Scotiabank calls January BoC rate hike, 175 basis points through end of 2022
We remain focused on the Bank of Canada’s upcoming rate decision. Scotia made waves yesterday with its call for six hikes this year, starting with liftoff next Wednesday, in a rate-hike campaign (including one half-point move) that would push the central bank’s policy rate to two per cent. And now National Bank is also calling for liftoff next week. The market is moving in that direction this morning. Last time I checked, Bloomberg’s WIRP screen was showing investors pricing in seven quarter-point hikes this year. But for every call for a move higher next Wednesday, we’ll hear the argument that Omicron and other factors should compel the bank to hold off until March. I’d like to hear more about the potential risks (like an abrupt drop in the dollar’s value) if the Bank of Canada punts.
The tech rout has been interrupted this morning, with futures pointing to a higher open for the major U.S. indices. Yesterday’s slide pushed the Nasdaq into correction territory, falling 10.7 per cent from its November high. Shopify was responsible for more than one-third of the TSX’s drop yesterday and its shares are now down almost 40 per cent in the last two months. Commodity prices aren’t offering up much direction this morning with oil and gold prices flat.
WAGES AT PLAY IN WAR FOR TALENT
When Andrew McCreath delivered his annual market forecast for BNNBloomberg.ca, he warned that one of the great risks for central bankers is what he described as the potential for “the more insidious demand pull type of inflation.” That’s where wages come into play in assessing the inflation outlook. And so let’s underscore what 1Password CEO Jeff Shiner said a few hours after his company unveiled a record Canadian fundraising. He told us that just last week all 1Password staff members were handed a 7.5 per cent raise “because the cost of things [is] just more expensive than they were last year … you also have to just do what’s right for your people,” he said. We’ll chase more views on pay trends.
WHAT’S COOKING AT BHP?
There’s been a drumbeat of speculation this week that BHP Group is on the prowl for a monster takeover. Yesterday, New York-based research firm Gordon Haskett pondered the possibility of BHP taking a run at Nutrien (imagine that, considering BHP’s failed attempt to buy Potash Corp more than a decade ago, and now with a Canadian CEO at its helm). Earlier in the week, Bloomberg News reported the mining giant could have its eyes on Glencore or Freeport-McMoran. We’ll chase perspective on this.
LOOSENING UP COVID RESTRICTIONS
CTV News and others are reporting Ontario Premier Doug Ford today will tee up an easing of rules that were implemented last month. Ford is expected to announce restaurant dining rooms will be allowed to reopen at 50 per cent capacity. CTV is reporting that will be the first step toward gradually lifting all restrictions in the coming weeks, and that Ford is eyeing a full reopening in March.
OTHER NOTABLE STORIES
- Birchcliff Energy has released a five-year plan that includes a goal of being debt-free in 2023. As a point of reference, the gas producer forecast 2022 year-end debt of $175 million to $195 million.
- United Airlines announced its capacity this year will be lower than 2019 pre-pandemic levels due to Omicron’s impact on demand. For the most recent period, fourth-quarter capacity was 23 per cent below Q4 ’19 levels. However, its adjusted loss for the quarter was much less than analysts expected as revenue jumped 140 per cent from a year earlier.
- Hut 8 is branching out beyond crypto mining. The company announced this morning it's paying $30 million to acquire TeraGo's data centre business. According to a release, that business is comprised of five data centres in this country serving 400 commercial customers.
- Notable data: U.S. initial jobless claims and existing home sales
- Notable earnings: Netflix, CSX
- 1130: Ontario Premier Doug Ford will be joined by Deputy Premier and Minister of Health Christine Elliott and Chief Medical Officer of Health Dr. Kieran Moore to make an announcement
- 1630: Ivey Business School hosts panel featuring Former Bank of Canada Governor Stephen Poloz