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Stocks that saw action on Monday

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A roundup of some of the North American equities making moves in both directions today

On the rise

Shares of Hudsons Bay Co. (HBC-T) were up over 9.5 per cent after executive chairman Richard Baker agreed to boost his bid for the iconic retailer, winning the backing of dissenting shareholder Catalyst Capital Group. and likely ensuring the company will go private later this year.

The new offer of $11 per share in cash tops the previous, purportedly “best and final” offer of $10.30. In a late-night announcement Friday, Catalyst Capital Group Inc. said it will vote in favour of the new deal.

Hudson’s Bay shares closed at $9.88 a share Friday on the Toronto Stock Exchange, before the Catalyst agreement with Hudson’s Bay was announced.

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– David Milstead and Jeffrey Jones

Roots Corp. (ROOT-T) rose 0.5 per cent after announcing late Friday chief executive Jim Gabel has left the company effective immediately, as the board of directors expressed a need for “renewed leadership.”

The company’s board of directors has appointed Meghan Roach as the retailer’s temporary chief executive. Ms. Roach has served as interim chief financial officer for the company since August and is a previous board member for the retailer.

Bed Bath & Beyond Inc. (BBBY-Q) was up 3 per cent after announcing it’s set to sell almost half of its real estate to an affiliate of Oak Street Real Estate Capital in a deal expected to generate US$250-million in net proceeds.

“We are pleased to complete this sale-leaseback transaction,” said president and CEO Mark Tritton. “This marks the first step toward unlocking valuable capital in our business that can be put to work to amplify our plans to build a stronger, more efficient foundation to support revenue growth, financial stability and enhance shareholder value.”

Shares of Boeing Co. (BA-N) increased 0.3 per cent after a Wall Street Journal report that it considering plans to raise more debt to bolster its finances after the grounding of its 737 MAX jet.

The company is also thinking of deferring some capital expenditures, freezing acquisitions and cutting spending on research and development to preserve cash, according to the report.

Air Canada, WestJet push back return of Boeing 737 Max until early spring

Apple Inc. (AAPL-Q) shares rose 0.8 per cent despite brokerage Needham cutting its rating to “buy” from “strong buy” in the wake of its strong performance in 2019.

Analyst Laura Martin did, however, match the Street-high target price for the stock.

On the decline

First Quantum Minerals Ltd. (FM-T) declined 0.2 per cent in the wake of announcing Monday it had adopted a shareholder rights plan, nearly a month after China’s Jiangxi Copper Co Ltd agreed to pay $1.1 billion to become the miner’s largest shareholder.

The rights plan, which comes into force immediately, will ensure that all shareholders are treated fairly in connection with any takeover bid, First Quantum said.

State-backed Jiangxi Copper said in a regulatory filing last month that it would buy Cupric Holdings Ltd from Pangaea Investment Management Ltd. Cupric held around 18% of First Quantum’s issued share capital as of Dec. 9.

First Quantum’s rights plan is subject to ratification by shareholders within six months of its adoption.

Ford Motor Co. (F-N) lost 0.7 per cent after it reported a 1.3-per-cent fall in sales for the fourth quarter in the United States, hurt by declining sales of passenger cars.

The No. 2 U.S. automaker said it sold 601,862 vehicles in the quarter, compared with 609,693 a year earlier

Cal-Main Foods Inc. (CALM-Q) fell 7.8 per cent after its second-quarter 2020 results fell well short of expectations on the Street.

“We continued to experience challenging market conditions for the second quarter of fiscal 2020,” said CEO Dolph Baker. “While our sales volumes remained relatively flat in the second quarter compared to last year, our financial results reflect lower average selling prices compared with the same period of fiscal 2019.

Xerox Holdings Corp. (XRX-N) slipped 1.5 per cent after it said on Monday it has secured US$24-billion in financing for its US$33.5-billion takeover offer for HP Inc. (HPQ-N), a deal that the personal computer maker is opposing.

HP rejected the US$22 per share offer in November saying it “significantly” undervalued the company, following which the printer maker took the offer directly to HP’s shareholders.

Xerox has engaged in “constructive dialog” with many of HP’s largest shareholders, the company’s chief executive officer, John Visentin, said in a letter addressed to HP’s board on Monday.

“My offer stands to meet with you in person, with or without your advisors, to begin negotiating this transaction,” Visentin said.

Shares of HP were up 0.4 per cent.

Harvest Health & Recreation Inc. (HARV-C) slid 5.3 per cent after it announced that it’s negotiating to acquire Interurban Capital Group, Inc., the owner and operator of Have a Heart CC, which has 11 operating dispensaries in California, Washington and Iowa and licenses for seven retail locations in California.

“Preliminary terms contemplate an acquisition price of approximately $87.5-million in Harvest stock and assumption of debt convertible into 205,594 multiple voting shares of Harvest stock, subject to applicable Canadian securities laws,” the company stated.

New York-listed shares of Chinese electric carmaker Nio Inc. (NIO-N) slid 3.7 per cent after reporting higher deliveries in December, compared with the previous month.

Nio said it delivered 3,170 vehicles in December, representing a jump of 25.4 per cent from November.

With files from Brenda Bouw, staff and wires

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India’s Adani Group loses $48bn in stocks over fraud claims

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Hindenburg Research claimed Adani Group had committed ‘brazen’ corporate fraud but Adani Group dismissed the report.

Shares of Asia’s richest man Gautam Adani’s business empire plunged, leading to losses of $48bn after a US investment firm claimed it had committed “brazen” corporate fraud.

Seven listed companies of the Adani conglomerate lost a combined $48bn in market capitalisation after Hindenburg Research flagged concerns in a January 24 report about debt levels and the use of tax havens.

Adani who was the world’s third-richest person at the start of the week is now ranked number seven on Forbes’ billionaires tracker after a $22.6bn hit to his fortune in Friday’s trade.

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Adani Enterprises, the group’s flagship company, plunged nearly 20 percent over the day’s trading in Mumbai, briefly triggering an automatic trading halt, before recovering slightly to close 18.52 percent lower.

Five other group companies hit their own stock exchange circuit breakers, with shares in Adani Total Gas, Adani Green Energy and Adani Transmission falling 20 percent apiece.

“Obviously, this is panic-selling,” JM Financials equity research chief Ashish Chaturmohta told AFP, adding that traders were creating new short-sell positions to protect earlier bullish bets on Adani stocks.

Hindenburg Research said in its report that Adani Group had used undisclosed related-party transactions and earnings manipulation to “maintain the appearance of financial health and solvency” of its listed business units.

Adani Group dismissed the report as baseless and that it was the victim of a “maliciously mischievous” reputational attack by Hindenburg.

Legal chief Jatin Jalundhwala said Adani was exploring considering taking legal action against the New York-based research advisory in US and Indian courts.

Hindenburg responded that Adani had ducked the issues its research had raised and instead resorted to “bluster and threats”.

“If Adani is serious, it should also file suit in the US,” the firm said in a statement. “We have a long list of documents we would demand in a legal discovery process.”

Adani, with a net worth of $96.6bn, is considered a close supporter of Prime Minister Narendra Modi. India’s main opposition Congress party has often accused Adani, and other billionaires, of getting favourable policy treatment from Modi’s administration, allegations the billionaire has denied.

The Adani Group was established in 1988, beginning with commodities trading. The conglomerate’s business interests now extend from ports and airports to mining and renewable power.

The report said a pattern of “government leniency towards the group” stretching back decades had left investors, journalists, citizens and politicians unwilling to challenge the group’s conduct “for fear of reprisal”.

“The signal is that because the Adanis are very close to the powers that be today, therefore nobody would challenge them,” economist Arun Kumar told AFP.

“Those who earlier criticised Adani, those who tried to do some investigation, Adani’s launched big [legal] cases against them, so they have scared off a lot of people,” he added.

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Rapidly cooling housing market helps to quell Canadian inflation

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Housing costs, and Canada’s unique way of capturing them in inflation, suggest that consumer price gains may slow rapidly in coming months.

As the largest expense for most households, shelter makes up 30 per cent of Canada’s consumer price index — a similar proportion to the U.S. But unlike its southern neighbor, Canada’s inflation metrics capture these costs in a way that’s more sensitive to changes in interest rates and home prices.

That means Canadian inflation measures are influenced by both the rise in mortgage costs as the Bank of Canada aggressively raises rates and by the resulting slowdown in the housing market.

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While inflation was still 6.3 per cent in December, price pressures in Canada are expected to lose momentum thanks to base effects and continued cooling in the Canadian real estate market, which features shorter-duration mortgages than the U.S. and a higher share of variable-rate home loans.

Those differences are one reason economists say the Bank of Canada — which said this week it intends to pause its tightening campaign — won’t have to raise borrowing costs as high as the Federal Reserve.

“One way Canada actually stands out from a lot of other countries is that when the Bank of Canada raises interest rates, there’s a temporary boost to inflation because of this mortgage interest rate effect,” Stephen Brown, an economist at Capital Economics, said by phone.

CROSS-BORDER DIFFERENCES

The U.S. calculates housing inflation using owners’ equivalent rent, or the price a property owner would have to pay to rent to live there. Canada calculates it through a formula that includes mortgage interest, replacement cost, property taxes and maintenance.

Shelter has been a major driver of Canadian inflation in recent months, and was up 7 per cent in December. The mortgage interest and rent sub-indexes saw year-over-year jumps of 18 per cent and 5.8 per cent, respectively.

But with rates now on hold, Brown expects mortgage interest costs to peak before dropping sharply in the second half of this year. Other inflation inputs, such as commissions on home sales, are already easing.

His forecast is for increases in the shelter component of CPI to fall to 3.5 per cent by June and to 1.5 per cent by December. With energy, food and goods prices also expected to fall sharply, Brown said the Bank of Canada may be “underestimating how quickly overall inflation will decline.”

Macklem’s rapid interest-rate hikes, to 4.5 per cent from an emergency pandemic low of 0.25 per cent in March, have dramatically cooled the real estate market. Prices have fallen more than 13 per cent since their peak last year. Higher mortgage costs are also squeezing some of the world’s most indebted households, forcing them to tighten their purse strings.

“The bank might be feeling like they’ve done enough on housing, and that the effect is going to unravel over the coming months,” said Rishi Mishra, an analyst at Futures First Canada Inc. “They don’t want to press down too hard, just because how large the exposure is to housing market in Canada.”

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Stock market news live updates: Stocks rally, Intel craters, as inflation data cools

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U.S. stocks rallied on Friday, after slipping earlier at the open, as investors weigh in on fresh economic data including consumer spending data, a closely watched measure by the Federal Reserve.

The S&P 500 (^GSPC) added 0.2%, while the Dow Jones Industrial Average (^DJI) ticked up 0.08%. The technology-heavy Nasdaq Composite (^IXIC) was up roughly 1%, closing out its best week since November.

The biggest mover on Friday were shares of Intel (INTC), which fell as much as 10% on Friday after the company’s bleak outlook disappointed.

Intel reported a quarterly earnings miss after the close Thursday, adjusted earnings per share coming in at $0.10 against the $0.19 expected by the Street. Revenue totaled $14.04 billion, below estimates for $14.5 billion.

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In the first quarter, Intel expects revenues to come in between $10.5-$11.5 billion, with losses totaling $0.80 per share. In delivering these results, CEO Pat Gelsinger cited “economic and market headwinds,” adding the company, “will continue to navigate the short-term challenges while striving to meet our long-term commitments.”

Elsewhere in markets, Tesla (TSLA) stock has become hot. The shares rose above 10% in Friday trading, eyeing its best week since May 10, 2013. The company’s latest earnings has prompted a boost for the shares. Separately, CEO Elon Musk is being investigated by US regulators in his role shaping the carmaker’s self-driving car claims, Bloomberg reported.

Lucid (LCID) stock surged Friday on reports that a Saudi Arabia’s Public Investment Fund could be planning a takeover and buying shares the EV maker doesn’t already own.

The yield on the benchmark 10-year U.S. Treasury note ticked up to 3.52% from 3.497% on Thursday. The dollar index was little changed. WTI crude oil sank 2% to trade at $79.41 a barrel.

U.S. core personal-consumption expenditures price index (PCE), excluding energy and food, rose 0.3% month-over-month, while the annual rate fell to a one-year low of 4.4% in December from 4.7% the prior month, in line with consensus forecasts.

Pending home sales increased 2.5% in December, ending a sixth month slide, according to the National Association of Realtors.

Meanwhile, consumers remain optimistic. The consumer sentiment index rose to 64.9, a slight increase from 64.6 reading two weeks ago, according to preliminary results from the University of Michigan’s consumer survey. Economists surveyed were expecting a reading of 64.6.

Stocks rallied on Thursday as investors digested other data that showed the U.S. economy ended the year on a solid foot despite higher interest rates and recessionary fears looming.

Gross Domestic Product (GDP) — the sum of all goods and services – expanded at a 2.9% annual pace in the final quarter of 2022. For the full year, GDP grew 2.1%.

Durable-goods orders in December increased by 5.6% topping expectations for 2.4%, the sharpest gain since July 2020. Meanwhile, the resilience of the U.S. job market has been a major surprise. Initial jobless claims fell again to 187,000, the lowest level since April 2022.

“Markets deciphered a lot of mixed clues [on Thursday] and, after some cause for concerns, decided that it was easier to shrug it all off and drive equities to fresh 2023 highs,” Jim Reid and colleagues at Deutsche Bank wrote in an early morning note Friday morning. “Earnings also helped the mood, to be fair.”

Visa (V) shares were higher Friday after the company reported results late Thursday. Revenue increased to $7.94 billion compared to expectations of $7.69 billion. And adjusted earnings per share came in at $2.18 versus estimates of $2.00. The company announced that Ryan McInerney will be stepping in as chief executive officer starting February 1st.

Hasbro (HAS) also joined the wave of company layoffs announcing it will cut its workforce by 15 percent, or 1,000 employees, effective in the coming weeks. The move comes as the toymaker seeks to save around $250 million and $300 million annually by the end of 2025.

Also in stock moves, Chevron (CVX) shares were down after reporting fourth quarter profit of $6.4 billion, down from the $11.2 billion in the third quarter. Ahead of Friday’s report Chevron, announced it was hiking its dividend by 6% along with massive $75 billion share repurchase plan.

Shares of American Express (AXP) rose after the credit card company reported fourth quarter net income of $1.57 billion. On a per-share basis, it had a profit of $2.07. American Express expects full-year earnings to be $11 to $11.40 per share.

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