First Look With Surveillance: Apple Ditches, Ian Strength
The market whiplash continues this morning. Initially, the focus was the debt market, where the U.S. 10-year treasury yield climbed above four per cent for the first time since 2008 thanks to those persistent rate-hike/recession fears. And then, the mood improved (at least temporarily) when the Bank of England announced it will step in to buy some U.K. government bonds starting today. “Were dysfunction in this market to continue or worsen, there would be a material risk to U.K. financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy,” it stated. We’ll chase reaction to the signal this sends about the difficult balancing act facing central banks.
CANADA'S OUTLIER HOUSING MARKET
Re/Max is out with a new forecast for the fourth quarter that looks pretty much exactly as you’d expect at a high level. One outlier amid the broadly dour outlook: Calgary, where sales are seen surging 25 per cent year-over-year in the final three months of this year, and prices are expected to rise three per cent from a year earlier. “Interest rate hikes and recession worries have not had a notable effect on the market, due to the region’s relative affordability,” the real estate firm said.
CANOPY BAILS ON RETAIL
The overhaul of what was once Canada’s most ballyhooed cannabis producer continues. Canopy Growth announced after markets closed yesterday that it’s exiting retail to focus on the core business of producing pot, in the hope that this divestment will help it achieve profitability. Financial terms weren’t disclosed, which is a telling sign considering that once upon a time, pot-store licences were seen as a golden ticket.
TURNING THE TABLES ON CINEWORLD
The Wall Street Journal is reporting Cineplex is exploring the possibility of buying Regal as Cineworld, the U.S. movie-theatre chain’s parent company, as it navigates its way through Chapter 11 bankruptcy. It would be quite a role reversal, considering it was Cineworld that was supposed to buy Cineplex before the pandemic blew up that deal and led to a bitter legal battle in which Cineworld could be on the hook for $1.24 billion in damages. Cineworld’s lenders would be key to any possible Cineplex-Regal tie-up.
LANDMARK PIPELINE DEAL
Enbridge announced this morning it’s selling an 11.57 per cent interest in a basket of seven of its Alberta pipelines to 23 Indigenous communities for $1.12 billion. It’s the latest (and largest) in a series of economic engagement transactions between major Canadian energy companies and Indigenous groups — and it comes a few days before Canada’s second National Day for Truth and Reconciliation. We’re chasing principals.
CP-KCS FACE MOST DAUNTING REGULATORY HURDLE
The chief executives of Canadian Pacific Railway and Kansas City Southern will make the case for their US$27.2-billion (US$31 billion including debt) deal to the U.S. Surface Transportation board today, as the regulator opens a three-day hearing about the takeover. We know the companies see their deal as an opportunity to bolster the North American supply chain and an environmentally-friendly alternative to trucks. We’ll keep tabs on the hearing as dozens of rival rail operators, customers, and citizens have their say.
APOTEX AGREES TO TAKEOVER
The Canadian pharma giant that was founded by Barry Sherman announced this morning it agreed to be acquired by SK Capital. Terms weren’t disclosed. The company’s future was thrown into doubt after the murder of Barry and his wife Honey in 2017; and Bloomberg News reported last year that Apotex was taking another look at a possible sale after weighing the possibility in 2019.
OTHER NOTABLE STORIES
- Bloomberg News is reporting Apple has scrapped plans to boost iPhone output because a hoped-for demand surge hasn’t panned out.
- Whitecap Resources said it’s on track to hit important debt-reduction milestones that will trigger a dividend hike of 66 per cent from current levels in mid-2023. It also dangled the possibility of special dividends and share repurchases.
- BlackBerry management had a conservative tone in a conference call with analysts late yesterday after reporting a smaller second-quarter adjusted loss than expected. Despite momentum in the company’s Internet of Things business (which includes QNX), CEO John Chen said it was “prudent” to maintain – rather than raise – the division’s full-year revenue outlook due to macro headwinds. He also expressed frustration about the delayed sale of BlackBerry’s non-core patents.
- Biogen shares are surging after the biotech company announced encouraging results from the phase three trial of an Alzheimer’s treatment that it’s developing with Eisai.
- Algoma Steel forecast adjusted earnings before interest, taxes, depreciation, and amortization late yesterday that would fall well short of the average analyst estimate. The company rattled off a number of production setbacks, including something it describes as “temporary workforce availability events.”
- Notable earnings: AGF Management
- 930: U.S. Surface Transportation Board opens three-day hearing into Canadian Pacific Railway’s planned takeover of Kansas City Southern
- 1000: International monetary Fund releases report on Bank of Canada’s transparency practices (Bank of Canada will simultaneously release its response to the report)
- 1200: Canada Infrastructure Bank CEO Ehren Cory addresses Canadian Club of Toronto
- Bloomberg two-day Canadian Finance Conference begins (speakers include Nutrien President and CEO Ken Seitz at 1015, National Bank President and CEO Laurent Ferreira 1110, Bombardier President and CEO Éric Martel at 1125, ex-Finance Minister Bill Morneau at 1140