Investors brush off geopolitical risk after North Korea’s nuclear test
North Korea has the world on edge, but you'd hardly know it by looking at the markets. Global stocks are trading higher and futures are pointing to a modest dip at the start of trading in New York. All this as the global community races to contain a mounting risk after the latest nuclear test by Pyongyang, and amid fear in South Korea that Kim Jong Un's regime is gearing up for another intercontinental ballistic missile launch. This morning we'll gather insight on why investors are taking the tension in stride, for now.
BANK OF CANADA EVE
The Canadian dollar remains solidly above 80 cents U.S. with just over 24 hours to go before the Bank of Canada’s rate decision. Implied probability of a quarter-point bump is hovering near 55 per cent. This time last week, investors saw barely a 25 per cent chance the bank would raise rates at the meeting. We’ll set the table and establish how the Canadian dollar’s recent surge will factor into the decision.
CENOVUS HAULS IN $975M IN ASSET SALE
We knew asset sales were in the offing at Cenovus. Today, we have a deal. Canadian Natural Resources is picking up the company’s assets in Pelican Lake for $975 million. Cenovus says proceeds will go toward paying down debt incurred as part of its $17.7-billion deal with ConocoPhillips. And there's more to come, with CEO Brian Ferguson saying there's "strong interest" from potential buyers for other assets that are up for grabs.
MORNEAU TOUTS TAX PLAN
Finance Minister is trying to get the message out on his three-pronged plan to tighten up tax rules for private corporations amid increasingly vocal opposition. This afternoon he meets with business leaders in Vancouver. And this morning he’s got an op-ed in The Globe and Mail. “Some of the highest-income earners are effectively being taxed at a much lower rate than everyone else,” he writes. “It is legal, but as a former business owner and high-income earner myself, I do not think it is right.” We’ll continue canvassing the business community for reaction to the government’s plan, which is only going to become more prominent as we gear up for the Fall parliamentary session.
NAFTA ROUND TWO WRAPS
The second round of NAFTA renegotiations wraps today in Mexico City. Sources are telling CTV the Canadian negotiating team isn’t willing to cede ground on supply management and the U.S. isn’t heeding Canada’s progressive agenda for environmental controls in the trade pact. Meanwhile, a Mexican business lobby group says there are signs of progress on energy, telecom and investment rules. We’ll check in with Richard Madan in Mexico City for updates.
ONTARIANS SET THE BAR FOR BORROWERS
Residents of Ontario are setting the pace for borrowing across Canada. A new report from Equifax shows non-mortgage debt rose 5.1 per cent, on average, year-over-year in Ontario. That's compared with the national average growth rate of 3.3 per cent. While delinquency rates are trending lower, Equifax is warning there are risks ahead. "[Consumers'] overall ability to pay back this money on time remains stable though," Equifax Canada Senior Director Regina Malina said in a press release. "As interest rates gradually rise, and borrowing costs increase, this trend may be impacted over time."
OTHER NOTABLE STORIES:
-Bitcoin tumbled yesterday, and continues to lose ground today, after China’s central bank announced a ban on initial coin offerings. If nothing else, it’s a reminder of how regulators are fighting to keep pace with digital currencies. We’ll chase insight on the regulatory landscape.
-Lego is cutting 1,400 jobs (representing eight per cent of its workforce) after reporting a five per cent drop in first-half revenue today. The company noted sales fell in core markets like the U.S. and Europe.
-Gasoline futures have been down as much as five per cent on the NYMEX as Gulf Coast refineries ramp back up.
-United Technologies has finally reached a long-awaited deal to buy Rockwell Collins for US$23 billion. With debt, the price rises to US$30 billion.
-Notable earnings: HBC
-Notable data: U.S. factory orders (10:00 a.m. ET)
-Second round of NAFTA renegotiations wraps up in Mexico
-3:00 p.m. ET: Finance Minister Bill Morneau holds media avail in Vancouver after roundtable with small business owners to discuss government’s tax plan
-5:10 p.m. ET: Natural Resources Minister Jim Carr tours Pipeline Integrity Institute at UBC and holds media avail
Every morning BNN's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.