The Daily Chase: OPEC+ opens the taps (barely); Rate hikes send home sales skyrocketing
At the time of writing, oil prices had moved into positive territory after OPEC+ agreed to a historically low production increase of just 100,000 barrels per day for next month. Recall that the cartel and its allies added 648,000 barrels per day in July and August after bringing forward adjustments that would have taken place in September. Let’s also keep in mind that today’s meeting was the first since US President Joe Biden spoke with Saudi Crown Prince Mohammad Bin Salman to make the case for increased oil supplies. So there’s a lot at stake here for geopolitics and for investors considering that since the recent high on June 8, the price of West Texas Intermediate crude has fallen almost 24% – which helps explain why the TSX’s energy subgroup has become a laggard. over this period, as it fell 13.4% through the close of trading yesterday.
DEEP FREEZE AFFECTS HOUSING MARKETS
We’re in the midst of the monthly data dump from the nation’s largest housing markets. Yesterday was in Calgary, where July home sales fell nearly 21% in sequence. Today is Vancouver, where the local real estate board said this morning that sales fell 22.8% last month. Tomorrow is Toronto, where the preliminaries figures from the broker John Pasalis show sales at their lowest level in 20 years. The bite of higher interest is becoming clearer day by day.
ANOTHER MEA CULPA CEO AS WORKERS PAY THE PRICE
Robinhood Markets is cutting its workforce by 23%, and its CEO sounds a lot like Tobi Lütke last week when he announced a 10% cut in Shopify’s workforce. “Last year, we staffed many of our operational functions assuming that the heightened retail engagement we had seen with the stock and crypto markets in the COVID era would persist well into 2022. In this new environment, we operate with more staff than As CEO, I have endorsed and taken responsibility for our ambitious staffing trajectory – it’s on me,” Vlad Tanev wrote in a blog post. He cited the crypto crash, high inflation levels and slowing business activity as triggers for the job cuts. Robinhood too published financial statements a day earlier than expected, posting a 6% sequential increase in revenue, despite a 19% drop in equity trading revenue.
OTHER NOTABLE STORIES
- Can’t help but wonder what’s coming up at Canadian National Railway after this announcement it raises US$1.5 billion in a debt sale, the proceeds of which are used for acquisitions, among other broad corporate purposes.
- Definity Financial announced a 7% decline in second quarter underwriting result due to catastrophe losses during the period. However, analyst John Aiken of Barclays Capital told clients in a note to look at past losses related to these extreme events and focus instead on core profit which exceeded the average estimate and rising premiums written. during the quarter.
- Finning International beat profit and revenue expectations second quarter despite supply difficulties in the construction sector in Canada and political uncertainty in Chile. CEO Scott Thomson joins us at 11:45 a.m.
- Semtech and Sierra Wireless ended speculation after markets closed yesterday, announcing they entered into a repurchase agreement at the previously disclosed price of US$31 per Sierra share.
- Airbnb recorded record bookings in the second quarter, it turned profitable and its revenue jumped 73% from second-quarter 2019 levels. It also said it was in the midst of its strongest summer travel season ever. It will also buy back up to US$2 billion of its shares. And yet, its action falls in pre-marketing.
- Starbucks business ransacked in China second quarter; same-store sales there have fallen 44% amid COVID lockdowns. On another sour note: the company’s operating margin deteriorated from 19.9% to 15.9%, largely due to inflationary pressures. However, U.S. same-store sales narrowly beat the average estimate on the back of higher prices, revenue hit a quarterly record of US$9.2 billion, and adjusted profit beat expectations.
- PayPal shares rose about 10% in premarket trading after the payment service announcement that Elliott Investment Management took a US$2 billion stake and entered into a formal information-sharing pact with the notorious US activist investor. Paypal also released its quarterly results and announced its intention to buy back up to $15 billion of its shares.
- Another Dye & Durham takeover could be on the ropes. The Toronto-based consolidator of cloud-based software for professionals said it will “consider its options carefully” after the UK competition watchdog sounded the alarm over the proposed acquisition of TM Group (UK ) Ltd by Dye. July 2021. This comes just after Dye & Durham finally renegotiated its takeover of Link Administration Holdings after that deal ran into regulatory hurdles in Australia.
NEWS RELEASES / NOTABLE EVENTS
- Notable data: Real Estate Board of Greater Vancouver monthly sales, US ISM services index, US factory orders
- Notable Profits: Nutrien, Sun Life Financial, Great-West Lifeco, Brookfield Infrastructure Partners, Boralex, Innergex Renewable Energy, Iamgold, B2Gold, Algoma Steel Group, NFI Group, Ovintiv, Yum! Brands, eBay, Robinhood Markets, Under Armor
- 10:00 a.m.: Ontario Premier Doug Ford makes an announcement in Stratford alongside Labor Minister Monte McNaughton
- 11 a.m.: German Foreign Minister Annalena Baerbock and Foreign Minister Mélanie Joly hold a joint press conference in Montreal ahead of the 11:30 a.m. fireside chat hosted by the Montreal Chamber of Commerce event
- 1 p.m.: Deputy Premier and Minister of Finance Chrystia Freeland makes media available after meeting with Port Saint John workers