August 5, 2022
- TC Energy Corporation today announced that it has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets and Scotiabank, pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 28,400,000 common shares of the Company at a price of C$63.50 per Common Share, for gross proceeds of approximately C$1.8 billion. The net proceeds from the Offering will be used, directly or indirectly, together with other financing sources and cash on hand, to fund costs associated with the construction of the Southeast Gateway Pipeline, a US$4.5 billion, 1.3 billion cubic feet per day, 715-kilometre offshore natural gas pipeline in the southeast region of Mexico. Pending such use, the net proceeds from the Offering may temporarily be used to reduce indebtedness or invested in short term liquid investments.
- Suncor to Sell Its Norwegian Assets to Sval Energi for $318m. Suncor Energy agreed to sell its assets in Norway for C$410m ($318m) to Sval Energi, with the transaction expected to be completed in 4Q. The deal will add daily production of ~4k boe and 19m boe in reserves to Sval Energi’s portfolio, according to a statement from the Norwegian company, which is backed by HitecVision. In a separate statement, Suncor also said the sale of its wind and solar assets is progressing and scheduled to be completed in early 2023. The company has also started a sale process for its entire UK E&P portfolio
- US equity futures ticked higher before the monthly US jobs report that’s likely to enliven the recession debate. Treasury yields and the dollar steadied. Contracts on the S&P 500 posted modest gains, while those on the Nasdaq 100 were little changed and just short of a 20% rebound from its June low that would meet the technical definition of a bull market. Stocks in Europe were in the red, with he Stoxx Europe 600 Index weighed by energy and media firms. A global equity index is set for a third weekly advance and near a two-month peak in a recovery from bear-market lows, helped by resilient US company profits. The durability of the bounce remains in doubt as central banks around the world speed up rate hikes, and the inversion between two-year and 10-year yields remains near the deepest since 2000, harkening imminent recession.
- Investors resumed shunning stocks in favor of bonds, BofA said, and the time is right to step back from US equities. Global equity funds had outflows of $2.6 billion in the week through Aug. 3, EPFR Global data show. US stocks had redemptions of $1.1 billion and while $4.1 billion left cash, global bonds drew some $12 billion. BofA sees the S&P in a 3800-4200 range till the Sept. 21 Fed meeting.
- Recession Alarms Ring Across Markets to Defy JPMorgan Model. JPMorgan Chase & Co.’s trading model may point to the chances of a US recession falling fast, but other market indicators are quite a bit more pessimistic. From bonds to commodities to money supply, there’s a slew of alarm bells going off that suggest a hard economic landing lies ahead. “The most likely outcome is that there has to be a recession to tame inflation, in the US and elsewhere,” said Stephen Miller, an investment consultant at GSFM, a unit of Canada’s CI Financial Corp. “Central banks clung to the transitory narrative for far too long and almost guaranteed themselves second- or third-best outcomes. The Fed and its peers are going to have to raise rates a lot more than markets are anticipating.”
- Ships Delay Sailing to Key Taiwan Port to Avoid China Drill Zone. China’s military exercises are making ships think twice about heading into one of Taiwan’s most important ports, creating potential delays for shipments of electronic goods. Ships are dropping anchor at sea to avoid a drill zone located just outside Kaohsiung port in Taiwan’s south, said Jayendu Krishna, deputy head of consultancy Drewry Maritime Advisors. The zone is one of the largest areas that China is carrying out exercises, and is 15 nautical miles away from the entrance of the port.
- The path was nearly cleared for one of the cornerstones of President Joe Biden’s domestic agenda after Democrats agreed on a revised version of their tax and climate bill. But it came at a price: To get the support of Senator Kyrsten Sinema — the pivotal Democratic vote in the 50-50 Senate — a levy on wealthy hedge fund managers had to be abandoned. So the Democrats agreed to drop a provision that would have narrowed a tax break for carried interest, meaning wealthy private equity managers and venture capitalists will continue to be able to pay a lower capital gains rate on one of their main forms of compensation. Lawmakers will also alter a 15% minimum tax on corporations and add a new 1% excise tax on stock buybacks.
- Nomad is offering a bounty to recoup funds spirited away in a $190 million hack. Anyone returning at least 90% of stolen tokens won’t be sued, with the remaining 10% effectively becoming a reward. Coinbase headed to a record weekly jump following its BlackRock partnership announcement.
- China probably fired missiles over Taiwan for the first time during drills, while warships and military planes crossed the line dividing the Taiwan Strait. The island responded by sending out air and maritime patrols. China imposed sanctions on Nancy Pelosi. In more regional angst, North Korea set off explosive devices this year and began digging underground tunnels at its Punggye-ri nuclear test site, Nikkei reported.
- Three ships carrying a total of 58,000 tons of corn left Ukrainian ports this morning, Turkey said. Ukraine’s infrastructure minister reiterated its goal of 100 vessels carrying up to 3 million metric tons of grain every month by mid-to-late September. Global food prices dropped for a fourth month, the UN said, as concerns over supplies of grains and vegetable oils eased, but a myriad of challenges are left.
- Erdogan Eyes Mediator Role With Putin After Ukraine Grain Deal. Russian President Vladimir Putin hosts Turkish leader Recep Tayyip Erdogan for talks on Ukraine on Friday, as Ankara pushes for a mediating role to try to help end the war following the breakthrough deal on grain exports. Erdogan is seen in Moscow as a potential go-between in the conflict, said two people familiar with the Kremlin’s thinking, asking not to be identified because the matter is sensitive. Still, Russia isn’t softening its terms for any end to the fighting and stalled peace talks with Ukraine are unlikely to resume unless there’s a major shift in the military balance in Putin’s favor, the people said. Ahead of the summit in Russia’s Black Sea resort of Sochi, Turkish Foreign Minister Mevlut Cavusoglu on Thursday said he hoped the agreement on Ukrainian grain exports could “form the basis of a broader cease-fire and peace plan.”
- DraftKings Jumps as Sales Beat Expectations, Forecast Raised. DraftKings Inc. raised its full-year revenue forecast as the company continued to sign up new bettors despite decades-high US inflation squeezing consumers’ budgets. The shares jumped in early trading. DraftKings now sees revenue for the year in the range of $2.08 billion to $2.18 billion, up from $2.055 billion to $2.175 billion, the company said Friday. The company also forecast a narrower loss for the year, in terms of earnings before interest, taxes, depreciation and amortization. Revenue in the second quarter rose to $466 million, a 57% increase from the year-earlier period. That beat the average of analysts’ expectations at $438 million.
- Warner Bros Discovery (WBD US) shares slump 11% in premarket trading after the media company reported a net loss and sales for the second quarter that missed the average analyst estimate. The recently merged media giant recorded about $4 billion in charges related to the deal, including amortization and restructuring expenses, wiping out profits.
- Virgin Galactic (SPCE US) shares tumbled 13% in premarket trading after the space tourism company announced another delay to the launch of their commercial service, pushing it back to the second quarter of 2023.
- Amgen (AMGN US) delivered a solid set of results and the biotech giant’s acquisition of autoimmune disease drug maker Chemocentryx looks to make sense, analysts say.
- Block (SQ US) shares fall 6.5% in premarket trading after gross payment volume for the second quarter missed the average analyst estimate. Analysts noted signs of slowdown in the Cash App business in July.
- Amazon to Buy Roomba Maker IRobot in Cash Deal at 22% Premium. Colin Angle to remain CEO of iRobot. Premium of 22% based on IRobot’s last closing price before the announcement and a premium of 43% based on the 20-day average closing price. The deal values IRobot at 121.2 times TTM EBITDA
- Industrial production in Germany, France and Spain all beat, notching increases in defiance of estimates. Italian factory output fell 2.1% month on month in June, worse than expectations of a 0.1% drop.
- Japan household spending jumped 3.5% year on year in June, more than expected. Labor cash earnings growth also exceeded expectations at 2.2%. Citi and SMBC Nikko predicted core CPI of 3% or more by year-end.
- China’s economic growth may pick up in the third quarter on the back of faster infrastructure investment and a recovery in consumption, the China Securities Journal said. Several Chinese cities tightened oversight of property presale funds held in escrow accounts, in order to ensure homes are handed over to customers, the Securities Times said.
- Oil headed for a punishing weekly loss. Brent’s set for a decline of more than 14%, while WTI’s are just shy of 10%. The market is struggling, SPI Asset said. Gold traded near a one-month high. Nickel and aluminum led base metals higher. Kazakhstan plans to raise August oil and gas condensate production to about 1.7 million barrels a day as the Kashagan field recovers further after maintenance.
- Twitter said Elon Musk’s counterclaims against its suit to make him complete his purchase were empty. It argued the Tesla boss’s complaint that he was hoodwinked was “as implausible and contrary to the facts as it sounds.”
- AMC sank in late trading after it declared a special preferred stock dividend to reward investors. CEO Adam Aron said the new instrument would be akin to a stock split. The company may issue more of the preferred shares that, when converted to AMC stock, would dilute existing holders.
- Complaints about workplace conduct at Rio Tinto almost doubled in the wake of inquiries that exposed an industry rife with sexual abuse, harassment and racism. “It has encouraged our people to speak up about poor conduct on our sites or in our offices, with the number of reports up by 95%,” said Rio’s Australia CEO Kellie Parker.
- Gold Heads for Third Weekly Gain on Rising Demand for Havens. Gold traded near a one-month high — after jumping the most since March on Thursday — as US-China tensions and a deepening global economic slowdown buoyed demand for haven assets. Bullion headed for a third weekly gain, even as prices slipped on Friday, after China likely fired missiles over Taiwan during military drills. Beijing has responded aggressively to US House speaker Nancy Pelosi’s visit to the island this week. There were more signs that the fight to cool inflation will weigh on global growth. The Bank of England unleashed its biggest rate hike in 27 years on Thursday as it warned the UK is heading for more than a year of recession, while Cleveland Federal Reserve Bank President Loretta Mester said US interest rates need to be raised above 4%.
- China’s Covid Lockdowns Send Luxury Brands on US Expansion Spree. Gucci in Columbus, Ohio. Chanel in Troy, Mich. Hermès in Naples, Fla. Welcome to luxury’s latest frontiers. After years focused mainly on expansion in China, luxury brands are rediscovering the U.S., opening boutiques across America in cities where they have never previously operated stand-alone stores. Once concentrated in a handful of places, wealth has spread to new parts of the U.S. in recent years, with cities such as Atlanta and Austin, Texas, emerging as new tech hubs, for example. The rise of these new wealth centers is driving the strategy, luxury companies say, drawing them beyond traditional U.S. mainstays of New York and California. China’s strict approach to containing Covid-19 has further bolstered the case for U.S. investment. In a bumper year so far for luxury revenues, China has been a laggard, its performance as a high-end market undone by strict lockdowns in Shanghai and other major cities — restrictions that executives say they fear could be repeated.
- Hong Kong to Announce Hotel Quarantine Cut as Soon as Monday. Hong Kong may announce a reduction in the amount of time international travelers need to spend in mandatory hotel quarantine as soon as Monday, according to people familiar with the matter, with discussions over the scale of the change still ongoing. While officials had anticipated making an announcement on Friday, it has been pushed back to Monday at the earliest since no firm decision has yet been made on the parameters of the cut, according to one person, who asked not to be identified discussing internal deliberations. A representative for the Department of Health said questions about the quarantine policy should be sent to the chief executive’s office, which didn’t immediately respond to an emailed request for comment.
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*All sources from Bloomberg unless otherwise specified