Here are five things you need to know this morning:
100: You could pack the number of Canadians who got new jobs into a small auditorium. Statistics Canada says Canada added just 100 new jobs in December. That’s it. The job growth was also fueled by part-time employment, while full-time category lost jobs. Unemployment held steady at 5.8 per cent, but weirdly, wage growth accelerated to 5.7 per cent. That’s a hot number. It is the quickest pace of wage growth we’ve seen since January 2021, so job growth is cooling but wage growth is accelerating. Andrew Grantham at CIBC is sanguine about the wage growth, suggesting it is largely due to base effects from last year. Stephen Brown from Capital Economics isn’t as dismissive. He called the wage growth a “big worry” in a note to clients this morning. “Wage growth accelerating again last month, weaker employment growth may not be enough to persuade the Bank of Canada to cut interest rates as soon as we forecast,” Browning wrote. One thing is for sure: this pace of job creation is not keeping up with population growth. The Canadian dollar weakened on the news, but that is also because of U.S. dollar strength on the American jobs report.
Meanwhile: The U.S. added many more jobs than expected in December. This is posing a bit of a problem for equities. Good news is bad news again. The U.S. added 216,000 new jobs, which was hotter than expected, and the wage number unexpectedly increased to 4.1 per cent. This marks 13 months in a row in which wage growth has been above four per cent. The market is worried that this is inconsistent with getting inflation back to target and delivering on those rate cuts. The U.S. dollar spiked, futures dipped further into the red, bonds are selling off.
Burn the furniture: We will watch First Quantum this morning after Reuters reported it is in talks to sell a stake in its Zambian copper mine to Jiangxi Copper. The report says the talks began after First Quantum was forced to shut down its Panama mine and could help to inject some much needed liquidity. Jiangxi is already one of the top shareholders in First Quantum. National Bank says a minority stake sale of 20 to 30 per cent could help generate between US$1.5 billion and $2 billion.
India on line one: Brookfield Asset Management is doing yet another deal to secure telecom assets in India. The company announced it is buying American Tower’s assets in India, in a deal worth about US$2.5 billion. This is the third telecom acquisition by Brookfield in India over the last four years.
Fade the hype: Shares of Palantir are under pressure this morning after Jefferies downgraded the stock saying the AI hype is overblown. Certainly it has helped propel the stock more than 150 per cent over the past year, but now Jefferies is saying its time to ring the register. The analyst calls the valuation “unsustainable” and notes there could be a meaningful slowdown in its business with the U.S. government as they are engaged in a dispute over who actually owns the data. He’s not alone in his bearish thoughts. There are now more “sells” on Palantir than buys or holds.