Commentaires

Market Update US tsys slightly lower, narrow range in TY futures on heavier volume (445k), 10Y 2.89%. Relative calm in EM with the Turkish Lira rebounding 5%, EU peripheral bond yields lower. Core EGBs also weighed by stronger than expected Eurozone Q2 GDP, IP. US equity futures higher, S&P +7, Nasdaq +29. Little reaction to stronger July Import  Prices.GOCs lower in line with tsys, provis unch. 

News headlines

Investors Haven’t Been This Bullish on U.S. Stocks Since 2015 (Bloomberg) The bull run that has taken U.S. equities to record highs this year may be about to reach its peak, according to the latest survey of fund managers by Bank of America Merrill Lynch. Allocations to U.S. stocks jumped 10 percentage points this month to a net 19 percent overweight, the highest since January 2015, the survey said. That makes America the most popular equity region for the first time in five years, according to the bank’s analysts.

China Growth Momentum Stalls as Debt Campaign and Trade War Bite (Bloomberg) China’s economy hit a mid-year rough patch as efforts to curb risky lending and excessive debt collided with a deepening trade war, adding to concerns about global growth. Fixed-asset investment in the world’s largest developing economy rose at the slowest pace in two decades in the first seven months of this year, while infrastructure spending slumped to a quarter of the pace of a year earlier. Factory output, retail sales and credit creation in July all trailed estimates.

Erdogan Escalates Row With U.S., Calls for Boycott of iPhones (Bloomberg) Turkish President Recep Tayyip Erdogan vowed to boycott American electronics, including Apple Inc.’s iPhone, as he retaliates against Donald Trump’s attempts to isolate his economy.After the U.S. imposed sanctions on two Turkish ministers and amid growing domestic pressure from businesses and banks to contain a currency crisis, Erdogan said he wouldn’t back down in the face of the economic attack against his country.

Stocks Rebound as Turkey Calms; Dollar Declines: Markets Wrap (Bloomberg) European stocks tracked gains across most Asian equities as global markets steadied in the wake of Monday’s Turkey-induced turmoil. The dollar slipped from its highest in 14 months and Treasuries fell. The Stoxx Europe 600 Index climbed alongside futures for the S&P 500, Dow Jones and Nasdaq, while European peripheral debt rebounded as a degree of calm returned to Turkish markets. The lira rose, and the country’s benchmark equity index climbed even as a diplomatic standoff between Turkey and the U.S. dragged on. The euro steadied after data showed the euro-area economy grew faster in the second quarter than initially reported.

Canada finance minister at steel mill Tuesday amid talk of new tariff steps (Reuters) Canadian Finance Minister Bill Morneau will make an announcement at steelmaker ArcelorMittal’s Dofasco plant in Hamilton on Tuesday, raising expectations that Canada could propose new tariffs or quotas to protect the industry. The Department of Finance said in a release that Morneau would also meet with local business leaders in Hamilton, the heart of Canada’s steel industry. The government said previously that it was considering a safeguard action to protect steel producers from imports flowing to Canada since the United States imposed tariffs in March.

Brazil’s farmers dump sugar for soy as trade war boosts Chinese demand (Reuters) Last year, Brazilian farmer Gustavo Lopes sized up his sugarcane plantation against his soybean fields. He looked at global trends, including rising U.S.-China trade tensions and a stubborn sugar-market glut. Then he tore up the last of his cane fields and ditched a decades-old supply contract with a local sugar mill. Lopes planted soybeans across his 1,600-hectare (4,000-acre) farm in Sao Paulo state – a bet that paid off earlier this month when Chinese buyers loaded up on South American soy after Beijing imposed tariffs on U.S. beans. The farmer got his highest price ever for soybeans.

Canada’s biggest builder faces ‘new level of risk’ in Saudi feud (BNN) Canada’s diplomatic clash with Saudi Arabia is threatening a key pillar of SNC-Lavalin Group Inc.’s growth plan. The Montreal-based builder gained additional exposure to the kingdom with its two biggest acquisitions, the 2014 purchase of Ireland’s Kentz Corp. and last year’s deal for WS Atkins of the U.K. SNC Chief Executive Officer Neil Bruce is counting on business in the Middle East to bolster his drive to increase profit more than 50 percent by 2020. SNC is getting caught in the crossfire after the kingdom froze diplomatic ties and new business deals with Canada last week, following a call by Canadian Foreign Minister Chrystia Freeland for Saudi human rights activists to be released from prison. The flare-up spooked investors in Canada’s biggest construction company, which gets about 11 percent of sales in Saudi Arabia.

Home Capital Q2 income falls short of estimates (BNN) Home Capital Group Inc. says it earned nearly $30 million in its most recent quarter, but fell just short of analyst estimates. The Toronto-based mortgage lender’s net income for the second quarter of its 2018 financial year was $29.6 million compared to a $111.1 million loss in the same quarter the previous year. It says its diluted earnings per share were 37 cents for the quarter ended June 30, compared to a loss of $1.73 per share in the second quarter of its 2017 financial year.

Overnight markets

Overview: US 10yr note futures are down -0.065% at 120-06, S&P 500 futures are up 0.25% at 2832.5, Crude oil futures are up 1.22% at $68.02, Gold futures are up 0.33% at $1202.8, DXY is down -0.11% at 96.289, CAD/USD is down -0.47% at 0.765.

US Economic Data

Canadian Economic Data

Disclosure and Disclaimer

The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.

Ivan Greenstein, Stephan Buu, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update Tsys slightly lower, 10Y 2.87%, earlier Turkish lira fell to new lows vs the USD. Strong volume in TY futures, ~880k or 4x recent avg. Core EGBS underperforming, Sep gilts fell to session lows after reports Turkey was set to release UK Pastor. US equity futures well off the lows, S&P unch after being down 16. US data calendar quiet, picks up Wednesday with Retail Sales. GOCs lower, reversing earlier gains as equity mkts recover. Provis closed wider Friday on risk off, spds opening unch. 

News headlines

Canada Overcomes Trump’s Metal Tariffs With Record Exports (Bloomberg) Canada’s merchandise trade deficit narrowed more than forecast as oil producers and aircraft makers led exports to a record high. Even after the U.S. imposed tariffs on steel and aluminum, Canada’s trade gap narrowed to C$626 million ($481 million) in June, down from C$2.7 billion a month earlier, Statistics Canada said Friday in Ottawa. Economists surveyed by Bloomberg predicted a deficit of C$2.3 billion. Exports rose 4.1 percent to C$50.7 billion, with energy shipments up 7.1 percent to the highest since 2014 and aircraft sales jumping by almost 45 percent. The return of several Canadian refineries to production after shutdowns also played a role in the 0.2 percent decline in imports as demand for foreign gasoline tumbled.

Robust Growth Pushes Canada’s Jobless Rate to Lowest Since 1970s (Bloomberg) Canada’s jobless rate returned to four-decade lows in July on stronger-than-expected employment gains, adding to evidence the nation’s economy continues to power ahead. The unemployment rate declined to 5.8 percent from 6 percent in June, matching the lowest level since the 1970s, Statistics Canada reported Friday from Ottawa. The economy added 54,100 jobs, marking a second straight month of exceptionally strong labor market gains.

Kushner’s Ties to Russia-Linked Group Began With Kissinger Lunch (Bloomberg) In March 2016, as the U.S. foreign policy establishment shunned presidential candidate Donald Trump, his son-in-law Jared Kushner was invited to lunch for a think tank urging detente with Russia and struggling for influence in Washington. The meeting at Manhattan’s Time Warner Center, which hasn’t been reported before, would prove significant for the Center for the National Interest and Kushner, who was still a little-known figure in the Trump campaign.

Stocks, EM Currencies Drop as Turkey Fever Spreads: Markets Wrap (Bloomberg) There were broad declines across equities on Monday and a sell-off in developing-nation currencies as the ongoing economic crisis in Turkey bled into global markets. The dollar and yen advanced. Futures on the Dow, S&P 500 and Nasdaq all pointed to a weaker open, while banks were among the biggest losers as the Stoxx Europe 600 Index fell. There’s concern the sector is heavily exposed to borrowers in Turkey, where the lira tumbled again alongside the country’s equities after President Recep Tayyip Erdogan maintained his defiance toward the U.S. and financial-market orthodoxy in speeches on Sunday. Central bank moves to boost liquidity provided little relief. The pain spread across emerging-market assets and the South African rand hit the lowest since June 2016.

Futures dip as Turkish currency crisis roils global markets (Reuters) Canada’s main stock index futures fell on Monday as ripple effects of the Turkish currency crisis continued to affect global markets, with investors seeking safety in government bonds and the dollar. September futures on the S&P/TSX index SXFc1 were down 0.13 percent at 7:15 a.m. ET. Canada’s main stock index fell on Friday. Dow Jones Industrial Average e-mini futures 1YMc1 were down 0.28 percent at 7:15 a.m. ET, while S&P 500 e-mini futures ESc1 were down 0.26 percent and Nasdaq 100 e-mini futures NQc1 were down 0.26 percent.

Trump threatens auto tariffs against Canada if trade talks fail (BNN) U.S. President Donald Trump said negotiations with Mexico on a new NAFTA are “coming along nicely,” while telling Canada it will have to wait to re-enter the talks to modernize the three-nation trade pact — hinting at his preference for bilateral negotiations. “Deal with Mexico is coming along nicely. Autoworkers and farmers must be taken care of or there will be no deal,” Trump tweeted late Friday, adding that incoming Mexican president Andres Manuel Lopez Obrador “has been an absolute gentleman.” Trump had harsher words for Canada, the other partner in the North American Free Trade Agreement. “Canada must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!” he said.

Elon Musk’s tweet draws Tesla investor lawsuit over share price swing (BNN) Tesla Inc. () and Elon Musk were sued by an investor over wild share price swings following the chief executive officer’s Aug. 7 tweet saying he was considering taking the company private. The complaint alleges violations of U.S. securities law and was filed Friday as a class action in federal court in San Francisco. Musk set off a firestorm with the 53-character post on Twitter: “Am considering taking Tesla private at $420. Funding Secured.” The stock initially shot up 11 per cent to almost US$380. Then it fell back, losing about 7 per cent over two days, as doubts mounted about the feasibility of the going-private idea — and about the chief executive officer’s declaration that funding was already in place. He hasn’t supplied evidence that it was; nor has anyone else.

Overnight markets

Overview: US 10yr note futures are down -0.065% at 120-10, S&P 500 futures are down -0.09% at 2834.25, Crude oil futures are down -0.46% at $67.32, Gold futures are down -1.06% at $1206.1, DXY is up 0.06% at 96.418, CAD/USD is up 0.05% at 0.7605.

US Economic Data

Canadian Economic Data

Disclosure and Disclaimer

The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.

Ivan Greenstein, Stephan Buu, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update Tsys higher, yields 2-4bps lower with the 10Y below 2.90% (2.89 -3.5bps) before CPI on safe haven flows after the Turkish lira spiked to a new low and global equity markets weaken on contagion fears, S&P futures -13, Nasdaq -44.  Core EGBs also higher in line with tsys, Sep bunds rising to a three-week high 163.15. GOCs higher before July employment data (17k exp vs 31.8k June, AHE 3.6% exp vs 3.5%). 

News headlines

Trump Stays Quiet While Saudi Arabia-Canada Tensions Rise (Bloomberg) The Trump administration is privately trying to coax Saudi Arabia to dial back hostilities with Canada even as the U.S. maintains a hands-off public approach to the escalating dispute between the two key allies, a senior U.S. official said. The U.S. is now trying to do behind-the-scenes damage control after being caught off guard by Saudi Arabia Crown Prince Mohammad bin Salman’s move this week to expel the Canadian ambassador, freeze new trade deals and cancel direct flights to Toronto on its state airline, according to the official, who spoke on condition of anonymity.

Ontario Goes Dark in Bond Market, Setting Up Slew of Fall Sales (Bloomberg) One of the world’s biggest non-sovereign borrowers has gone quiet in the debt market. The province of Ontario hasn’t sold bonds since June 1, a few days ahead of an election that ended 15 years of Liberal Party rule. This 70-day drought is almost a month longer than the pause that followed Ontario’s prior change in 2003, according to National Bank of Canada. The result will be a flood of sales from Ontario in the fall that may weigh on performance, said Ryan Goulding, a fixed-income analyst at Vancouver-based asset manager Leith Wheeler Investment Counsel Ltd.

Canada Sees Return to Nafta Talks as U.S.-Mexico Near Auto Deal (Bloomberg) Canada could soon be returning to the Nafta talks as the U.S. and Mexico approach agreement on a deal over cars, according to one of Canada’s top diplomats. The U.S. and Mexico, which have been in bilateral negotiations for about three weeks, appear to be “getting close” to agreement over auto manufacturing, David MacNaughton, Canada’s ambassador to the U.S., said in an interview.

Stocks Fall With Euro on Turkey Contagion Concern: Markets Wrap (Bloomberg) European stocks fell the most in almost a month and U.S. equity futures slipped as investors awaited a speech from Turkey’s president that they hope will address concerns about the country’s financial ills spilling over into the euro zone and emerging markets. The common currency sank, while the dollar advanced alongside Treasuries. The Stoxx Europe 600 Index slid, dragged down by banks, after a news report said the ECB was concerned about the exposure of European lenders to Turkey. Investors are now looking to President Recep Tayyip Erdogan to calm their nerves when he speaks Friday for the first time since the latest sell-off began. Contracts on the S&P 500, Dow and Nasdaq declined alongside shares in Asia. The euro dropped to the weakest level in a year, while the dollar rallied with Treasuries and core European bonds. Turkey’s lira sunk to a fresh record low amid the diplomatic spat with the U.S.

TSX futures lower as Turkey turmoil roils global markets (Reuters) Canada’s main stock index futures edged lower on Friday as global stock markets tumbled following a slump in Turkey’s currency due to the country’s deepening rift with the United States. Investors scurried for safer assets such as dollar, yen and U.S. government bonds. The dollar index .DXY, which measures the greenback’s strength against a group of six major currencies, touched its highest level since July 2017. September futures on the S&P/TSX index SXFc1 were down 0.51 percent at 7:15 a.m. ET. Employment data for July is due at 8:30 a.m. ET. Canada’s main stock index rose on Thursday.

Big credit card firms agree to cut fees they charge merchants (BNN) Major credit card companies have struck an agreement with the federal government to trim the fees they charge to merchants in a move Ottawa hopes will provide a boost to small businesses. Ottawa announced Thursday it has reached voluntary, five-year deals with Visa, MasterCard and American Express to cut fees by about 10 basis points. Finance Minister Bill Morneau, who unveiled the deal at an Ottawa grocery store, said he expects the agreements to help small and medium-sized businesses save a total of $250 million per year. “That’s a big difference for companies,” said Morneau, who billed the change as part of his department’s effort to listen to the concerns of Canadian business owners about staying competitive. 

Overnight markets

Overview: US 10yr note futures are up 0.287% at 120-02, S&P 500 futures are down -0.45% at 2841, Crude oil futures are up 0.73% at $67.3, Gold futures are up 0.11% at $1221.2, DXY is up 0.64% at 96.12, CAD/USD is up 0.27% at 0.7642.

US Economic Data

Canadian Economic Data

Disclosure and Disclaimer

The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.

Ivan Greenstein, Stephan Buu, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230