Hike rates

The Daily Chase: BoC Rising and Sounding the Alarm; Musk calls for his return to power

The Bank of Canada carried out the half-point rate hike expected by Bay Street this morning, bringing the target for the overnight rate to 1.5%. It is the second consecutive movement of this magnitude, and the language used in the statement is decidedly warmongering. He warned that inflation “is likely to rise further in the near term” and that “the risk of high inflation taking hold has increased.” And so the bank reiterated previous language about being ready to act “forcefully” and that it expects further hikes to be needed. How much more? And how high? This is what we will probe today by bringing in guests to assess the implications for the economy, fixed income markets, banks, household finances and housing markets.

WESTJET CEO EXPLODES FEDERALITY

This is perhaps the most outspoken criticism of Canadian government travel policies that I have seen from the CEO of a major Canadian airline. In a Tweeter Last night (from an unverified account) WestJet CEO Alexis von Hoensbroech said ‘it no longer makes sense to maintain’ the vaccination mandate for travelers and workers in the airline industry. He added that dropping the mandate would “mitigate some of the operational challenges at airports.”

TSX STREAK CANCELED

The S&P/TSX Composite Index lost points yesterday for the first time since May 18, ending its longest winning streak since October as energy heavyweights Canadian Natural Resources, Suncor and Enbridge pulled the market down. Glass half full: The TSX is up 5% since the recent low on May 12. Glass Half Empty: The TSX is down 6% from its March 29 closing high.

TELL US WHAT YOU REALLY THINK, ELON

“They should pretend to work somewhere else.” So said Elon Musk in a Tweeter early this morning after someone tweeted a (purportedly) leaked memo sent by Musk to Tesla management staff that ordered them to work in the office at least 40 hours a week if they also wanted the ability to perform certain remote tasks. I can’t help but wonder how that tone is going over with his team and the signal he’s sending to Twitter employees as they watch Musk’s takeover attempt unfold.

OTHER NOTABLE STORIES

  • WSP Global announcement this morning it is paying US$1.8 billion to buy the environment and infrastructure business of John Wood Group Plc. In its statement, WSP said the deal would immediately boost profits and touted it as a significant expansion of its US environmental consulting business.
  • CAE said this morning it expects “additional opportunities” for its defense business due to “current geopolitical events (which) have galvanized national defense priorities in the United States and across NATO” . The Montreal-based simulator company, best known for its aviation unit, reported this morning a 7% increase in fourth-quarter revenue and adjusted earnings per share that jumped 32% year-on-year. ‘other. Revenue for the company’s defense unit soared 40% to $469.5 million. These were the results that had been delayed due to auditors needing more time to complete their work.
  • BlackBerry has an asset sale that’s on the rocks. The company announcement this morning he is “exploring alternative options” for a basket of non-core patents he previously agreed to sell to Catapult IP Innovations for US$600 million. In a statement, BlackBerry said it was “still looking forward” to closing the deal with Catapult, but since it still hasn’t closed and Catapult is still working on financing, BlackBerry is opting to play the field.
  • Laurentian Bank announcement a modest dividend hike this morning, with the quarterly payout rising from $0.44 to $0.45 per share. It also reported fiscal second-quarter adjusted earnings that beat expectations ($1.39 vs. $1.15).
  • Salesforce.com shares rose nearly 10% in premarket trading after the maker of customer relationship management (CRM) software raised its full-year earnings forecast, while reducing its revenue outlook. Entering today’s session, Salesforce shares are down 37% year-to-date.
  • What a difference a year makes for computer manufacturers. HP late yesterday said revenue from its consumer business fell 6% year-over-year in the fiscal second quarter. In the second quarter of its previous fiscal year, consumer revenues jumped 72%. This may be a sign that the upgrade cycle has run out or that there is simply less demand as more workers return to offices.
  • Jamieson Wellness announcement this morning, it buys Nutrawise Health & Beauty Corporation for US$210 million, plus future contingent payments. The deal is a mix of cash and stock; Jamieson said the takeover would immediately boost its earnings after it closes.

NEWS RELEASES / NOTABLE EVENTS

  • Notable data: Calgary Real Estate Board monthly sales figures (exact time unknown; it will be before 12:00 MT), ISM US manufacturing index
  • Notable benefits: Laurentian Bank of Canada, CAE, GameStop
  • 10 a.m.: Bank of Canada releases interest rate decision
  • 11:30 a.m.: The Privacy Commissioner of Canada and the privacy officers of Quebec, British Columbia and Alberta hold a press conference to discuss the results of a Tim Hortons mobile app joint investigation
  • 2:00 p.m.: The US Federal Reserve publishes the Beige Book
  • ~5:30 p.m.: Former Finance Minister Bill Morneau delivers keynote address at CD Howe Institute Directors’ Dinner