May 13, 2022
The Daily Chase: TSX closing out brutal week; Musk's Twitter deal in question
By Noah Zivitz
First Look With Surveillance: Strong Dollar, EU Sanctions
Managing Editor, BNN Bloomberg
Global markets and U.S. futures are suggesting this brutal week could end on a high note. For the S&P/TSX Composite Index, the weekend can’t come soon enough after sliding into correction territory this week. The index enters today down 4.5 per cent for the week, with only 21 members trading higher over the last four days. Paul will have details at 8 a.m. on what worked against Canadian stocks this week, and the outliers that managed to post gains. Bigger picture: Société Générale Macro Strategist Kit Juckes told clients this morning “only when yields peak will the cycle break … it seems highly implausible that this latest peak, in yields/spreads/dollar, will be the last.”
MUSK PUTS TWITTER TAKEOVER ON ICE
Another twist this morning in Elon Musk’s attempt to buy the social media platform. Musk announced (in a tweet, naturally) that the deal is “temporarily on hold” pending a review of fake accounts. Twitter shares sank upward of 20 per cent in pre-market trading immediately after his tweet at 5:44 a.m., and there was a relief rally in Tesla shares (presumably at the prospect its CEO won’t have to sell more shares and can keep his focus on the automaker). We’ll chase reaction and insight on what could happen next in this saga. Reminder that there’s a US$1-billion break fee potentially at stake if the deal falls through. Though Musk followed up today’s original tweet with another saying he’s still committed to the deal.
MOVIES AND HOTEL LINENS: PROXIES FOR THE REOPENING TRADE
The loosening of COVID restrictions has been good business for Cineplex. The theatre operator posted a 452 per cent surge in first-quarter revenue this morning and it swung to a profit on an EBITDA basis (though its “EBITDAaL” (??) was still in the red). CEO Ellis Jacob joins us shortly after 1pm.
K-Bro Linen is another case study in navigating the reopening. The Edmonton-based purveyor of linen and laundry services reported a 299 per cent revenue surge in its hospitality business. But there are some blemishes; like a narrowing profit amid rising costs and staffing problems.
OTHER NOTABLE STORIES
- Aurora Cannabis is doubling down on cost savings as the Canadian pot producer attempts to offset a challenging domestic market. The company said late yesterday it’s now aiming for $150 to $170 million in savings; it previously targeted $60 to $70 million in cuts. As for the quarter that just wrapped: net revenue in recreational pot unit fell to US$10.3 million from US$14.4 million in the previous quarter, which Aurora pins on “pricing pressures” and store closures in some provinces.
- Canadian investors continue to be showered with payout hikes. Among those I’ve seen since yesterday’s closing bells: H&R REIT announced its annual distribution will rise almost six per cent to $0.55 per unit; and Algonquin Power & Utilities said its board authorized a six per cent hike, taking the quarterly payment to US$0.1808 per share.
- Dye & Durham has been swept up in the tech carnage, with its shares down almost 70 per cent this year on the TSX. The cloud-focused software firm’s revenue jumped 78 per cent in its fiscal third quarter thanks to a growth-by-acquisition strategy. Chief Operating Officer Martha Vallance joins Paul at 840 a.m.
- Robinhood Markets shares are surging in pre-market trading after the company brought one of the biggest names in crypto into its corner. An entity controlled by Sam Bankman-Fried, the founder and chief executive of the FTX crypto exchange, disclosed a 7.6 per cent stake in Robinhood after markets closed yesterday. The boilerplate language in the filing indicates SBF views the trading app operator’s shares as “an attractive investment” and he has no intent of activism.
- Notable data: University of Michigan U.S. consumer sentiment index
- Notable earnings: Cineplex, Onex, Emera
- 900: Industry Minister François-Philippe Champagne holds media call re. meetings in Belgium and Germany
- 1030: Bank of Canada releases Senior Loan Officer Survey