Those rates will go up at least 100 basis points: David Dodge
Rather than me blabbering away about yesterday’s remarkable trading session, here’s what some of the pros told us about what was happening, and why:
“Bottoms are typically and historically made on Mondays. And [yesterday was] one of those types of monumental types of reversals where investors kind of swept up some of the best bargains.” – Brian Belski (BMO’s chief market strategist)
“I certainly think that the fear of the Fed has gotten ahead of itself.” – Art Hogan (National Securities’ chief market strategist)
Hogan also pointed out that this week’s earnings calendar has the potential to shift focus back to fundamentals from macro worries. Today at least, industrial bellwether General Electric provided an uninspiring snapshot of those fundamentals as fourth-quarter revenue fell three per cent, which its CEO pinned on “supply chain challenges, commercial selectivity” and uncertainty about a wind power tax credit. On the upside, it looks like Verizon and Johnson & Johnson are forecasting profits ahead of expectations. Overall, it’s a sour mood in the market as futures point to losses at the start of trading.
IN CONVERSATION WITH DAVID DODGE
The former Bank of Canada governor joins us at 8:30 a.m. There are few people who can deliver this level of perspective on the policy decisions (and communication strategies) that will be announced tomorrow by the Canadian and U.S. central banks. Don’t miss it.
WHAT’S NEXT FOR GOLD?
After a putrid year for gold miners on the Toronto Stock Exchange (and the commodity itself) in the loose money days of 2021, the Fed’s pivot toward tighter policy could theoretically make for more dismal days ahead. We’ll find out what the future might have in store for the sector when Gabelli Gold Fund Analyst Chris Mancini joins us shortly after 11 a.m.
OTHER NOTABLE STORIES
- IBM’s shares are rallying after the company again demonstrated the payoff from its pivot to the cloud. Revenue rose 6.5 per cent to US$16.7 billion in the fourth quarter, powered by proceeds from hybrid cloud offerings.
- Turquoise Hill Resources and Rio Tinto announced they’re going ahead with the underground expansion of their prized Oyu Tolgoi copper and gold project. The decision was made after a new agreement was reached with the government of Mongolia. Should point out the plan requires Turquoise Hill to raise at least US$650 million in a share sale by Aug. 31. The Bloomberg terminal shows at least two analysts have raised their recommendations on Turquoise Hill to a buy.
- Let’s not call it buyer’s remorse, but it sure sounds as though Alstom has discovered some surprises at the Bombardier business it acquired last year. “We’re solving problems one by one,” its CEO, Henri Poupart-Lafarge, said in an interview today about the integration of Bombardier’s rail assets. He added that the business evidently “suffered from an absence of control,” and that integration will take up to four years.
- Metro is raising its quarterly dividend 10 per cent to $0.275 per share while reporting flat fiscal first-quarter sales. Chief Executive Eric La Flèche acknowledged in a release his industry is “facing higher than normal inflationary pressures.” The company’s pharmacy business was a saving grace in the quarter as its same-store sales rose almost eight per cent, compared to a 1.4 per cent drop in food same-store sales.
- This has been a busy news cycle at Unilever. Today, it announced it’s slashing 1,500 management positions as it reorganizes its structure. While the consumer goods giant said it’s been working on a new structure for the last year, this morning’s announcement comes one day after reports surfaced that activist investor Nelson Peltz was building a stake, and 10 days after Unilever’s attempts to buy GlaxoSmithKline’s consumer health-care business were publicly rebuffed.
- ….And now for something completely different: Before today, I hadn’t heard of Pierin Vincenz or Raiffeisen, but even for the uninitiated like me, this headline from Bloomberg couldn’t be passed up: “Strip-Bar Habit Worth $220,000 Hangs Over Swiss Banker on Trial”
- Notable data: Canadian business openings and closings, U.S. Conference Board consumer confidence index
- Notable earnings: Canadian National Railway, Metro, Microsoft, General Electric, Johnson & Johnson, Texas Instruments, 3M, Verizon, American Express
- 900: International Monetary Fund releases World Economic Outlook update
- 900: Parliamentary Budget Officer releases report "Estimated Cost of Cleaning Canada's Orphan Oil and Gas Wells"
- 1200: Calgary Real Estate board releases housing market forecast