-9:30 a.m. ET: Prime Minister Justin Trudeau makes announcement in Dartmouth, NS (plus avail)
-10:15 a.m. ET: Finance Minister Bill Morneau holds town hall in Barrie, Ont. (plus avail)
-1:00 p.m. ET: Bank of Canada Governor Stephen Poloz delivers speech in Montreal (remarks on site at 12:45 p.m. ET, plus news conference at 2:00 p.m. ET)
-1:00 p.m. ET: Ambassador David MacNaughton and Transport Minister Marc Garneau participate in Canadian American Business Council panel on new NAFTA in D.C. (plus avail)
-2:00 p.m. ET: Ontario Premier Doug Ford, Ambassador Kelly Knight Craft discuss trade at Canadian American Business Council conference in D.C.
-Robert Lighthizer, Steven Mnuchin, Liu He expected to participate in China-U.S. trade talks in D.C.
-Saudi Crown Prince Mohammed bin Salman begins two-day trip to China (expected to meet with President Xi Jinping)
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.
