Commentaires

Market Update US tsys opening higher, yields 1-2bps lower across the curve with the 10Y 3.16% (-2bps), tsy futures slightly lower, giving back gains equities look to open higher (S&P 12.75) after yesterday’s steep selloff (S&P -2%). Core European bonds mixed – UK gilts lower on increasing signs UK & EU are close to deal on Brexit, 10Y gilt 3bps higher vs 5.5bp lower ahead of the headline, GBP erasing yest losses. Crude down for a 2nd day after Trump’s tweet urging OPEC to increase supply. GOCs higher, underperforming tsys by 0.5bps in the short end, 10Y 2.48 (-2.5bps).

News headlines

China’s top trade negotiator Liu He heads to US in bid to kick start new talks on easing tensions. (YahooNews) China’s top economic negotiator is expected to visit the United States soon for talks with his American counterparts aimed at calming trade tensions between the two sides and paving the way for a meeting between the two countries’ presidents.

U.S. car-import probe said to advance as Trump plans trade meeting (Bloomberg) The White House is circulating a draft report by the U.S. Commerce Department over whether to impose tariffs on automobile imports to protect national security, three people familiar with the matter said.

Italy won’t budge on deficit, may offer concession on growth (Bloomberg) Italy’s government may offer the European Commission a minor concession when it resubmits its budget after an unprecedented rejection last month. The populist administration may admit its 2019 spending plans will have a smaller economic impact than previously projected, and cut its growth target to as low as 1.3 per cent from 1.5 per cent, Il Sole 24 Ore reported on Tuesday. La Stampa reported that Finance Minister Giovanni Tria wants to lower the 2019 GDP growth target even further to 1.2 per cent, which would be in line with the level forecast by the commission.

Oil Extends Record Losing Streak as Trump Blasts Saudi Plan (Bloomberg) Oil fell for a 12th day, its longest losing streak on record, after U.S. President Donald Trump criticized Saudi Arabia’s plan to cut output. West Texas Intermediate futures in New York sank as much as 2.6 per cent, extending a drop of more than 11 per cent since Oct. 26. Prices “should be much lower based on supply,” Trump said in a tweet, after Saudi Energy Minister Khalid Al-Falih said producers need to cut about 1 million barrels a day. Meanwhile, the dollar rose to an 18-month high, hurting demand for commodities priced in the U.S. currency.

GE CEO admits regular investors have fled the stock since he cut the dividend to a penny (CNBC) GE CEO Larry Culp acknowledged Monday that his decision to slash the quarterly dividend to a penny sent regular investors scrambling. About one-third of GE shares are held by retail investors, a higher than average mix for a public company.

Sears should close for good, creditors say (CNN) A committee of unsecured creditors said in a court filing Friday that the company’s plans to stay in business during bankruptcy are « nothing more than wishful thinking  » and « an unjustified and foolhardy gamble with other people’s money. »

Amazon chooses New York, Northern Virginia for HQ2 (Bloomberg) Amazon.com Inc. () has selected New York City and Northern Virginia as the company’s second and third headquarters, the Wall Street Journal reported. An announcement could come as soon as Tuesday, the newspaper reported, citing unidentified people familiar with the plan. Other cities may get major sites from the company, the newspaper said.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 118-12, S&P 500 futures are up 0.41% at 2739, Crude oil futures are down -1.23% at $59.19, Gold futures are down -0.01% at $1203.4, DXY is down -0.27% at 97.277, CAD/USD is down -0.17% at 0.756.

US Economic Data

Canadian Economic Data

There is no 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 US tsys higher, tsy curve 1bp flatter with the 10Y 3.21% (-2.8bps). Tsys higher with German bunds on risk-off tone with Euro equities weaker, Italy spds wider, crude oil continuing lower for a fourth day, prices have been moving steadily lower for the last two weeks on rising US production & inventories.  Oct PPI expected to have risen 0.2% after a similar rise the previous month, with core prices decelerating to 2.5% y/y from 2.5%. GOCs higher in line with tsys – 10s consolidating in a 3bp range ~2.51% over the past week.

News headlines

Fed Holds Rates Unchanged Ahead of Expected December Hike (Bloomberg) The Federal Reserve left interest rates unchanged and stayed on course to hike in December despite recent jitters in financial markets and a critical president. The U.S. central bank said “economic activity has been rising at a strong rate” and job gains “have been strong,” acknowledging a drop in the unemployment rate, while repeating its outlook for “further gradual” rate increases in its statement Thursday following a two-day meeting in Washington.

Mueller’s New Boss Has Broad Powers to Throttle Trump Probe (Bloomberg) President Donald Trump’s new acting attorney general, Matthew Whitaker, now has almost unlimited authority over the Russia investigation led by Robert Mueller. Democrats have warned that Whitaker, a Trump loyalist and vocal critic of the probe, may fire Mueller, but he has many other ways to hamper, or even freeze, the investigation. Many of these steps may be largely invisible to the public and even lawmakers.

Stocks Fall on Oil, China Concerns; Dollar Gains: Markets Wrap (Bloomberg) U.S. equity-index futures fell for a second day as crude oil’s slide into a bear market and concerns over the health of China’s economy weighed on global stocks. The dollar continued its advance after the Federal Reserve stayed on track for a December rate hike. Mining and energy shares led a drop in Europe’s main equity gauge as most industrial metals fell, while disappointing forecasts from Richemont and Thyssenkrup AG also weighed on the index. Futures on the Dow Jones, S&P 500 and Nasdaq slipped. Oil extended a run of declines, heading for the longest losing streak on record. In Asia, financial shares performed particularly poorly following news that Beijing plans to set quotas for banks to pump credit into private companies. Treasury yields edged lower.

U.S. judge halts construction of Keystone XL oil pipeline (Reuters) A federal judge in Montana halted construction of the Keystone XL oil pipeline on Thursday on the grounds that the U.S. government did not complete a full analysis of the environmental impact of the TransCanada Corp (TRP.TO) project. The ruling deals a major setback for TransCanada Corp and could possibly delay the construction of the $8 billion, 1,180 mile (1,900 km) pipeline. The ruling is a victory for environmentalists, tribal groups and ranchers who have spent more than a decade fighting against construction of the pipeline that will carry heavy crude to Steele City, Nebraska, from Canada’s oilsands in Alberta.

Canada Pension Plan achieves 0.6 percent net return in second quarter (Reuters) The Canada Pension Plan Investment Board (CPPIB), Canada’s biggest public pension fund, said on Friday it delivered net investment returns of 0.6 percent in the latest quarter, impacted by adverse exchange rate movements. The CPPIB, which manages Canada’s national pension fund and invests on behalf of 20 million Canadians, said it had net assets of C$368.3 billion at the end of September, compared with C$366.6 billion three months earlier.

Disney earnings buoyed by theme parks, box office (BNN) Walt Disney Co. () delivered fourth-quarter sales and earnings that beat analysts’ projections, fueled by the entertainment behemoth’s movies and theme parks. Films such as “Ant-Man and the Wasp” and “Incredibles 2” more than doubled movie profit for the Burbank, California-based company. The company’s theme parks, meanwhile, benefited from the busy summer travel season, attracting more free-spending guests.

Martinrea misses expectations despite earning a record $36.4M in Q3 (BNN) Martinrea International Inc. () says it earned a record $36.4 million in the third quarter despite modest tariff effects and foreign exchange losses. The Toronto-based auto parts manufacturer says it earned 42 cents per share for the period ended Sept. 30. That’s unchanged from the prior year when its net income was $36.2 million. Excluding one-time items, adjusted profits rose for a 16th consecutive quarter, reaching $37.2 million or 43 cents per share, below analyst expectations but up from $36.3 million or 42 cents per share a year earlier.

Overnight markets

Overview: US 10yr note futures are up 0.133% at 117-30, S&P 500 futures are down -0.42% at 2797, Crude oil futures are down -1.52% at $59.75, Gold futures are down -0.63% at $1217.4, DXY is up 0.06% at 96.78, CAD/USD is up 0.32% at 0.7578.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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 have steadied after Wednesday`s late slide, and ahead of the FOMC decision later today. The 10-Yr T-Note future is off 4.5/32 at 117-27, still trading within a tight range (117-25 low, 117-30 high). Cash curve is bull flattening, with short-end relatively unchanged. The 2-Yr yield is down 0.4bps at 2.9527%, 5-Yr is down 0.2bps at 3.0779%, 10-Yr is down 1.1bps at 3.2244%, and 30-Yr is down 1.3bps at 3.4286%. This comes against a backdrop of weaker equity futures (S&P Emini off 0.5%) and stronger dollar (DXY up 0.3%). No change expected at today’s FOMC decision, but dovish risks from the statement

News headlines

Bombardier Plans to Cut 5,000 Jobs, Sell Turboprop Aircraft Unit (Bloomberg) Bombardier Inc. plans to cut about 5,000 jobs while selling its turboprop unit and a training business as Chief Executive Officer Alain Bellemare extends a far-reaching turnaround drive at Canada’s biggest aerospace company. Net proceeds from the asset sales will be about $900 million, Bombardier said in a statement Thursday. The employment reduction, Bellemare’s third since taking the reins at the debt-laden company in 2015, will yield annual savings of about $250 million by 2021 while also prompting a charge of a comparable amount next year.

American Voters Just Sent a Surprising Message About the Trade War (Bloomberg) The trade war of 2018 was, in theory, supposed to hurt Republicans in states vulnerable to higher tariffs and Chinese retaliation. The results from Tuesday’s midterm elections suggest that didn’t really happen. President Donald Trump’s tariffs were a hot topic in farming regions and the Rust Belt — places with a lot to lose in the dispute with China, which countered with duties on iconic American exports from soybeans to lobsters. Yet several candidates who opposed Trump’s tariffs were defeated, while some who backed the duties won their races.

U.S. Mortgage Applications Hit Lowest Since 2014 as Rates Rise (Bloomberg) A gauge of U.S. mortgage applications fell last week to the lowest level in almost four years as borrowing costs hit the highest since 2010, adding to challenges for the housing market. The Mortgage Bankers Association’s market composite index fell 4 percent in the week ending Nov. 2 to 316.2, the lowest reading since December 2014, according to a report Wednesday from the Washington-based group. The survey’s contract rate on a 30-year fixed loan rose to 5.15 percent from 5.11 percent, while a gauge of applications to purchase homes dropped 5 percent to the lowest in about two years.

U.S. Stock Futures Slide as Treasuries Advance: Markets Wrap (Bloomberg) U.S. stocks looked set to put an end to a global rally that spread across Europe and Asia after the midterm elections. Benchmark Treasury yields retreated from the highest level since 2011. Futures on the S&P 500 retreated after a surge in the underlying index yesterday. Europe’s main equity gauge pared an earlier advance spurred by strong earnings and dividend outlooks from companies including AstraZeneca Plc and Siemens AG. It remained in the green, however, after an upbeat session in Asia. Japan’s Topix jumped 1.7 percent and shares in Hong Kong and South Korea also posted solid gains. Italian bond yields climbed after the European Union warned the nation’s budget deficit will move dangerously close to the economic bloc’s limit of 3 percent. The dollar edged higher.

Diversified retailer Canadian Tire’s profit rises 16.5 percent (Reuters) Diversified retailer Canadian Tire Corp Ltd (CTCa.TO) reported a 16.5 percent rise in quarterly profit on Thursday, helped by higher sales at its retail segment and the inclusion of newly acquired Helly Hansen’s operations to its earnings. Net income rose to C$231.3 million ($155.54 million), or C$3.15 per share, in the third quarter ended Sept. 30, from C$198.5 million, or C$2.59 per share, a year earlier. Revenue rose to C$3.63 billion from C$3.27 billion.

Car parts maker Magna tops profit estimates, lowers 2018 outlook (Reuters) Canadian auto parts maker Magna International Inc (MG.TO) topped estimates for quarterly profit on Thursday while trimming its 2018 total sales forecast on the back of a dip in its units that produce car frames and complete vehicles. The Aurora, Ontario-based company now expects light vehicle production – its main measure for output of a diverse range of parts and assembly work – to reach 17 million units in North America, down from a previous forecast of 17.2 million. The company also said it expects costs in its unit handling auto exteriors and structures to go up and total sales in fiscal 2018 to be between $40.3 and $41.4 billion compared to an earlier range of $40.3 to $42.5 billion.

Imperial CEO says $2.6B Aspen project needed amid crude price slump (BNN) Imperial Oil Ltd. has approved a final investment decision to proceed with its $2.6-billion Aspen oil sands project in Alberta. Construction will begin in the fourth quarter of this year. Imperial says Aspen will eventually produce 75,000 barrels of bitumen per day, with first output anticipated in 2022.

Cannabis stocks spike after U.S. Attorney General Sessions resigns (BNN) Cannabis stocks, already bolstered by wins in the midterm elections, got an added boost when anti-pot Attorney General Jeff Sessions announced his resignation Wednesday afternoon. Exchange-traded funds that track marijuana stocks, including the Horizons Marijuana Life Sciences Index ETF in Toronto and the U.S.-listed ETFMG Alternative Harvest ETF, jumped to fresh highs on the news, gaining as much as 9.1 per cent and 7.9 per cent, respectively.

Overnight markets

Overview: US 10yr note futures are down -0.066% at 117-29, S&P 500 futures are down -0.32% at 2807.5, Crude oil futures are down -0.02% at $61.66, Gold futures are down -0.2% at $1226.3, DXY is up 0.25% at 96.239, CAD/USD is down -0.07% at 0.7631.

US Economic Data

Canadian Economic Data

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