Here are five things you need to know this morning:
Quirk: Inflation in Canada fell 0.3 per cent from November to December while headline inflation re-accelerated 3.4 per cent year-over-year. Both are a quirk of gas prices: down month-over-month, but up year-over-year. The real surprise was in the core numbers, which reaccelerated. Core inflation ran at 3.7 per cent (trim basis) because of higher rent prices and car prices. The next Bank of Canada rate decision is next week and traders are walking back their expectations for the first rate cut. CIBC said the uptick in core inflation means “the Bank of Canada will need to see more progress in before considering rate cuts.”
Welcome back: Our American friends are back at it after MLK day yesterday. With full market participation, futures are under pressure. This morning will feature a speech from Fed Governor Christopher Waller at 11 a.m. ET, who leans dovish and is a voting member of the U.S. Federal Open Market Committee. While Waller has recently been dovish, Scotia’s Derek Holt notes investors will be curious to see if he sticks to bent or pushes back against rate cut expectations. Speaking of rate cuts, the Bank of England got another reason to start cutting after the latest round of jobs data showed payrolls dropping more than expected. In politics, former U.S. president Donald Trump emerged as the clear winner in the Iowa caucus, bringing him one step closer to the 2024 Republication presidential nomination.
Bank on it: Shares of Goldman Sachs and Morgan Stanley are popping after reporting quarterly results. Goldman surged past profit expectations on the back of better sales and trading results in equities. Fixed income, currency and commodity trading were blights, with sales falling more than expected. Investors seem content to look past this. Meanwhile, wealth managers at Morgan Stanley rode in to save the day, offsetting weakness from the trading business.
The King calls: We will watch shares of Burger King parent company Restaurant Brands International after announcing its largest acquisition since buying Popeyes in 2017. Restaurant Brands will buy the rest of Carrols it doesn’t already own for US$9.55 per share, a 13-per-cent premium to where the stock closed Friday. Carrols is a franchise owner of restaurants that Restaurant Brands International owns – Burger King and Popeyes. This is really just bringing everything under one tent, with the goal to refranchise each store. Why? Citi says it’s part of a plan to accelerate “strategic remodels” across Burger King’s store base.
First cut is the deepest: First Quantum is cutting spending, pausing its dividend and putting smaller mines up for sale in a sweeping effort to free up cash after it was ordered to shut down its copper operations in Panama. The miner says it’s also considering selling stakes in larger mining assets after receiving expressions of interest from potential investors.