There weren’t many places to hide on Wednesday, as the TSX Index shed nearly 3% of its value, while the tech-heavy NASDAQ 100 tanked nearly 4%. The market-wide sea of red had many worried in what shaped up to be an “everything sell-off” that spared few. With the markets nearing correction territory once again, Canadian investors may wish to put some cash on some battered plays that are better poised to hold their own if the bear were to re-emerge from his cave before the holidays.
Nutrien: A lone green arrow on a big red day
Now, I’ve been a raging bull on shares of the fertilizer kingpin for quite some time now — not just because the long-term prospects for agricultural commodity producers are bright, given the secular tailwind in an ageing global population, but because Nutrien stock had been so beaten up such that its correlation to the broader markets is likely to be near zero, if not negative.
“Nutrien was in a world of pain well before the coronavirus crash hit.” I said in a prior piece where I referred to Nutrien as a dividend darling that was to be bought whether a market crash happens or not. “With a robust retail segment and operational advantages (in potash production in particular) that Nutrien holds over its peers in the space, the company is a ‘moatier’ stock that most folks would give it credit for.”
With shares of NTR trading at one times book value, the stock looks so undervalued that I suspect we’ll see more days where the stock holds its own when the rest of the market crumbles like a paper bag.
Hydro One: Low in beta and high in defence
Shares of the wide-moat municipal utility Hydro One (TSX:H) fell 0.8% on Wednesday. But it easily could have been in the green given the stock’s ridiculously low 0.21 beta. Ryan Vanzo, my colleague here at the Motley Fool, recently referred to Hydro One as one of the safest stocks on the TSX. I think he’s right on the money.
“The company primarily delivers electricity to customers in Ontario, where its transmission lines cover 98% of the province. Even during a recession, electricity demand doesn’t recede that much. And with regulators guaranteeing a level of profits, often years in advance, Hydro One has extreme visibility into future cash flows.” wrote Vanzo.
With a virtual monopoly that’s defending its cash flows, Hydro One is one of the few bond proxies that makes for a decent hiding place for investors worried that things could go south in a hurry. The company may not have the best growth profile in the world, but it certainly has one of the most well-covered 3.5%-yielding dividends out there. With shares trading at 1.7 times book value, you’re getting a lot of bang for your buck with H stock versus the likes of those ridiculously unrewarding fixed-income assets.
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Canadian economy added 62,000 jobs in November, unemployment rate fell to 8.5% – CityNews Toronto
The rate of job growth continued to slow in November with the economy adding 62,000 jobs, down from 84,000 in October.
The gains were mostly focused in full-time work with a gain of 99,000 jobs, offset somewhat by a decline in part-time work of 37,000 positions, Statistics Canada reported Friday.
The average economist estimate had been for a gain of 20,000 jobs and an unchanged unemployment rate, according to financial data firm Refinitiv.
The gains in November left the country 574,000 jobs short of recouping the approximately three million jobs lost from lockdowns in March and April that sent the unemployment rate skyrocketing to 13.7 per cent in May.
The unemployment rate fell to 8.5 per cent compared with 8.9 per cent in October.
The unemployment rate would have been 10.9 per cent in November, StatCan said, had it included in calculations Canadians who wanted to work last month but didn’t search for a job.
The agency said 1.5 million people searched for jobs in November, a small drop of 39,000 from October, but still more than 448,000 or so who were looking for work in February, pre-pandemic.
The report noted that job searchers made up an increasing share of the total number of unemployed.
The youth unemployment rate fell 1.4 per cent to 17.4 per cent with a gain of about 20,000 jobs for the age group, mostly concentrated among young men with little change to the employment situation for women age 15 to 24.
Similarly, employment among women 25 to 54 years old didn’t change much in November after six straight months of seeing their numbers rise.
Positions in the hard-hit accommodation and food services sector declined for the second consecutive month, shedding 24,000 jobs in November.
That figure doesn’t take into account renewed restrictions in areas like Toronto that kicked in later in the month.
“As a result, it’s likely that COVID will catch up with the Canadian economy in the December data, with a decline expected in both employment and overall economic activity,” notes CIBC senior economist Royce Mendes.
Overall, the pace of job gains has slowed, with employment rising by 0.3 per cent in November compared to an average of 2.7 per cent per month between May and September.
Canadian banks face revenue growth challenges as focus shifts from managing loan losses – Yahoo Canada Finance
(Bloomberg) — Glencore Plc named Gary Nagle to take over as chief executive officer, when billionaire Ivan Glasenberg steps down after almost 20 years at the top of the world’s biggest commodity trader.“It’s time to hand over to a new generation and a new leader,” Glasenberg said on an investor call Friday. “We’ve decided that over the next six months I will be working closely with Gary Nagle, who will be taking over from me.”Nagle, like Glasenberg, is South African and similarly has degrees in commerce and accounting from the University of the Witwatersrand. Also like Glasenberg, he built his career by rising through the ranks of Glencore’s coal department. Now head of that business, Nagle’s appointment comes as Glencore committed to keeping its coal assets, despite speculation it could follow rivals in spinning them off.Glasenberg announced at the end of 2018 his plan to retire in the next few years, firing the starting gun on a closely watched race in which Nagle held off challenges from rivals including Kenny Ives and Nico Paraskevas. The transition comes as Glencore navigates through corruption probes, scrutiny of its environmental bona fides and a share price that’s lost half its value during the past decade.Known by some as a “mini-Ivan,” Nagle joined Glencore in 2000 as an asset manager in the coal department, going on to become chief executive of its Colombian coal operation, Prodeco, in December 2007. Following the acquisition of Xstrata, the 45-year-old was moved to run the company’s South Africa-focused alloy assets, and was later named head of coal assets.Maintaining Culture“He will maintain the culture and the style this company has,” Glasenberg said. “I’m happy to have him as the custodian of my shareholding in the company which I will maintain going forward.”Though Glasenberg is relinquishing the top job, he holds a 9.1% stake in Glencore, making him the second-biggest shareholder.Glencore’s shares rose as much as 4% in London, following the announcement.Glasenberg, who has long defended coal’s role in Glencore’s portfolio, said he would support Nagle if he decided to exit the business. Although he still believes Glencore is a better steward of its coal mines, Glasenberg said that if shareholders decided the coal unit should be sold or spun off, then Nagle would have to do it.“I’ll support him in anything that creates value for shareholders,” he said.Glasenberg’s impending departure follows that of his chief lieutenants, who themselves became billionaires when the company listed, have been leaving the past two years. The exodus included former head of copper trading Telis Mistakidis, head of oil Alex Beard and Daniel Mate, who headed up its zinc business.(Updates with comment from Glasenberg in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Doug Ford rebuffs calls to reopen retail shops at 25 per cent capacity in Toronto, Peel region – The Globe and Mail
Ontario Premier Doug Ford is rejecting a push from prominent retailers to reopen non-essential stores in Toronto and Peel, a day after they published an open letter urging the government to allow 25 per cent capacity in retail shops in lockdown regions.
Mr. Ford on Wednesday said he feels the pain of business owners who are forced to close until at least Dec. 20 during the lockdown, but said he is listening to the province’s Chief Medical Officer of Health and others guiding his government during the COVID-19 pandemic.
“I’d switch those things open in a heartbeat. But I can’t. I have to listen to the health experts,” Mr. Ford said during his daily press briefing at Queen’s Park.
“I’m a businessperson. I don’t want to close these down. But health trumps my personal belief.”
As part of the lockdown, big-box stores selling essential items – such as Costco and Walmart – are allowed to open at 50 per cent capacity, while other retail stores and small businesses cannot offer in-store shopping and are forced to sell items for delivery or curbside pickup only.
A coalition of nearly 50 retailers, including Canadian Tire, Indigo, Hudson’s Bay and others, this week called on the Ontario government to lift the COVID-19 restrictions that have shuttered stores just in time for the crucial holiday shopping season.
In an open letter released on Tuesday, the group said that the closing of retailers deemed non-essential in Peel Region, which includes Mississauga and Brampton, and in Toronto is “an ineffective policy” that puts retail businesses at risk of failure. The group called for Ontario to implement store capacity limits at 25 per cent of the building capacity for all retailers – not selective lockdowns with big-box stores open at 50 per cent capacity.
Signatories pushing for the changes said Wednesday they felt unfairly targeted by the government’s rules.
“[Retailers] feel undeservedly singled out as an initiative to stop the spread of COVID-19, when in fact the government’s own statistics indicate that retail is not a significant source of spread,” Leon’s Furniture Ltd. president and chief executive officer Edward Leon said in an e-mail on Wednesday.
David Bensadoun, CEO of the Aldo Group Inc., said the decision to keep non-essential stores shuttered would drive customers to American stores.
“Every time we do a lockdown of specialty stores, we’re hurting Canadian retail,” he said.
“Even though Canadian retailers have terrific online experiences, they cannot compete with the big American players for ad dollars, so when we shift consumers online, we’re largely shifting them to Amazon, Walmart and other American mega-players. I don’t envy Ford’s position, I don’t think it’s easy. But in this case I think he’s made a mistake, and the sooner he corrects it the better, because these are the biggest weeks of the year for shopping.”
Heather Reisman, CEO of Indigo Books & Music Inc., said by funnelling more people into fewer stores, “you actually cause longer waiting lines with chance for closer contact. … This could create higher health risk while doing devastating damage to hundreds of businesses.”
Mr. Ford acknowledged that keeping big-box stores open for in-store shopping is “not fair,” but said they are intended to be a one-stop shop for groceries and other essential items. However, those stores also sell non-essential goods such as clothing, toys and gifts.
Ryan Mallough, director of provincial affairs for Ontario at the Canadian Federation of Independent Business, said small businesses are also calling for the government to present data that back up the need to keep independent retailers shuttered. His group has called for limited in-person and appointment-only shopping during the holiday season.
“If there’s any evidence that shopping at a busy big-box store with a couple hundred other people, even at 50 per cent capacity, is safer than at a small business with two or three other people, then show that data. Because right now that is one of the immensely frustrating things,” he said.
Ontario reported 1,723 new cases of COVID-19 on Wednesday, as well as 35 new deaths owing to the virus. Toronto and Peel account for more than half of the new infections, with 500 cases reported in Peel and 410 in Toronto. There were 196 new cases in York Region, north of Toronto, which is not in lockdown and still allows in-person shopping in malls and stores.
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Canadian economy added 62,000 jobs in November, unemployment rate fell to 8.5% – CityNews Toronto
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