The Daily Chase: OPEC + faces pressure to pump more oil; Stocks stagnate as traders reflect on the Fed’s roadmap
What will OPEC + do as oil nears a seven-year high and the cartel and its allies speak out from the United States to pump more oil? That was the big question today. At the end of the morning, we learned: the group of oil-producing countries is staying the course, with a new production increase of 400,000 barrels per day in December. The consequences are far-reaching as the world grapples with inflation, as oil producers and their investors reap the rewards of high oil prices (more details below).
US Federal Reserve Chairman Jerome Powell addressed these consumer inflation pressures yesterday after his central bank presented its roadmap to curtail asset purchases. “We fully understand this [households are] in progress and we will use our tools over time to ensure that [high inflation] does not become a permanent feature of life, ”he said. Investors seemed to like what they read and heard from the Fed yesterday, as major US markets closed at all-time highs (for the Nasdaq, this was the eighth consecutive day of gains). Enthusiasm wanes this morning, with futures pointing to a flat open.
WAITING FOR OSFI’S GREEN LIGHT
I can only imagine that bank executives and investors across the country are eagerly awaiting the announcement from the Office of the Superintendent of Financial Institutions this afternoon. All we know for sure is that Superintendent Peter Routledge will provide an update on capital distributions. These capital distribution options have been limited since March of last year, when banks were barred from raising dividends and buying back shares. We’ll announce the news when that happens and look forward to speaking with Routledge at 4:10 PM.
Far too much to dissect here from A to Z. Here are some of the notable ones since yesterday’s closing bell:
- Canadian Natural Resources reported third quarter cash flow from operating activities which doubled year over year. Naturally, he announced a 25 percent increase in the quarterly dividend (bringing the payout to 58.75 cents per share). The company also said it is now targeting debt below $ 15 billion (net debt was $ 15.9 billion at the end of the quarter).
- Tourmaline Oil, a favorite of our guests, reported a 172 percent increase in its cash flow year over year. And management said they are planning additional special dividends after recently making a one-time payment that was higher than the total annual dividend.
- Paramount Resources announced a tripling of its monthly dividend (to six cents per share) and raised its free cash flow forecast for the entire year while reporting a 73% sequential increase in adjusted cash flow.
- Three of Canada’s insurance giants reported late yesterday. Manulife Financial narrowly missed earnings expectations due to weak operations in Asia as COVID-related restrictions intensified. Sun Life Financial narrowly exceeded expectations due entirely to improved profitability in its asset management business. Great-West Lifeco said its third quarter performance was hampered by claims related to catastrophic weather events and life insurance claims in the United States resulting from the pandemic.
- The third quarter was chaotic for Barrick Gold. Revenue down 20 percent year-over-year, adjusted earnings down 42 percent, and free cash flow down 63 percent. As for operations: Production has fallen, while realized gold prices have fallen 8% and all-in sustaining costs have increased. So basically everything is going in the wrong direction.
- BCE (which owns BNN Bloomberg through Bell Media) said it was on track to meet its full-year financial guidance and reported third-quarter revenue that is almost back to prior levels. the pandemic two years ago. Notably, wireless service revenues increased by five percent due in part to increased roaming activity and the addition of 114,821 new net postpaid subscribers. We look forward to speaking with CEO Mirko Bibic this afternoon.
- Quebecor said it added 40,900 wireless subscribers in the third quarter and saw revenues increase 21.3 percent in its media division, helping it exceed earnings expectations.
- Maple Leaf Foods CEO Michael McCain this morning warned his company “is experiencing a marked slowdown” in its plant protein business and said his team is currently reviewing the “investment thesis” for that division. On the plus side, adjusted earnings per share jumped 112 percent in the third quarter thanks to flagship Maple Leaf meat operations.
- Lightspeed posted a fiscal second quarter that nearly tripled; however, the point-of-sale service provider has warned that its adjusted loss for the entire year will be larger than expected. In its statement, the company noted that supply chain issues were hurting its customers and itself (in terms of equipment availability). CEO Dax Dasilva joins us shortly after 9 a.m.
- Spin Master is an uncommon engine after its winnings. Shares of the toy maker topped the TSX leader board early in trading after reporting a 25% increase in third-quarter revenue and raising its guidance. His CEO has also defended his company’s supply chain team, which he says “has expertly managed the disruption in the market.”
REMARKABLE AMERICAN MOVERS
- Moderna shares are down more than 10% in pre-market trading after the company slashed its forecast for COVID-19 vaccine shipments and product sales for the entire year.
- Qualcomm shares rose nearly 10% early in the session after the semiconductor maker forecasted profit well above analysts’ average estimate.
NOTABLE OUTPUTS / EVENTS
- Notable data: Canadian trade balance, US trade balance and first jobless claims
- Notable Benefits: Canadian Natural Resources, BCE, Quebecor, Barrick Gold, Lightspeed, Constellation Software, Kinaxis, Open Text, Arc Resources, Enerplus, Pembina Pipeline, Fairfax Financial, Saputo, Maple Leaf Foods, Gildan Activewear, Uber Technologies, Peloton Interactive, Airbnb, Expedia Group
- 8:00 am: Bank of England releases interest rate decision
- 9:45 a.m .: Supreme Court of Canada ruling on whether to hear Mosten Investment’s appeal against a lower court ruling in a dispute with Manulife Financial
- 11:15 a.m .: Former Bank of Canada Governor Stephen Poloz addresses the ULI ESG Symposium in Toronto
- 11:30 am: The Minister of Environment and Climate Change Steven Guilbault makes an announcement at COP26 (no longer available)
- 12:10 p.m .: Innovation, Science and Industry Minister François-Philippe Champagne holds press conference in Washington, DC
- About. 1:00 p.m .: Ontario Minister of Finance Releases Economic Outlook and Fiscal Update (1415 media available)
- 2:00 p.m .: OSFI Superintendent Peter Routledge delivers remarks on future priorities, strategic agenda and capital distributions for federally regulated financial institutions (call for media at 3:00 p.m.)
- 2:00 p.m .: Housing Minister Ahmed Hussen and Vancouver Mayor Kennedy Stewart make ‘major housing announcement’ in Vancouver
- OPEC + Ministerial Meeting https://www.opec.org/opec_web/en/press_room/6647.htm