Here are five things you need to know this morning:
Studying for finals: This week will be a test of market expectations for rate cuts as early as the spring. In the U.S., we will get a read of consumer inflation tomorrow, producer inflation on Wednesday morning and then the final U.S. Federal Reserve rate decision of 2023 on Wednesday afternoon. In order to understand how emphatically the Fed will push back on rate expectations, we first need to understand inflation, so tomorrow will be illuminating for the markets and the Federal Reserve. Nothing much happening today – it’s all positioning for the week ahead. Oil is making no moves this morning after slumping for a seventh week in a row in the longest losing streak since 2018. Bitcoin woke up on the wrong side of the bed with a brief “flash crash” to US$40,000 before settling at around $42,000.
On second thought: Shares of BlackBerry are under pressure in the pre-market after announcing a new CEO and scrapping plans for an IPO of its Internet of Things business. John Giamatteo will become the new CEO, moving up from president of BlackBerry’s struggling cybersecurity business. He certainly has the resume for the job, previously serving as chief revenue officer at McAfee and other leadership roles at places like Nortel. Investors appear disappointed with plans to scrap the IPO, even as BlackBerry says it is still going to separate the businesses, it just won’t spin one part out into the public markets. BlackBerry announced a strategic review in May after years of its stock languishing. Then in October, it announced the result of the review was to spin out its better-performing Internet of Things business. The stock has rallied a little since then, but clearly BlackBerry didn’t get the re-rating it was hoping for. What happens next? BlackBerry’s board chair says splitting the business operationally will open up a number of “strategic alternatives.” So this deal remains a live, albeit elusive, possibility.
Dirty laundry: Shares of Gildan Activewear are under pressure after the surprise ouster of the company’s co-founder and CEO. The maker of blank T-shirts announced this morning that Glenn Chamandy has “left his position” as president and CEO. Then Chamandy came out with his own press release saying he was fired without cause after 40 years of service. There is not much clarity about why he was fired. Gildan was taken public in 1998 by Bear Stearns and since then is up nearly 10,000 per cent. It has also outperformed so far this year, including after its latest set of earnings in early November, which saw the stock soar nearly 16 per cent. This is not the typical backdrop for a CEO ouster, so there is definitely more than meets the eye here.
Buy the whole store: Shares of department store Macy’s are surging in the pre-market on reports it has received a US$5.8 billion buyout offer from a pair of private equity players. At $21 per share, the offer would be a 23 per cent premium to where the stock closed Friday. I’ll watch how this puts a bid under other department stores.
Party in the basin: Occidental Petroleum is buying Texas shale driller CrownRock in a deal worth more than US$10 billion. Recall, Warren Buffett is the largest shareholder in Occidental and presumably is alright with M&A over buybacks and dividends. This comes as we’ve seen a number of blockbuster deals in the energy sector. Exxon bought Pioneer, Chevron bought Hess, and Crescent Point bought Hammerhead Energy. It is interesting to see these deals at a time of anxiety over demand and volatility in oil prices.
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