Commentaires

Market Update US tsys higher led by the long end , with the tsy curve 1.4bps flatter 2s10s, the 10Y 2.96 (-1.5bps). Prices sliding on Draghi comments, despite weaker June Durable Goods Orders. ECB left rates unch as expected, rates to be on hold ‘through the summer of 2019’ with very little initial reaction in bunds/euro, both close to yesterday’s lows. Stock futures lower, Facebook earnings/guidance disappointed, the stock is down20% pre-mkt.  GOCs lower ,1bp  wider vs tsys, 10Y 2.29% 9 (0.5bps). Provis unch despite higher all in yields, QC 48s issue yest @ 75, 75/74 on screen. 

News headlines

ECB Keeps to Policy Path to End Bond Purchases (Bloomberg) The European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid. The Frankfurt-based institution reiterated it will continue buying 30 billion euros ($35 billion) of assets a month until the end of September, reduce the pace to 15 billion euros from October, and stop additional purchases at the end of the year.

Uranium Tariffs Threaten Nuclear Plants Trump Is Trying to Save (Bloomberg) The Trump administration’s decision to consider tariffs on uranium imports may raise the cost of fuel for nuclear reactors and undermine a separate initiative to shore up struggling electricity generators. The Commerce Department said Wednesday it will probe whether uranium imports “threaten to impair” national security. U.S. miners Energy Fuels Inc. and Ur-Energy Inc., which requested the probe in January, want 25 percent of the domestic market reserved for U.S. producers. Domestic companies supply less than 5 percent of U.S. consumption and would need about three years to ramp up production to meet that target.

Air Canada Unveils Back-to-the-Future Bid for Loyalty Plan (Bloomberg) Air Canada is trying to take its frequent-flyer program back to the future. The airline is teaming up with Visa Inc. and two Canadian banks on a C$250 million ($190 million) cash offer for Aimia Inc.’s Aeroplan rewards program. If accepted — and Aimia surged the most on record on the news — the deal would return the loyalty plan to Air Canada, which spun it off in 2005.

U.S. Stock Futures Slip on Facebook; Euro Weakens: Markets Wrap (Bloomberg) U.S. equity index futures fell on Thursday as investors braced for the impact of Facebook Inc.’s disappointing earnings, which looked set to overshadow a trade breakthrough between America and Europe. The euro stayed lower after the ECB held interest rates steady. The Nasdaq was set for a steep drop after Facebook Inc. tumbled more than 20 percent in pre-market trading as revenue and user growth missed estimates. S&P 500 futures also nudged lower, though contracts for the Dow edged up. In Europe, the Stoxx 600 Index climbed, led by industrials, after President Donald Trump agreed with European Commission chief Jean-Claude Juncker to suspend new tariffs while continuing to negotiate over trade.

NXP to repurchase $5 billion shares after Qualcomm deal falls through (Reuters) NXP Semiconductors NV (NXPI.O), whose buyout deal with U.S. chipmaker Qualcomm Inc (QCOM.O) fell through due to lack of approval from China, said on Thursday it would buy back $5 billion worth of shares. The company said Qualcomm has informed the company it would pay $2 billion breakup fee by 9 a.m., New York City time, on Thursday. NXP also reported second-quarter revenue of $2.29 billion, a 4 percent increase from last year, missing the average analyst estimate of $2.36 billion, according to Thomson Reuters I/B/E/S.

Carmakers surge after Trump agrees to put auto tariffs on hold (BNN) European carmakers climbed after President Donald Trump backed off his threat to levy tariffs on cars imported to the U.S. during a meeting with European Commission President Jean-Claude Juncker, averting for the time being an escalating trade war. Shares of BMW AG, Volkswagen AG, Fiat Chrysler Automobiles NV and Daimler AG jumped on Thursday following a pledge from the two leaders to “hold off on other tariffs” while they negotiate a deal to expand European imports of U.S. liquefied natural gas and soybeans and lower industrial levies. Germany’s VDA auto industry association called the meeting “a big step forward” and “good news for industry and consumers on both sides of the Atlantic.”

Apparent EU-U.S. trade truce ‘positive news’ for Canada: Freeland (BNN) The apparent trade truce agreement between European Commission President Jean-Claude Juncker and U.S. President Donald Trump is good news for Canada, Foreign Affairs Minister Chrystia Freeland told reporters in a conference call from Mexico City. The U.S. and the EU agreed to expand imports of U.S. liquefied natural gas and soybeans as well as lower tariffs on non-auto industrial goods on both sides. The U.S. and EU have also agreed to “hold off on other tariffs” while negotiations continue, said Juncker. “I really commend everyone involved for pulling back from an action – if that is indeed what is happening – from pulling back from an action that not only is not justified and illegal under WTO and NAFTA rules but actually has the potential to be really devastating for the global economy,” Freeland said on the conference call shortly after the U.S.-EU announcement. “We need to look at [the agreement] more closely, but it sounds certainly like some positive news.”

Precision Drilling loss rises 30.7% on higher compensation expense (BNN) Precision Drilling Corp. had a $47.2-million net loss in the second quarter, 30.7 per cent bigger than the same time last year, as stock-linked compensation expenses increased. The loss amounted to 16 cents per share compared with a net loss of $36 million or 12 cents per share in the second quarter of 2017. Analysts had estimated a loss of 14 cents per share, according to Thomson Reuters Eikon. The increase was largely fuelled by a $12-million increase in administrative expenses due to higher incentive compensation tied to the price of Precision Drilling’s stock price.

Overnight markets

Overview: US 10yr note futures are down -0.209% at 119-13, S&P 500 futures are down -0.11% at 2838.25, Crude oil futures are down -0.07% at $69.25, Gold futures are down -0.32% at $1237, DXY is up 0.06% at 94.286, CAD/USD is up 0.05% at 0.7661.

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 US tsys higher on below avg volume in TY futures (330k ), 10Y 2.94%, early bid on back of weak Australian CPI data (2.1% vs 2.2%). Equities weaker, thou off the lows (S&P futures -4), crude/USD slightly weaker. Key talks on US/EU trade today with EU Commission President Juncker meeting in Washington, while the US auctions $18bln in 2Y FRNs & $36 5Y notes later today. Core EGBs higher, outperforming tsys, bunds little changed despite stronger IFO sentiment survey. GOCs little changed before 10Y auction at noon – $3.0bln in new June 2029 bonds, with the WI roll (new 29/28) ~2bps (1.9/ this morn) vs 1.2bps for the current 10Y roll. The outstanding 5.75/29s trade 2.8bps back of 10s, so at first glance the WI roll looks tight, particularly given the new 2029 bond will have a duration closer to 9.6s vs ~8.5 for the high coupon 5.75/29.  Keep in mind the new 29s will eventually become the 10Y benchmark. 

News headlines

Nafta Talks to Pick Up Again as Threat of Auto Tariffs Looms (Bloomberg) High-level talks for a new Nafta are picking up again this week following two months of limited negotiations that were instead marred by tit-for-tat tariff battles and diplomatic fallout. Canadian Foreign Affairs Minister Chrystia Freeland will discuss the North American Free Trade Agreement on Wednesday when she meets in Mexico City with officials from the incoming and outgoing Mexican administrations. On Thursday, Mexican Economy Minister Ildefonso Guajardo is traveling to Washington to discuss the status of Nafta talks with U.S. Trade Representative Robert Lighthizer. The bilateral gatherings mark the most activity on Nafta negotiations since May.

Trump Says U.S., EU Must Cut All Tariffs Ahead of Key Talks (Bloomberg) President Donald Trump said that the U.S. and the European Union should eliminate all tariffs, barriers and subsidies, with the bloc’s trade chiefs set to present him with proposals in that direction in a crunch meeting at the White House later Wednesday. “I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies!” Trump said in a Tuesday night tweet. “That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!”

Coke Profit Beats Estimates on Sales Boost From Healthier Drinks (Bloomberg) Coca-Cola Co. is getting a boost from its healthier beverages, with its resurgent zero-sugar soda brands buoying the company’s results. Profit beat analysts’ estimates in the second quarter, helped by double-digit growth for its Coca-Cola Zero Sugar brand and efforts to cut costs, it said in a statement. The results drove the shares up as much as 1.7 percent in early trading Wednesday.

Stocks Turn Lower Before Trade Talks; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity futures turned lower with European stocks as investors digested the latest raft of earnings, and before key trade talks between America and the European Union. The dollar declined against most of its major peers. Futures for the S&P 500 and Dow edged lower, while those for the Nasdaq erased a gain amid a mixed bag of earnings. Coca Cola’s results beat forecasts, while Fiat Chrysler’s came in below expectations, triggering declines in pre-market trading. The picture was similar in Europe, and the Stoxx Europe 600 Index retreated. Asian equities advanced earlier, though Shanghai stocks edged lower as positive sentiment spurred by Beijing’s willingness to support the Chinese economy showed signs of fading.

Singapore buys trains from Canada’s Bombardier in up to $880 million contract (Reuters) Singapore has bought 66 new trains from Canada’s Bombardier Inc to replace an older fleet on its metro rail service in a contract worth up to S$1.2 billion ($880 million), the city-state’s Land Transport Authority said on Wednesday. The LTA’s contract with Bombardier includes an option under which the firm can provide long-term service support for the new fleet, set to arrive from 2021.

Canadian grocery chain Loblaw’s profit beat estimates (Reuters) Canadian grocery and pharmacy chain Loblaw Cos Ltd’s (L.TO) quarterly profit topped analysts’ estimates on Wednesday, driven by higher food and drug same-store sales. The company, which sells everything from grocery to wireless mobile connections, said food retail same-store sales grew 0.8 percent while drug retail same-store sales rose 1.7 percent. The Brampton, Canada-based company, like other retail stores, has been refurbishing and expanding its online presence to carve out more market share in the face of stiff competition from companies such as Amazon.com Inc (AMZN.O).

OECD urges Canada to review tax system, boost competitiveness (BNN) The Organisation for Economic Cooperation and Development is warning that Canada risks being left behind in the global race for investment dollars if it doesn’t respond to U.S. tax reform, joining a growing chorus of voices that are sounding the alarm on the country’s competitiveness. The OECD said in a report Monday that tax reform in the United States has made Canada a less attractive place to do business, and urged the Canadian government to reassess its own tax system.

Ontario accountability officer to probe Ford’s cancellation of cap and trade (BNN) Ontario’s fiscal watchdog said Tuesday it will examine the new Progressive Conservative government’s cancellation of the cap-and-trade program in order to determine how much that decision will end up costing the province. Financial Accountability Officer Peter Weltman said the work on the review, which was requested by Opposition Leader Andrea Horwath, was already underway. « There are some key considerations with cap-and-trade, » Weltman said. « We need to get more detail from the government as to how they intend to manage those considerations. »

Overnight markets

Overview: US 10yr note futures are up 0.052% at 119-20, S&P 500 futures are down -0.18% at 2816, Crude oil futures are up 0.01% at $68.53, Gold futures are up 0.6% at $1242, DXY is down -0.14% at 94.476, CAD/USD is down -0.25% at 0.7621.

US Economic Data

Canadian Economic Data

There is Canadian economic data for today.

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 trading slightly weaker, 10Y 2.96% , prices near bottom of o/n  4 tick range in TY futures on better than avg volume (~382k).  Equities firmer, (S&P +5, Nasdaq +21), core EGB yields higher as well on stronger PMIs (German 57.3 vs 55.5), while 10y JGBs are 2 bps lower after yesterday’s BOJ inspired rout. US $35bln 2Y auction at 1:00PM, followed by $36bln 5Y & $30bln 7Y Wed and Thurs, the WI 2Y 1.638% or ~10bps cheaper than June auc.  The long end of the tsy curve should benefit rom m/e extension (BB index +0.6yrs). GOCs trading lower, 0.5bps wider vs tsys , provis closed 0.5bps tighter on the selloff in GOCs – the BOC auctions $3bln in new June 2029 bonds tomorrow – the current 5.75/29 ~2.272% . The last 10Y auction on June 20th was for $2.2bln June 28s, so this is an $800mln/36% increase – which could weigh on the sector. 

News headlines

China Unveils New Measures to Aid Growth Amid Trade Uncertainty (Bloomberg) China unveiled a package of policies to boost domestic demand as trade tensions threaten to worsen the nation’s economic slowdown, sending stocks higher. From a tax cut aimed at fostering research spending to special bonds for infrastructure investment, the measures announced late Monday following a meeting of the State Council in Beijing are intended to form a more flexible response to “external uncertainties” than had been implied by budget tightening already in place for this year.

Alphabet Results Support Confidence in Face of EU Curbs (Bloomberg) Google executives projected confidence in Android and other businesses, giving investors no signal that a costly regulatory crackdown in Europe would curb sales and profit anytime soon. Parent company Alphabet Inc. posted second-quarter results that walloped Wall Street expectations, while Chief Executive Officer Sundar Pichai hinted at new untapped advertising opportunities and highlighted growth at video service YouTube and the cloud arm. The shares rose 4.5 percent in pre-market trading Tuesday, putting them on course for a record. 

Trump and Iran Leader Swap Taunts as Sanctions Loom (WSJ) After Iran leader refers to ‘the mother of all wars,’ president warns of consequences such as ‘few throughout history have ever suffered’. The Trump administration exchanged threats with Iran, turning to a longstanding security concern and a top foreign-policy focus of President Donald Trump’s key supporters. In a Twitter message addressed “To Iranian President Rouhani,” Mr. Trump wrote: “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE.”

Bitcoin has now gained 35% from recent lows as prices rally back above $US8,000 (Business Insider) Bitcoin climbed back above the $US8,000 mark in Asian trade this afternoon for the first time since late May. The world’s biggest cryptocurrency has now rallied by around 35% since dipping below $US5,900 at the end of June.

Alphabet jumps after big earnings beat (CNBC) Google parent company Alphabet reported its Q2 earnings Monday afternoon, with a big beat sending its stock jumping after-hours. Wall Street will be paying close attention to the company’s traffic acquisition costs and capital expenditures. 

World markets rally on strong US corporate earnings (Financial Post) World markets rallied on Tuesday, gaining momentum from an upbeat day in Asia and from U.S. corporate earnings. But downbeat purchasing managers’ index readings hinted at underlying worries. This week brings earnings from Facebook and Twitter, both of which remain under fire for their abilities to handle fake accounts and false information on their respective platforms. Facebook reports Wednesday afternoon, and Twitter reports on Friday morning. Amazon.com Inc. is on the docket for Thursday afternoon, and can also be considered an advertising giant as it pulls in billions from selling ads on its site.

Goldman says an all-out trade war would lower earnings for US companies by 15% (CNBC) If « tensions spread » and a 10 percent tariff were imposed on all U.S. imports, Goldman says, it would lower its 2019 EPS estimate by 15 percent to $145 a share. Goldman economists now assign a 60 percent probability that the U.S. imposes tariffs on the recently targeted $200 billion of imports from China. Certain tactics, such as investing in companies with higher domestic sales, would likely outperform if the trade dispute worsens, Kostin added. 

Overnight markets

Overview: US 10yr note futures are up 0.013% at 119-16, S&P 500 futures are up 0.41% at 2823.5, Crude oil futures are up 0.71% at $68.37, Gold futures are up 0.13% at $1236, DXY is down -0.16% at 94.48, CAD/USD is down -0.21% at 0.7607.

US Economic Data

Canadian Economic Data

There is no Canadian Economic Data for today.

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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