The balance of risks points to another hike in June: Economist
The Canadian economy expanded at a faster-than-expected pace in the first quarter, growing at a 3.1 per cent annualized pace, sailing past economist expectations for a 2.5 per cent print. The implications are clear for the Bank of Canada (which, it should be noted, was looking for something closer to 2.3 per cent growth) ahead of its June 7 rate decision. The wrinkle here is the consumer spending side of things – demand for both goods and services continued to rise (up 1.5 and 1.3 per cent, respectively), which sort of speaks to the fact household consumption hasn’t yet been fully dampened by the higher cost of borrowing, raising the prospect of a further rate increase.
NATIONAL BANK CAPS OFF EARNINGS SEASON WITH A BEAT
National Bank of Canada is capping off big bank earnings season with a beat, putting a ribbon on what’s been something of a mixed bag this quarter. The bread and butter personal and commercial net income came in at $335 million, a good $30 million higher than estimates. Loan loss provisions – that cash set aside to cover potentially sour loans – was lower than estimates, at $85 million, so call it a win after most of the other lenders struggled with that item line this quarter.
GREAT-WEST LIFE SELLING PUTNAM
A bit of M&A news this morning, with Great-West Life selling Putnam Investments to Franklin Templeton for an upfront consideration of up to US$1 billion. It’s cash and stock – 33 million Franklin Templeton shares, US$100 million in cash six months after the fact, and up US$375 million payable between three and seven years after the deal closes, contingent on the performance of the unit.
OTHER NOTABLE STORIES
Our Bloomberg News partners are reporting Glencore is working on a sweetened bid for Teck Resources to break the impasse on its pursuit of the miner
Centerra Gold has obtained environmental approval to restart operations at its Oksut mine in Turkiye, which was shut down last year due to mercury leaching. (Centerra’s been running on one mine – Mount Milligan here in Canada – due to the Oksut shutdown and the seizure of its Kumtor mine in Kyrgyzstan)
- Notable data: Canadian GDP, Chicago PMI, U.S. Job Openings and Labor Turnover Survey
- Notable earnings: National Bank of Canada
- Notable guests: Louis Têtu, chairman and CEO of Coveo
- 1400: Beige Book
- Facebook AGM
- WalMart AGM