Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

Brace yourself: the Bank of Canada’s back-to-back half-point hikes (or jumbo, as they’ve come to be known) may only be an appetizer for more aggressive moves in its fight against inflation. Earl Davis, BMO Global Asset Management’s head of fixed income, told us he thinks the central bank will raise by three-quarters of a point at its next meeting, and possibly follow that up with another. Have to wonder what that will do to housing markets that are already cooling, and consumers who binged on cheap money.
On the slowdown in housing: Calgary’s real estate board reported a sequential drop in sales late yesterday (and we await Vancouver’s numbers today). As for consumer finances: new data from Equifax show a surge in credit card spending as total consumer debt rose almost nine per cent to $2.3 trillion in the first quarter. We’ll dig into the outlook for consumer spending shortly after 9 a.m., and check out BNNBloomberg.ca for more of Earl Davis’s commentary on the Bank of Canada, and why he’s on the fence about whether the bank is (or will be) in control of inflation.

MORNEAU SOUNDS ALARM

By the sounds of it, Bill Morneau thinks Canadians need to wake up to this country’s fragile economic prospects. "Though there have been nods to it from time to time, there is no real sense of urgency in Ottawa about our lack of competitiveness. It’s like we’re the proverbial frog in the pot, not realizing what happens to us as the heat gradually rises," he said in a speech to the C.D. Howe Institute last night, in which he also called out "anemic" capital investment levels in this country, and called for a "real" fiscal anchor. "Natural resources alone won't save us," he said. "Neither will cryptocurrencies, just so we've got that on the record."

OIL IN THE SPOTLIGHT

OPEC+ announced this morning it will accelerate output hikes by adding 648,000 barrels per day in July and August (the group’s statement made it clear the cartel and its allies are just moving up and splitting up output hikes that would have happened in September). The bigger issue might be the viability of OPEC+ itself as much of the world shuts its borders to Russian oil. Another factor at play today: the Financial Times reported that Saudi Arabia could ramp up output if Russian production slumps due to sanctions. One of the FT’s sources said “Saudi Arabia is aware of the risks and that it is not in their interests to lose control of oil prices.”

 ELECTION DAY IN ONTARIO

Polls have suggested it could be a landslide for Doug Ford’s Conservatives today. We’ll leave the politics to others and focus on what the future holds from a policy standpoint, particularly when it comes to housing. Reminder that in the budget presented in April, the government forecast a $19.9-billion deficit in this fiscal year amid $185.2 billion in program spending. We’ll carry the CTV News live election special starting at 7 p.m. this evening.

 OTHER NOTABLE STORIES

• Tourmaline Oil announced another dividend sweetener after markets closed yesterday. The natural gas producer said its quarterly payment to shareholders is rising to $0.225 per share from $0.20. It’s the fifth hike since the start of last year. Not two mention three special dividends along the way.
• Shares in Meta Platforms have stabilized in pre-market trading after they slumped in the last few minutes of trading yesterday on the back of Sheryl Sandberg’s announcement that she’s stepping down as chief operating officer. She will, however, retain her seat on the board of directors.
• NFI Group, the beleaguered Winnipeg-based bus maker that’s been hobbled by supply chain problems, could be a takeover target, according to Cameron Doerksen, who covers the stock for National Bank. He reckons NFI could attract interest from either a strategic buyer or private equity. NFI shares have tumbled almost 65 per cent since early 2020. 
• Descartes Systems is on our radar after the Canadian supply chain logistics specialist reported an 18 per cent rise first quarter revenue, it also said it might repurchase up to 10 per cent of its shares (pending TSX approval). Analysts, by and large, like the stock: eight buys, four holds, no sells. But this year hasn’t been kind to investors: shares have shed 26 per cent of their value.
• Alimentation Couche-Tard is getting one of its own inside Fire & Flower Holdings. That’s the pot retailer that Couche-Tard has a big stake in. After markets closed yesterday, Fire & Flower announced it’s hiring Stéphane Trudel, Couche-Tard’s senior vice-president of operations, as its chief executive. He replaces Trevor Fencott, who is also resigning from Fire & Flower’s board.
• This seems especially notable on a day when Lululemon is reporting: Canadian Tire announced this morning it’s launching its first-ever line of activewear, dubbed Forward With Design.

NOTABLE RELEASES/EVENTS

• Notable data: Canadian building permits, U.S. initial jobless claims
• Notable earnings: Lululemon, Indigo Books & Music, Canaccord Genuity
• Bank of Canada Deputy Governor Paul Beaudry addresses Gatineau Chamber of Commerce (embargo lifts 1045, speech at 1100, media avail at 1215)
• 1530: Canadian National Railway CEO Tracy Robinson and CFO Ghislain Houle address Bernstein conference
• 1530: Deputy Prime Minister and Finance Minister Chrystia Freeland meets with U.S. Treasury Secretary Janet Yellen in Washington, D.C. (also meeting at an unconfirmed time with U.S. National Economic Council Director Brian Deese)