Value rotation helped the TSX outperform U.S. counterparts in Q1: Fiera's Bangsund
The S&P/TSX Composite made it four-for-four yesterday, extending its streak of record closing highs as Alimentation Couche-Tard and Shopify led the way. The S&P 500 also closed at a record, nearing its intraday high in the moments after minutes from the last FOMC meeting left no room for doubt that the U.S. central bank is in zero rush to adjust policy. Investors will have more to absorb from the Fed today, when Chair Jerome Powell speaks on an IMF/World Bank Spring Meeting panel.
IN CONVERSATION WITH DAVE MCKAY
The chief executive officer of Royal Bank of Canada joins Bloomberg Markets today to share his thoughts on Canada’s economic outlook and his bank’s performance during the pandemic. Interesting to see news this morning that McKay acknowledged staff burnout in a memo today and is providing employees with an extra paid day off. Don’t miss our interview with him at 1 p.m.
MORTGAGE STRESS TEST BACK IN PLAY
The Office of the Superintendent of Financial Institutions is ready to restart its re-assessment of the stress test parameters for uninsured mortgages. Recall that in January 2020, before the extent of COVID's threat to the world was evident, the banking regulator announced a review of the qualifying rate used in B-20 testing (wherein borrowers must show they can service their debt at the greater of their contract rate plus 2 per cent or the Bank of Canada's five-year rate). By mid-March of last year, OSFI called off the process due to financial tumult. Today, we're expecting the re-launch of consultations, with an announcement at noon. We'll be ready for it and expect to speak with OSFI Superintendent Jeremy Rudin shortly after 3 p.m. Should also flag that we’re getting a fresh snapshot of housing sentiment today: A new Scotia survey shows 36 per cent of Canadians believe home prices will fall in the next year and 57 per cent believe now is a good time to buy because of low interest rates.
MORE THAN HALF OF CANADIANS ON BRINK OF INSOLVENCY
At least that’s the takeaway from the latest MNP consumer debt index, which shows 53 per cent of respondents said they’re within $200 every month of not being able to cover their debt and bills. Check out CTV Chief Financial Commentator Pattie Lovett-Reid’s perspective here.
With less than two weeks to go until the first federal budget in more than two years, the C.D. Howe Institute delivered its policy recommendations in a shadow budget published yesterday. Warning of the need to avoid a “wrenching adjustment” in the future if Canada’s debt-to-GDP ratio isn’t brought under control, the think tank is (among other things) recommending raising the GST by two percentage points, taxing foreign tech giants, phasing out the first-time homebuyer tax credit, and resisting the urge to proceed with up to $100 billion in additional stimulus over the next three years. As for measures to bolster the economy, it’s recommending cutting the corporate tax rate two points to 13 per cent and introducing a temporary tax credit to incentivize business investment.
OTHER NOTABLE STORIES
- Canopy Growth has struck a deal to buy The Supreme Cannabis Company for $435 million in shares and cash. Canopy is zeroing in on the appeal of owning the 7Acres premium pot brand and says there could be $30 million in cost savings within two years.
- Enerplus announced this morning it’s paying US$312 million acquire Williston Basin assets from Hess Corp.
- We need some clarity on precisely what the state of play is at Cenovus Energy with its Asian assets. Earlier this week, CEO Alex Pourbaix made noise about taking a “hard look” at the Asia Pacific assets that were acquired in the Husky deal. Now, Cenovus Director Frank Sixt told our Bloomberg partners that the company is pleased with the assets and that no decision has been made on what to do with them.
- Roots will be on our radar after reporting a 22 per cent plunge in fiscal fourth-quarter revenue, which the retailer of course blames on COVID-related restrictions. On the upside, online sales surged 60 per cent year-over-year.
- Stantec is expanding its mining expertise with the acquisition today of Australia-based Engenium. Terms weren’t disclosed.
- Notable data: U.S. initial jobless claims
- Notable earnings: Roots, Constellation Brands
- 12 p.m. ET: OSFI releases new consultation re. minimum qualifying rate for uninsured mortgages (media call at 2 p.m.)
- 12 p.m.: U.S. Federal Reserve Chair Jerome Powell speaks at IMF seminar “Debate on the Global Economy”