February 7th, 2020
Daily Market Commentary
- Aurora Cannabis CEO Departs, 500 Jobs Cut, Credit Facility Cut. Aurora Cannabis Inc., struggling with a cash crunch and a slumping stock price, announced the departure of its CEO, the termination of about 500 employees and a significant reduction in its credit facility. Chief Executive Officer Terry Booth, who founded the Canadian pot company in 2013, will retire but will remain a director on the board, the company said Thursday in a statement. He’ll be replaced on an interim basis by Executive Chairman Michael Singer.
- Canada Goose Sinks After Cutting Forecast on Coronavirus Impact. Canada Goose Holdings Inc. tumbled in early trading after the company said the coronavirus is “having a material negative impact” and cut its full-year forecast for sales and profit. Revenue at the luxury parka maker will rise as much as 15% for the full year, down from a previous outlook of at least 20%. Profit per share, excluding some items, will be between a drop of 2.2% and a gain of 0.7%, far below its prior forecast of at least 25% growth.
- Canadian Milk Giant Saputo Homes in on Dairy-Free Deal This Year. The dairy industry is joining the dairy-free craze. Canadian dairy giant Saputo Inc. is targeting an acquisition of a plant-based milk business in North America by the end of the year to capture some of the growth driven by a shift toward less or no dairy for health and environmental reasons.
- Brookfield Infrastructure Fund IV attracted total capital commitments exceeding the original $17 billion fundraising target. To date, the Fund has invested or committed about $8 billion, or 40% of its capital, to a diversified set of infrastructure businesses
- U.S. stock futures fell with shares in Europe and Asia at the end of a week of big gains while bonds climbed before American jobs data. The dollar rose as the yuan slumped along with the Aussie and won. Gold and the yen climbed. Oil was steady. Industrial metals tumbled.
- European equities were little changed on Friday as shares in Burberry Group Plc and Credit Suisse Group AG fell, though the region’s benchmark remains close to record highs as investors await the release of a U.S. jobs report.
- Red Flags Emerge in U.S. Stocks With Insiders Rushing to Sell. The list of warning signs for the rally that pushed U.S. stocks to another record is growing longer. As the S&P 500 Index embarked on a torrid four-day advance, corporate executives and officers have stepped up selling shares in their own companies — so much so that there were five insider sales for every one buy, according to data compiled by Washington Service. That’s poised to be the highest since early 2017.
- U.S. stock funds’ inflows were the largest in 7 weeks, at $12.7 billion through Feb. 5, according to BofA, citing EPFR data. Weekly inflows for bond funds were the eighth-highest ever at $16 billion.
- German industrial production fell 3.5% in December after a revised gain of 1.2% the previous month. It was the biggest slump since the financial crisis and leaves the country facing a possible recession again. France reported a 2.8% drop in industrial output in December, and Spain posted a 1.4% decline.
- China’s January trade data was delayed for a month and will be announced later together with February’s figures. Doing so aligns the numbers with data from the statistics office, which also combines January and February together because of the shifting Lunar New Year.
- Burberry scrapped its forecasts for the year and warned the coronavirus outbreak wiped out three-quarters or more of sales at stores in China. The hit comes as Burberry undergoes a style revamp. It said response to the new lines has been favorable and it’s sticking with plans to roll out new products.
- Coronavirus news: The number of cases on a cruise ship in Japan tripled to 61, making the vessel the biggest center of infections outside China. Deaths rose to 638. A Chinese journalist reporting from inside Wuhan is missing. His friends posted a message on his Twitter account saying he’s been out of touch since yesterday. Singapore raised its response level to the same level as in the SARS outbreak.
- Presidents Trump and Xi spoke over the phone and reaffirmed their commitment to the phase one trade deal, the White House said. Trump also expressed confidence in China’s strength in fighting the coronavirus. State-run Chinese TV reported Xi’s pledge to fight the outbreak and his assertion that the long-term trend for his economy hasn’t changed.
- China will face a big economic shock that spills over to the rest of Asia, Nomura said. The impact will probably be worse than SARS, cutting GDP growth to about 3.8% year on year this quarter, versus 6% in the last quarter.
- The U.S. economy may have added 165,000 jobs in January, consensus shows, after a below-par 145,000 the month before. The strong ADP private jobs beat on Wednesday helped push the whisper number up to 180,000. Bloomberg Economics predicted 160,000. The unemployment rate probably held at 3.5%, with average earnings ticking up to 0.3% month on month.
- Intercontinental Exchange gave up its pursuit of EBay. ICE CEO Jeff Sprecher said the online auction site “was not interested” in any kind of tie-up. EBay slid 6.2% post-market and ICE rose.
- Pete Buttigieg and Bernie Sanders face off in the New Hampshire debate today, still squabbling over who won in Iowa. Buttigieg got 26.2% of delegate equivalents and Sanders 26.1% with all the results in but AP, whose call is considered official, won’t declare a winner because of the margin. Elizabeth Warren and Joe Biden came third and fourth.
- Russia and Saudi Arabia are fighting for supremacy in oil, Bloomberg Opinion’s David Fickling writes. In 1985, Saudi Arabia flooded the market, depressing prices and dealing a blow to the high-cost Soviet Union. The tables have turned. The Saudis need about $85 a barrel to balance the budget, but It’s $50 in Russia.
- Oil pared its fifth straight weekly loss on optimism that OPEC+ will deepen output cuts. Oil refineries across China have cut crude intake by around 15%, and could deepen those reductions in the coming weeks if demand for aviation and transportation fuels continue to shrink.
- Russia will give its decision next week on an OPEC+ proposal to cut output as divisions persist. The proposal is for an extension of existing cuts to year-end and additional curbs in the first half, a delegate said. Saudi Arabia’s biggest fear is that without deeper and extended cuts, Brent prices will fall below $50 a barrel, Eurasia Group said.
*All sources from Bloomberg unless otherwise specified