5 things you need to know to start your trading day
Here are five things you need to know this morning:
It’s giving thanks: Trading volumes will be low with Americans giving thanks for the rally in U.S. stocks and bonds. The S&P 500 is just five per cent away from an all-time high and the bond market is on track for its best month since March. As for the TSX, well, it’s been watching from the sidelines. The go-nowhere index continues to hum merrily along the 20,000 mark. This morning we got a read of economic activity in the Euro area that showed both manufacturing and services increasing from two-year lows, but still stuck in contraction. Oil posted an intraday reversal after an initial sharp sell-off on the back of OPEC+ delaying its meeting. But it is a delay, not a cancellation, so perhaps investors are still skittish about being short into the Nov. 30 meeting.
Origin story: Brookfield Asset Management has been trying to buy Origin, Australia’s largest utility, for the past year. That deal was dealt another blow as it appears its top investor was poised to reject an amended offer by Brookfield. In classic Brookfield form, the deals on the table are far from straightforward. Under the newest amendment, Brookfield is giving investors the opportunity to re-invest into Origin’s energy generation and retailing business. Its backup plan is to try and acquire Origin’s energy unit while its partner in the bid, EIG, would make an off-market offer for the remaining business. The holdout is AustralianSuper, a pension fund which owns 17 per cent of Origin. AustralianSuper said in a statement that the latest offer is a “low-ball” and argued Origin should remain owned by AustralianSuper members, not in the hands of “a private equity consortium planning to shortchange them.” A shareholder vote on the amended deal that allows for reinvestment will now be held Dec. 4.
Clean up on aisle two: We will watch shares of Empire after catching a downgrade from Vishal Shreedhar at National Bank. Yesterday, grocery stocks were in rally mode on no specific news (perhaps no news in the fall fiscal update was the good news). Empire, which owns Sobeys and Farm Boy, is up eight per cent so far this year and Shreedhar thinks it’s time to cash in. While Empire trades a discount to peers, it is not enough to tempt the analyst who says Empire has less exposure to pharmacy which is the real crown jewel these days.
Bring in the noise: Investors are bracing for bank earnings season which kicks off next week. Preview notes have been flying out, each with a heavy dose of caution. Yesterday I mentioned TD was downgraded by CIBC, which cited concerns about a negative surprise. Today, KBW’s Mike Rizvanovic says TD is his top pick. You know I love me a bull-bear debate. Rizvanovic says TD has all that excess capital (from not doing the deal with First Horizon) which it will deploy into buybacks and growth initiatives. He doesn’t think that is reflected in the stock. TD reports Nov. 30. We will see which side wins out!
I’ll just have some salad: More than nine million Americans have filled prescriptions for weight loss and diabetes drugs like Ozempic and Mounjaro in the last three months. This could mean a more slimmed down Thanksgiving when Americans sit around the table with family this holiday season. This is one of those stories that’s heavy on anecdotes and light on facts, but there is no denying what these drugs do and how many people are on them. The big question is whether family members will disclose they are on the weight-loss drugs and face the wrath of the aunt who isn’t satisfied until your stretchy pants don’t stretch anymore. As Stephen Colbert said last night on “The Late Show,” in America it is rude to leave the Thanksgiving table alive.