Link maker

The Daily Chase: Market sentiment plummets; Link cancels Dye & Durham deal

Other than the US dollar and global bond yields, it’s hard to find anything trading higher this morning. US futures suggest it will be another low open in New York after three straight days of losses. The Canadian dollar traded as low as 73.79 US cents this morning, nearly two cents lower than a week ago. And West Texas Intermediate crude lost more than 4% in early trading and fell below US$80 a barrel for the first time since January. So, in this kind of context, it’s no surprise to see Bank of America strategists saying that sentiment is “unquestionably” at its lowest since the 2008-09 financial crisis as central banks rush to contain inflation.

On that note, there were some encouraging comments from Costco’s CFO after markets closed yesterday. Speaking on an earnings call with analysts, he said he saw “minor improvement in a few areas…we only see a small light at the end of the tunnel.”

DECLINE OF CONSUMERS

Statistics Canada said sales fell 2.5% in July; this is the first decline recorded this year. It was widespread, as declines were recorded in nine of the 11 main sectors tracked. Interestingly, one of the biggest slowdowns was in furniture stores, where sales fell 6.0%. In a brief analysis for clients, Karyne Charbonneau of CIBC Economists said “Canadians may have started to react to higher interest rates.” In a snapshot of sales in August, Statistics Canada estimated that sales rose 0.4% in that month.

DYE & DURHAM’S LINK TAKEOVER FALLS APART

It almost seemed like the writing was on the wall after a years-old fund meltdown came back to haunt the company Dye & Durham was trying to acquire. And so, early this morning, it became official: Link Administration Holdings Ltd. said it was disappointed to announce that the takeover by Dye & Durham will not proceed. The Toronto-based software consolidator said it has a “strong pipeline of M&A opportunities” to focus on.

HURRICANE FIONA

Much of Atlantic Canada is under hurricane watch as Environment Canada warns of a severe weather event that will hit the region with heavy rain and damaging winds. We will examine the preparations underway in the agriculture and offshore oil sectors.

CRYPTO OFFER

A few Canadian crypto trading platforms combine as Coinsquare announced it would buy parent company Coinsmart. In a statement, the Coinsquare CEO said the deal was driven at least in part by the “ever-increasing cost structure and added complexity” of navigating the industry’s ongoing regulatory landscape. Coinsmart is one of nine crypto trading platforms registered with the Ontario Securities Commission. Coinsquare, which settled a regulator investigation in 2020 stemming from inflated trading volumes and transgressions by its former chief executive, chief compliance officer and founder/chairman, has made pre-registration commitments to the CSO. It is also seeking to obtain authorization to operate under the responsibility of the Investment Industry Regulatory Organization of Canada.

OTHER NOTABLE STORIES

  • FedEx – whose shares lost nearly a quarter of their value last Friday after the early release of disappointing first-quarter results – said it was aiming to cut up to US$2.7 billion in costs over the course of of the current fiscal year, mainly by adjusting its flight schedule and temporarily decommissioning certain aircraft. He also announced rate hikes that will take effect on January 2.
  • Boeing has agreed to pay US$200 million to settle US and Securities and Exchange Commission charges that it misled investors following the fatal 737 Max crashes in 2018 and 2019. Dennis Muilenburg , the former CEO of the aircraft manufacturer, has also settled and will pay a fine of 1 million US dollars. In a statement, the SEC chief said both parties “failed this most basic obligation” to provide accurate information to the markets.
  • Emera said it would increase its annual dividend to $2.75 per share from $2.65 and now aims to continue raising the payout by 4-5% through 2025.
  • First Capital Realty announced it is targeting more than $1 billion in asset sales by the end of 2024, and said it will focus on “grocery-based, community-based properties.” necessity” in “prosperous neighborhoods with superior demographics”.
  • Newmont is selling its 18.75% interest in the Mara copper and gold project in Argentina to Glencore for $124.9 million and up to $50 million in deferred payments. The deal will leave Glencore with a 43.75% stake; the rest belongs to Yamana Gold.

NEWS RELEASES / NOTABLE EVENTS

  • Notable data: Retail sales and manufacturing sales in Canada (flash estimate)
  • 3:25 p.m.: Prime Minister Justin Trudeau is available to the media alongside South Korean President Yoon Suk Yeol