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Noah Zivitz

Managing Editor, BNN Bloomberg

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The S&P/TSX Composite Index is on a roll. Yesterday’s gains put it within nine points of closing at or above 20,000 for the first time since early June (to borrow from Amber Kanwar: attention round-number enthusiasts). And since the recent bottom on July 14, the index has rallied nine per cent and closed higher in all but four sessions. This morning we’ll dig deeper into the anatomy of what’s powering the gains, and the outlook as investors hope inflation has peaked and central banks will slow the pace of rate hikes.

FREEDOM MOBILE SALE PACT FIRMED UP

It took a little longer than originally anticipated, but Rogers, Shaw, and Quebecor this morning finally confirmed a definitive agreement for the Montreal-based telco to acquire Freedom Mobile — so long as Rogers and Shaw clear the two remaining regulatory hurdles that are in the way of their $20-billion takeover arrangement. There isn’t any major new information in this morning’s announcement. All we know is that the firmed-up pact allows for Quebecor to buy Freedom under terms that are “substantially consistent” with the original $2.85-billion deal announcement in June. We’ll see if this inspires a bit more confidence for Shaw investors; its Class B shares are languishing way below the $40.50 takeover offer from Rogers as competition commissioner Matthew Boswell digs in his heels in opposing the deal and last month’s network outage has given Canada’s industry minister more to consider before deciding on the deal’s fate.

U.S. MARKET WATCH         

Futures are pointing to another higher open for the major U.S. indices today after yesterday’s gains faded into the closing bells. And with two straight days of relief on the inflation front in the U.S., this morning we’ll get a sense for whether that’s boosting spirits on Main Street, with the release of the University of Michigan’s consumer sentiment index.

CASH KEEPS FLOWING IN ENERGY SECTOR

The latest producer to share its wealth with shareholders is Vermilion Energy, which announced a dividend hike after markets closed yesterday and signalled its intent to ramp up share buybacks. The oil and natural gas producer said its quarterly dividend will rise 33 per cent to $0.08 per share. And while it said it has “significant capacity” to continue raising its payout, Vermilion indicated the bulk of future capital returns will be via share buybacks (how appropriate that we have Eric Nuttall on Market Call today). We’ll get more insight into that strategy, as well as Vermilion’s production outlook, when president Dion Hatcher joins us at 11 a.m. EDT.  

LIGHTS BACK ON IN CANADA’S FINANCIAL HUB

Hydro One confirmed shortly after 8 p.m. EDT yesterday that power had been restored after a widespread outage that affected downtown Toronto, including the city’s financial district. The utility company blamed the mess on a crane that collided with transmission lines while being shipped by barge.  

OTHER NOTABLES FROM THE EARNINGS BARRAGE

  • Wheaton Precious Metals slashed its outlook for full-year attributable production due to a range of issues including a terminated streaming agreement and flooding that hampered output at another mine it depends on.  
  • Northland Power is on our radar after its crushed second-quarter profit expectations ($335 million in adjusted EBITDA versus $234.9-million estimate). In a release, CEO Mike Crawley said his company benefitted from higher market prices in Europe during the quarter, which brings us back to the broader European energy crunch narrative. Northland also raised its full-year outlook for adjusted EBITDA and free cash flow.
  • Exchange Income raised its full-year outlook for adjusted earnings before interest, taxes, depreciation, and amortization and nudged up its monthly dividend after reporting record quarterly revenue.
  • Dentalcorp reported a 25 per cent surge in second-quarter revenue on the back of its growth-by-acquisition strategy. Can’t help but wonder what the dental-care program that the Liberals and NDP are negotiating will mean for this company’s future.
  • Chartwell Retirement Residences had some cautionary language in the latest earnings release, as its chief executive said recent COVID outbreaks in the company’s facilities “impacted our leasing efforts in the short term.” The company also said Omicron-related expenses continue to be a factor.
  • Yet another reminder today that Canadians have been eager to resume dining out: SIR Royalty Income Corp., whose revenue is based on the performance of brands like Jack Astor’s and Reds, announced same-store sales surged 232.7 per cent in the second quarter at its pool of restaurants.  

NOTABLE RELEASES/EVENTS

  • Notable data: University of Michigan U.S. consumer sentiment index
  • Notable earnings: Dentalcorp, MDA
  • 1100: Ontario Premier Doug Ford and Economic Development, Job Creation, and Trade Minister Vic Fedeli make announcement in Dundalk, Ont.