Here are five things you need to know this morning:
Bank of Canada expected to cut benchmark rate: It’s Bank of Canada day, and after months of inflation numbers trending down, a softening job market and downright icy retail sales data last week, the central bank is expected to lower its benchmark interest rate to 4.5 per cent. Given that the U.S. Federal Reserve has yet to move, a pause is certainly on the table at least, but safe to say any other decision but a cut would make for a far more compelling story, so we’ll be watching with great interest what Tiff Macklem and Carolyn Rogers have to say about the bank’s line of thinking at a press conference starting at 10:30 a.m. After raising its rate at the most aggressive pace on record, it seems unlikely that the central bank is going to hit pause on the downslope when rates still begin with a 4, so the more apt question might be where exactly the so-called neutral range might lie. As I write this, markets are still anticipating a rate of above four per cent by the end of the calendar year, which is lower than the peak but still cold comfort for the millions of Canadians anxious about mortgage renewals this year or next.
Tesla misses, but promises to show off robotaxis in October: For the fourth quarter in a row, Tesla put out earnings that failed to live up to expectations as the electric car maker shows how hard it is to deliver cars and promises. The company cranked out 1.8 million vehicles last year, but will fall well short of that total for this year based on current production and sales. In earnings posted after the bell yesterday, Tesla announced its adjusted earnings fell to 52 cents per share, even as it beat on revenue, which grew to a record US$25.5 billion. Interestingly, the cash surge didn’t come from making cars, but rather growth in its energy generation and storage business, as well as $890 million worth of sales of regulatory credits to other automakers trying to meet emissions targets. As for the future, CEO Elon Musk makes it clear that the company’s fortunes are inextricably linked to autonomous driving, telling investors that the company’s value “overwhelmingly is autonomy” and that everything else is “noise.” To that end, Tesla has offered up another date where it plans to show off its robotaxi functionality. In October, Tesla will show prototypes of the type of self-driving cars that Musk has been promising in one form or another for about a decade.
TC Energy nears pipeline deal: Pipeline operator TC Energy is in the process of finalizing a deal to sell a stake in a natural gas pipeline network in Western Canada to a consortium of Indigenous groups. The government of Alberta has signed off on a loan guarantee for the buyers wishing to purchase the NGTL System, a network of almost 25,000 kilometres of pipelines across Alberta and B.C. The buyers are dozens of Indigenous groups across those two provinces and Saskatchewan and the deal is expected to be announced at the end of this month, according to a letter from the company to Alberta’s energy regulator obtained by Bloomberg News. The deal is part of TC’s previously stated goal of $3 billion in asset sales to clean up its books.
LVMH the latest luxury brand to get walloped: LVMH shares are down more than six per cent today after the luxury brand conglomerate posted quarterly results. The numbers showed that sales in China have fallen off a cliff, a troubling sign that consumers in the world’s most populous nation are starting to tap out. The weak numbers make LVMH just the latest luxury brand to face headwinds, as Swatch Group recently said its profits fell 70 per cent on slumping Chinese demand, and U.K. fashion house Burberry axed its CEO and warned on profits for the same reason. It may be enough to drive someone to drink, except LVMH says its seeing double digit sales declines in its champagne brands, including Ruinart and Dom Perignon.
First Quantum strikes standstill deal with major Chinese shareholder: Copper miner First Quantum has come to an agreement with its second-largest shareholder, Jiangxi Copper Co Ltd., that will limit the latter’s ownership. First Quantum said Tuesday a shareholder rights agreement prevents Jiangxi from buying more stock in the company or selling a block of shares of five per cent or more without the company’s consent. The deal does not, however, preclude Jiangxi from buying any mining assets from First Quantum outright, something the acquisition-focused Chinese miner has kicked the tires on in the past.
