Here are five things you need to know this morning:
Drift: Futures are drifting a bit lower this morning after what has been a rocking week for equities. The S&P 500 is on pace for its best week since November and the TSX is back near record highs. Last week’s sell off is looking more like a distant memory. In fact, the Volatility Index has gone from a crisis reading of 65 to just 15 in the span of nine business days.
Lockout watch: CN Rail and CP Kansas City are poised to lock out their engineers and conductors on August 22nd as negotiations have yielded no compromise so far between the rails and the Teamster Canada Rail Conference. Labour Minister Steven Mackinnon rejected a request by CN Rail for binding arbitration. At issue are things like wages and scheduling. This could be a protracted drag on the Canadian economy depending how long this plays out. CN and CPKC have already halted shipments of certain hazardous materials lest they be stranded in the event of a work stoppage.
Grounded: Canada Jetlines is now the third Canadian airline carrier to cease operations in less than a year. After just two years in the skies, the company announced it would be grounding its fleet amid a cash crunch. This won’t come as a total surprise, of course. Four board members resigned Monday and the stock was halted Wednesday on the NEO exchange. Over the past year Lynx Air and Swoop Holdings have also left the skies.
Canopy CEO retiring: Canopy Growth announced its CEO David Klein will be retiring after four years at the helm of the company. He will stay on until next quarter and continue to be the CEO until a successor is named. I am told it was Klein’s decision to retire. Klein became CEO just before the pandemic boom took pot stocks significantly higher. But the high came crashing down and the stock is down some 98 per cent since its peak in 2021. While it is a stunning crash, some might argue the success is that the company is still around. For a while it was considered a going concern, marred with issues around its Bio Steel acquisition which it eventually sold at a loss. Under Klein they also pulled off access to the American markets while still staying on side with listing requirements in the U.S.
Bank on it: Canadian banks start reporting next week. They are coming into the earning season as underperformers so far this year relative to the TSX. In a note to clients last night, Gabriel Dechaine of National Bank says he remains positive on the sector overall. He believes Canada will deliver a “sufficient” number of rate cuts to avoid a sharp uptick in loan losses. Dechaine likes banks with domestic exposure like Royal Bank and CIBC. He is also a defender of BMO which has taken its lumps this year on concerns about credit quality, but admits that patience is required.
