A roundup of some of the North American equities making moves in both directions today
On the rise
Vancouver-based apparel retailer Lululemon Athletica Inc. (LULU-Q) rose 1.5 per cent in early trading on Monday after the company raised its quarterly sales and profit outlook, boosted by strong holiday season demand.
It now expects profit per share for the quarter ending Feb. 2 to be between US$2.22 and US$2.25, up from its prior range of US$2.10 to US$2.13.
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Lululemon in December had forecast its holiday quarter sales largely below Wall Street expectations.
Tesla Inc. (TSLA-Q) jumped over 7 per cent and pushed past US$500 per share after a report said China would not make significant cuts to subsidies for new energy vehicles (NEV) this year.
Shaw Communications Inc. (SJR.B-T) was down 0.6 per cent after announcing its earnings dipped in its first fiscal quarter of 2020 even as wireless revenue climbed.
The Calgary-based telecom company says net income came in at $162 million or 31 cents per share for the quarter ending Nov. 30, down from $186 million or 36 cents per share for the same quarter last year.
Shaw says the comparative decline for the first quarter was largely because of a $23 million equity income in the quarter last year from its investment in Corus Entertainment Inc.
Maple Leaf Foods Inc. (MFI-T) slid 1.3 per cent after its CEO spoke out Sunday against the U.S. government, days after an Iranian missile accidentally shot down a jetliner, killing all 176 people on board – including the family of a company employee.
Michael McCain said in a series of tweets that the time since Wednesday’s crash has not quelled his anger over what he describes as a “needless, irresponsible series of events in Iran.”
…The collateral damage of this irresponsible, dangerous, ill-conceived behavior? 63 Canadians needlessly lost their lives in the crossfire, including the family of one of my MLF colleagues (his wife + 11 year old son)! We are mourning and I am livid. Michael McCain.
Brookfield Renewable Partners (BEP.UN-T, BEP-N) declined 1.6 per cent after it said it would acquire the remaining 38-per-cent stake in TerraForm Power Inc. (TERP-Q) it does not already own, in a deal that values the electricity utility at $3.93 billion, as it looks to boost its power portfolio.
Brookfield Renewable said on Monday the all-stock offer represents an exchange ratio of 0.36 BRP units for each TerraForm class A share, valuing TerraForm at $17.31 per share, an 11-per-cent premium to the stock’s last close.
TerraForm said it has formed a special committee of non-executive, independent directors to review the unsolicited proposal it received on Saturday.
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“There can be no assurance that a definitive proposal relating to the proposed transaction will be made, that any such proposal will be recommended or accepted by the committee,” TerraForm said in a separate statement.
Shares of Terraform were up just over 10 per cent.
Cott Corp. (BCB-T) fell 4.4 per cent on the premarket announcementit will acquire Primo Water Corp. (PRMW-Q), a provider of water dispensers, purified bottled water, and self-service refill drinking water in the U.S. and Canada, for $14 per share in cash and stock, a deal valuing the company at about $775-million.
“The combination of Cott and Primo, along with the recent announcement of Cott’s evaluation of certain strategic alternatives for its S&D Coffee and Tea business, including a sale of S&D, will transition Cott into a pure-play water company,” Cott stated in a release Monday.
Shares of North Carolina-based Primo Water were up over 25 per cent.
Acasti Pharma Inc. (ACST-X, ACST-Q) plummeted almost 70 per cent after it said on Monday its krill oil-derived drug candidate, CaPre, was not more effective than placebo in reducing high levels of triglycerides in a late-stage study.
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The Laval-based drug developer said CaPre failed to show a statistically significant reduction in blood triglycerides compared to placebo after 12 weeks and 26 weeks of treatment.
Triglycerides are a type of fat found in blood that contributes to heart disease alongside cholesterol.
In an effort to address economic disparities and promote entrepreneurship among Black communities, Canada introduced the Federal Black Entrepreneurship Program (FBEP) and the associated Black Entrepreneurship Loan Fund (BEFL). However, recent revelations have brought to light a shocking reality: the underutilization and obstacles faced by Black businesses in accessing the FACE (Funding for Black Entrepreneurship) loans. In this thought-provoking article, we delve into the numbers and uncover the challenges and experiences of Black entrepreneurs in navigating these loan programs. Through interviews with business owners, experts, and advocates, we shed light on the systemic barriers that hinder their success and explore potential solutions for a more equitable and inclusive lending landscape.
The FACE loan program was created with the intention of providing financial support and resources to Black-owned businesses. However, the reality has been far from the expected outcomes. Jessica Thompson, an economist specializing in racial disparities, states, “The FACE loan program was designed to address historical economic disadvantages, but the numbers reveal a significant gap between its objectives and the lived experiences of Black entrepreneurs.”
Black entrepreneurs face numerous hurdles when attempting to access FACE loans. A lack of awareness about the program, complex application processes, and limited outreach to communities in need contribute to low participation rates. Michael Johnson, a business owner, shares his frustration, saying, “It’s disheartening to see a program that was meant to uplift Black businesses fall short due to bureaucratic obstacles. Many of us struggle to navigate the application process and meet the stringent criteria.”
Systemic barriers and discrimination persist within the lending landscape, perpetuating the cycle of inequality. Dr. Maya Williams, a sociologist specializing in racial disparities, explains, “Structural racism and bias continue to disadvantage Black entrepreneurs. Discrimination in loan approvals, higher interest rates, and limited access to capital contribute to the challenges faced by Black-owned businesses.”
The consequences of the FACE loan program’s shortcomings are far-reaching. Many Black-owned businesses struggle to access the capital needed for growth, expansion, and operational sustainability. Tanya Campbell, a business owner, emphasizes, “The lack of financial support hampers our ability to scale our businesses, hire employees, and contribute to the local economy. It perpetuates a cycle of limited opportunities and restricted growth.”
To address the disparities within the FACE loan program, experts and advocates propose several solutions. Improved outreach and community engagement, simplified application processes and tailored support services can increase access and awareness among Black entrepreneurs. John Stevens, a business consultant, suggests, “The government must invest in targeted initiatives that address the specific needs and challenges faced by Black-owned businesses, such as mentorship programs, financial literacy training, and capacity-building initiatives.”
Addressing the challenges faced by Black entrepreneurs requires collaboration and accountability from various stakeholders. Governments, financial institutions, and community organizations must work together to create an inclusive lending ecosystem. Mary Johnson, an advocate for Black economic empowerment, states, “Transparency, accountability, and ongoing dialogue between policymakers, lenders, and Black entrepreneurs are essential to drive meaningful change and ensure equal opportunities for all.”
The FACE loan program aimed to empower Black entrepreneurs and address economic disparities, but the reality falls short of expectations. The underutilization and obstacles faced by Black businesses in accessing FACE loans highlight the pressing need for systemic change within the lending landscape. By acknowledging and addressing the structural barriers, streamlining processes, and fostering collaboration, we can create a more inclusive and equitable environment where Black entrepreneurs thrive. It is through proactive measures, collective effort, and ongoing dialogue that we can dismantle systemic inequities and build a future where Black-owned businesses have equal access to the resources and support necessary for success.
Crude oil began trading this week with a gain after President Biden and House Speaker Kevin McCarthy were reported to have reached a provisional agreement on raising the debt ceiling.
At the time of writing, Brent crude was trading at over $77 per barrel and West Texas Intermediate was changing hands at over $73 per barrel.
Debt ceiling negotiations have been a major factor for oil price movements in the past couple of weeks, mostly because of the apparent inability of Republicans and Democrats in Congress to strike any semblance of an agreement on how to increase the federal government’s borrowing power.
According to early reports on the tentative deal, it involves flat spending over the next two years and the recycling of unused Covid funds.
Although such tense negotiations have been relatively regular in past years, they have eventually ended with an agreement, and default has invariably been avoided.
This historical evidence could have served to stabilize prices but it did not, and neither did mixed data about China’s recovery. On the one hand, PMI readings are showing an uneven rebound in economic activity, but on the other, demand for oil as evidenced by import rates, is going strong.
To complicate the picture further, OPEC+ is reportedly in two minds about what to do with its output at its next meeting.
According to reports quoting Saudi Energy Minister Abdulaziz bin Salman, he has hinted at another round of output cuts.
According to reports quoting Russia’s Deputy Prime Minister and top OPEC+ official Alexander Novak, the co-leader of the extended cartel is fine with production where it is right now.
Thanks to its recent gains, oil’s decline since the start of the year has shrunk from about 14% earlier this month to just 9% as of the start of this week, according to Bloomberg.
By Irina Slav for Oilprice.com
Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
American equity futures posted modest gains amid cautious optimism the U.S. will avert a catastrophic default after the weekend’s tentative debt-ceiling deal. European stocks wavered in muted holiday-affected trading.
Contracts on the S&P 500 climbed about 0.2 per cent, while those on the Nasdaq 100 were up around 0.3 per cent, with trading set to end early for Memorial Day. The dollar, which has benefited from angst around the statutory borrowing limit, held Friday’s decline while Treasury futures were flat in the absence of cash trading.
The Stoxx Europe 600 index edged lower, with Spain’s benchmark underperforming after Prime Minister Pedro Sanchez called a surprise snap election following heavy losses for his party in regional and local elections Sunday. Volumes were about 60 per cent lower than usual as markets in the U.K. and some European countries remained closed for national holidays. SBB gained after the embattled Swedish landlord said it may look to sell the company. A gauge of Asia-Pacific equities rose, though Chinese shares slid closer to a bear market.
President Joe Biden and House Speaker Kevin McCarthy expressed confidence that their agreement to curtail spending and extend the borrowing limit will pass through Congress. But even assuming lawmakers seal the deal before the U.S. government runs out of cash in about a week, traders still have much to contend with — from the prospect of another interest-rate hike from the Federal Reserve to a likely deluge of bond issuance from the U.S. Treasury Department.
“The obvious positive interpretation is that a negative tail risk is close to being taken off the table,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “With the distraction of the debt ceiling fading into the background, investors can now refocus their attention on the underlying fundamentals. One concern, though, is that the fundamental picture remains precarious.”
European bonds rose, with Germany’s 10-year yield falling about 11 basis points. Spain’s 10-year yield dropped by a similar amount.
Meanwhile, Turkey’s lira weakened after Recep Tayyip Erdogan won a presidential runoff election on Sunday, extending his time as the nation’s longest-serving leader and leaving investors looking for any signs he’ll start to relax the state’s tight grip over markets. The nation’s stocks benchmark gained.
Gold was flat on waning demand for havens, while as oil held onto most of Friday’s gains and Bitcoin climbed, reflecting a modestly buoyant tone.
‘UNCERTAINTY PERSISTS
The agreement struck by Biden and McCarthy is running against the clock given that June 5 is the date when Treasury Secretary Janet Yellen has said cash will run out. There is plenty in the deal that Democrats and Republicans won’t like.
“Uncertainty persists regarding the duration and severity of the ongoing earnings recession, and perversely, the near-term tightening of liquidity may worsen due to the government’s need to address its debt issuance backlog,” said Suzuki. “While the markets managed to avert an immediate crisis, the coast is far from all-clear just yet.”
The rate-sensitive two-year Treasury drifted Friday as traders considered how a debt agreement could play into the Fed’s path forward on interest rates. The two-year yield hovered around 4.65 per cent after a report on consumer spending showed the Fed still has more work to do to bring inflation back toward its target.
“Markets will have the liquidity hassles to deal with, as the Treasury will issue a deluge of bonds to restore its cash reserves,” said Charu Chanana, market strategist at Saxo Capital Markets. “Not to forget, the hawkish re-pricing of the Fed path that we have seen last week could possibly get firmer if we get a hot jobs print this week.”
Key events this week:
U.S. Memorial Day holiday. U.K., Switzerland and some Nordic markets also closed for holidays, Monday
