Latest news with #CanadianEconomy
Globe and Mail
14 hours ago
- Business
- Globe and Mail
Market Factors: Export-oriented stocks ready to bounce
This edition outlines why trade-oriented domestic stocks may rally and why Scotiabank strategists are even more skeptical about the outlook for Canadian bank stocks. The diversion discusses the best essay I've read this year. As usual we'll look ahead to the important data releases for the next week. Brian Belski, BMO's chief investment strategist, is expecting a lucrative rally in trade-oriented domestic stocks in the second half of 2025. In part, this reflects hope that trade agreements are on tap at the upcoming G7 meetings in Alberta. Mr. Belski cites corporate paralysis for helping set up the rally. Tariff fears have Canadian exporters issuing extremely cautious profit guidance, setting the stage for positive surprises for later in 2025. The underperformance of the trade-oriented industrials and consumer discretionary sectors reached extremes in February 2025. (The S&P/TSX Consumer Discretionary index is considered export-focused because of its large weighting in auto stocks. In addition, index constituent Aritzia Inc. receives 58 per cent of its revenue from the United States). At the time, the year-over-year return on consumer discretionary stocks trailed the S&P/TSX Composite's year-over-year result by over 15 percentage points. Industrials trailed by over 19 percentage points. Earnings revisions for exporting sectors have been bleak. Positive profit updates as a percentage of the total have 'collapsed' in Mr. Belski's words. This ratio for both industrials and consumer discretionary stocks has fallen to levels historically associated with significant recessions. Mr. Belski's Monday research report helpfully provides the results of a stock screen attempting to identify the biggest beneficiaries of the tariff victim recovery theme. The screen emphasized high quality, profitable companies that most underperform on days with significant (and negative) trade news from Washington. The resulting stocks were presented in alphabetical order. Those with outperform ratings from BMO analysts are Air Canada, Aritzia inc., Boralex Inc., CIBC, Canadian National Railway Co., Canadian Pacific Kansas City Ltd., Cenovus Energy Inc., Linamar Corp., Mattr Corp., MDA Space Ltd., Magna International Inc., Premium Brands Holdings Corp., Precision Drilling Corp. and Stantec Inc. The non-outperform names are ATS Corp., Cargojet Inc., Canadian Tire Corp., goeasy Ltd., Lundin Mining Corp., Richelieu Hardware Ltd., Saputo Inc. and Terravest Industries Inc. The wildcard here is the Trump administration and its willingness and preparedness to provide clarity on Canada/U.S. trade. That's not a wildcard you want when making investment decisions. The recent underperformance of the exporting sector does, however, provide some margin of safety and big international political meetings have in the past been an occasion to announce major deals. Scotiabank strategist Simon Fitzgerald-Carrier has moved bank stocks further into underweight territory in the firm's model portfolio as he expects provisions for credit losses [PCLs] to cut in to profit margins. Mr. Fitzgerald-Carrier concedes that first quarter earnings for the banks were not disastrous but emphasized that PCLs as a percentage of gross loans and acceptances continued to climb. The last time this ratio was this high – ignoring the pandemic – was 2010 in the wake of the great financial crisis. The strategist argues that tariffs will hurt domestic economic growth. The unemployment rate is already climbing and this will push PCLs higher. Higher PCLs have historically been correlated with lower price-to-earnings ratios for the sector. Earnings momentum in the bank sector is still positive but flatlining, uninspiring particularly in comparison to insurance company expectations where profit forecasts continue to climb. Scotiabank believes insurance companies remain the better investment as they are better positioned to weather a weaker economy. I announced/warned readers of my intention to subscribe to The Atlantic and the experiment is paying off nicely. The recent column What Happens When People Don't Understand How AI Works by former academic Tyler Austin Harper is amazing, debunking Silicon Valley claims about AI and providing important perspective. The central conceit of AI, according to Mr. Harper, is based on the human tendency to associate language with intelligence. AI's ability to guess the phrase most likely to follow another is an exercise in probability, not thinking. Mr. Harper pushes back on the claim that AI can act as an effective companion. Responding to a robotics professor's contention that AI can combat loneliness as a personalized form of interaction, he writes: 'The fact that the very point of friendship is that it is not personalized–that friends are humans whose interior lives we have to consider and reciprocally negotiate, rather than mere vessels for our own self-actualization – does not seem to occur to him.' Looking for our updates on market movers, analyst actions, stock technicals, insider trades and other daily, weekly and monthly insight? Click here to visit our Inside the Market page. When social media is full of investment advice, that's a good time to do nothing, writes Sam Sivarajan. And a recent study backs up that advice. As investors are looking to diversify away from Wall Street, many are eyeing Latin America. Reuters has more. There's a sharp division between the real world (where everything seems iffy) and the stock market (where everything is great), writes Tim Shufelt. Retail investors might be driving the big divergence. The data calendar is light on both sides of the border for the upcoming week. The only economic release of note domestically is month-over-month manufacturing sales for April where a decline of 2.0 per cent is expected. For domestic earnings Dollarama Inc. on Wednesday is pretty much it. The consensus analyst estimate is $0.835 per share. U.S. CPI for May is out on Wednesday. Economists expect a month-over-month increase of 0.2 per cent and 0.3 per cent for the ex-food and energy reading. Producer prices for May will be released Thursday – a 0.3 per cent rise for the ex-food and energy data is forecast. Relevant earnings reports include Oracle Corp. ($1.642 per share expected) on Wednesday and Adobe Inc. ($4.976) on Thursday.
Yahoo
3 days ago
- Business
- Yahoo
Unpacking the Bank of Canada's interest rate hold: FP video
The Bank of Canada held its key interest rate this week and FP Video talks to economists about the decision and what the central bank might do next . Plus, as Donald Trump again ratchets up tariff threats against Canada, we interview company and industry leaders about the impact. Randall Bartlett, deputy chief economist at Desjardins, talks about the central bank's decision on Wednesday and where it might go next. Douglas Porter, chief economist at BMO Capital Markets, talks about how the economy and Canadian consumers are faring. Francois Desmarais, vice- president of Trade & Industry Affairs at Canadian Steel Producers Association, talks about the Canadian steel industry's reaction to Trump's latest tariff threats. Shayne Casey, board chair at OK Tire, talks about how tariffs are affecting this Canadian company. Should Canada Post stop delivering letters? FP Video looks at what's ahead for the postal service Money in the bank: FP Video looks at what the markets may bring
3 days ago
- Business
Carney and Chinese premier agree to regularize communication between Canada and China
Headlines Latest News Podcasts (new window) Prime Minister Mark Carney at Parliament in Ottawa, June 5, 2025. Photo: La Presse canadienne / Sean Kilpatrick Posted: June 6, 2025 4:04 PM Leaders also committed to working together to address the fentanyl crisis, PMO readout says. Prime Minister Mark Carney and Chinese Premier Li Qiang have agreed to regularize channels of communication between the two countries. A readout from Carney's office also says the leaders committed to working together to address the fentanyl crisis. Canada and China have been involved in a trade dispute. China has imposed tariffs on Canadian canola oil and meal, peas and seafood in retaliation to Canadian levies on Chinese-made electric vehicles, steel and aluminum. In his conversation with Li, Carney raised the issue of trade affecting agriculture and agri-food products, including canola and seafood, as well as other issues. Carney said earlier this week that Ottawa is working urgently to remove Chinese tariffs on Canadian agriculture and seafood products. The Canadian Press Word of Nathaniel Veltman's appeal comes on 4th anniversary of attack on Afzaal family. 8 hours ago Courts and Crime Environment Canada says air quality in the city is 'very high risk' as of noon Friday. One Canadian Economy bill crafted to strengthen Canada's economy, sovereignty in face of Trump's tariffs. Bill C-2 gives power to pause, cancel and suspend immigration documents. Distribution sites have been plagued by deaths, reports of violence in last 2 weeks. 13 hours ago International
Bloomberg
4 days ago
- Business
- Bloomberg
Carney to Fast-Track ‘Nation-Building' Projects Through Bill
Prime Minister Mark Carney announced legislation on Friday to fast-track 'nation-building' projects in Canada and remove internal barriers to trade in an effort to shore up the country's economy from the US tariff barrage. The bill that aims to build 'one Canadian economy' targets projects that may include ports, railways, highways, critical-mineral mines, oil pipelines and electricity transmission systems. The government's overall goal is to speed up approvals to two years.
CTV News
6 days ago
- Business
- CTV News
MPs to vote on government's speech from the throne in confidence motion
Prime Minister Mark Carney is seen outside his office prior to a cabinet meeting on Parliament Hill in Ottawa on Tuesday, June 3, 2025. THE CANADIAN PRESS/Sean Kilpatrick OTTAWA — The Liberal minority government's first real test comes today as MPs are scheduled to vote on the government's throne speech. The Liberals lost a vote Monday evening when opposition members successfully amended the speech to call on the government to table an economic update before Parliament breaks for the summer. Government whip Mark Gerretsen insisted nothing went wrong with that vote despite the Liberals losing it by a count of 166 to 164. However, the vote on the throne speech itself is a confidence vote, which means that if the government loses it, it could be forced into a general election. The speech focuses heavily on building up the Canadian economy by fast-tracking projects it considers to be in the national interest, and moving faster to build new homes. Opposition party leaders say the speech is vague, relies too much on slogans and doesn't explain how the government plans to scale back its spending. This report by The Canadian Press was first published June 4, 2025.
