Electric vehicle start-up Nikola has begun production of its first battery-electric semitruck
https://www.cnbc.com/2022/03/23/nikola-begins-production-of-battery-electric-tre-semitruck.html
Category: Stock Investment Education
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Bank of Montreal Shares Fall on C$2.7B Stock Offering
Bank of Montreal Shares Fall on C$2.7B Stock Offering
Bank of Montreal shares fell early Wednesday after the company said it would seek to raise around 2.7 billion Canadian dollars, or US$2.15 billion, in a public offering.
At 9:38 a.m. ET, shares were down 2.9% at C$149.23.
The Canadian financial institution said Tuesday it would offer 18.1 million common shares at C$149 apiece.
On Tuesday, shares closed at C$153.72.
The bank has also granted its underwriters an option to purchase up to an additional 2.7 million common shares at the same price at any time up to 30 days after the closing of the offering.
BMO said it plans to use the proceeds to finance a portion of its acquisition of Bank of the West and its subsidiaries.
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Economic Calendar:
March 21 – March 25
Monday March 21
Japanese markets closed
(8:30 a.m. ET) U.S. Chicago Fed National Activity Index for February.
(12 p.m. ET) U.S. Fed Chair Jerome Powell speaks at the NABE Economic Policy Conference in Washington.
Earnings include: Nike Inc.; Orla Mining Ltd.
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Tuesday March 22
(8:30 a.m. ET) Canada’s industrial product and raw materials price index for February. Estimates are increases of 2.0 per cent and 5.5 per cent, respectively, from January.
(8:30 a.m. ET) Canadian household and mortgage credit for January.
(10 a.m. ET) U.S. Richmond Fed Manufacturing Index for March.
Also: Quebec and New Brunswick budget.
Earnings include: Adobe Systems Inc.; Converge Technology Solutions Corp.; Filo Mining Corp.; Victoria Gold Corp.
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Wednesday March 23
Japan machine tool orders
Euro zone consumer confidence
(8 a.m. ET) U.S. Fed Chair Jerome Powell speaks on a BIS panel.
(10 a.m. ET) U.S. new home sales for February. The consensus projection is an annualized rise of 1.8 per cent.
Also: Saskatchewan budget
Earnings include: Boyd Group Income Fund; Cintas Corp.; Cresco Labs Inc.; Fortuna Silver Mines Inc.; General Mills Inc.; Seabridge Gold Inc.
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Thursday March 24
Japan PMI and department store sales
Euro zone PMI and ECB economic bulletin
(8:30 a.m. ET) U.S. initial jobless claims for week of March 19. Estimate is 211,000, down 3,000 from the previous week.
(8:30 a.m. ET) U.S. current account deficit for Q4. Consensus is US$218-billion, up from US$214.8-billion in Q3.
(8:30 a.m. ET) U.S. durable goods orders for February. The Street expects a decline of 1.4 per cent.
(9:45 a.m. ET) U.S. Markit PMIs for March.
(11 a.m. ET) U.S. Kansas City Manufacturing Activity for March.
Earnings include: Atalaya Mining Ltd.; SiverCrest Metals Inc.
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Friday March 25
Germany business climate
(8:30 a.m. ET) Canada’s manufacturing sales for February.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for March.
(10 a.m. ET) U.S. pending home sales for February.
Also: Ottawa’s budget balance for January.
Earnings include: BRP Inc.; Dentalcorp Holdings Ltd.; Skeena Resources Ltd.
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Sasse: Saudi oil deal with China is ‘big, bad thing,’ that could be sign of global shift away from US
Saudi oil deal with China
News that Saudi Arabia is considering pricing oil sales to China using the Chinese yuan instead of the U.S. dollar has Sen. Ben Sasse, R-Neb., concerned the U.S. could be losing its footing on the world stage.
In an interview with “Fox News Sunday,” Sasse said this development, along with how the war between Russia and Ukraine develops, could send a message to the rest of the world that could have a significant impact.
SAUDI ARABIA CONSIDERS ACCEPTING YUAN INSTEAD OF DOLLARS FOR CHINESE OIL SALES
“Just this point of the Saudis pricing some of their commodity in Chinese currency or signaling that that’s where they’re headed, that is a big, bad thing,” Sasse said. “But let’s take a bigger step up. The 10-year-out existential battle on the globe is between the United States and Western values against the Chinese Communist Party’s exported surveillance state oppression of peoples around the globe.”Video
Sasse then addressed why, if China is really a main concern, he is so worried about Russia and Ukraine.
“Partly because Chairman Xi greenlit this invasion,” Sasse explained. “And so we need to recognize that defeating Vladirmir Putin or helping the Ukrainians defeat Putin here is an important shot across the bow of Chairman Xi, who wanted to see if the West had any will to stand up to Putin because Xi desires to seize Taiwan.”
STATE DEPT REFUSES TO DETAIL ‘RED LINE’ IF CHINA PROVIDES SUPPORT TO RUSSIA AMID WAR IN UKRAINE
Sasse went on to say that China’s objective of trying to “displace the dollar” is something the U.S. must monitor.
Sen. Ben Sasse, R-Neb.
“We need to keep our eye on this because we need to demonstrate that freedom-loving peoples around the world would rather have U.S. leadership than Chinese oppression,” Sasse said.
CLICK HERE TO GET THE FOX NEWS APP
Sasse claimed that other countries would not gravitate toward China out of preference for its policies but out of concern that “America is weak.”
“We need our commander in chief to be strong, both in these conversations with Chairman Xi but more proximately in this moment with arming the Ukrainians immediately and rapidly,” Sasse concluded.
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Billionaires
Billionaires By Country 2022
2022 -
Canadian retail sales rose 3.2% to $58.9-billion in January amid Omicron surge
Canadian retail sales rose 3.2% to $58.9-billion in January amid Omicron surge
Statistics Canada says retail sales rose 3.2 per cent to $58.9-billion in January, helped by higher sales at new car dealers to start the year.
However, the agency says its early estimate for February suggests retail sales fell 0.5 per cent for that month, though it cautioned the figure will be revised.
The rise in sales in January came despite public health restrictions in several parts of the country to deal with the Omicron surge in COVID-19 cases.
Sales at motor vehicle and parts dealers led the way higher as they climbed 5.3 per cent helped by a 5.5 per cent increase at new car dealers and a 9.7 per cent rise at used car dealers.
Excluding motor vehicle and parts dealers and gasoline stations, retail sales rose 2.9 per cent.
In volume terms, overall retail sales rose 2.9 per cent in January.
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Russia’s invasion of Ukraine will lower car production by millions of units over two years, S&P says
Russia’s invasion of Ukraine will lower car production by millions of units over two years, S&P says
DETROIT – The war in Ukraine is expected to lower global light-duty vehicle production through next year by millions of units, according to S&P Global Mobility.
The automotive research firm, formerly known as IHS Markit, on Wednesday downgraded its 2022 and 2023 global light vehicle production forecast by 2.6 million units for both years, to 81.6 million for 2022 and 88.5 million units for 2023.
The conflict has caused logistical and supply chain problems as well as parts shortages of critical vehicle components. Most notably, many automakers source wire harnesses, which are used in vehicles for electrical power and communication between parts, from Ukraine. The problems add to an already strained supply chain due to the coronavirus pandemic and an ongoing shortage of semiconductor chips.
European auto production is expected to experience the most disruption, according to S&P. The firm cut 1.7 million units from its forecast for Europe, including just under 1 million units from lost demand in Russia and Ukraine. The rest of the cuts are from parts shortages involving chips and wiring harnesses caused by the war.
That compares to S&P cutting its North America light-duty vehicle production by 480,000 units for 2022 and by 549,000 units for 2023.
About 45% of Ukraine-built wiring harnesses are normally exported to Germany and Poland, placing German carmakers at high exposure, according to S&P. Automakers such as Volkswagen and BMW have been among the most impacted since Russia’s invasion of Ukraine about three weeks ago.WATCH NOWVIDEO07:48President Biden: We’re authorizing additional $800M in security aid for Ukraine
Volkswagen CEO Herbert Diess earlier this week said the war has put the company’s 2022 outlook into question, as the automaker experiences parts problems. He said the company was moving some of its production out of Europe to North America and China in response to war-related supply-chain disruptions.
BMW cut its car division’s 2022 profit margin forecast on Wednesday from 8%-10% to 7%-9%, due to the impact of the unfolding Ukraine crisis.
BMW’s plants will be back to full production next week following the luxury automaker halting or lowering production output at some German plants after the invasion, said the company’s chief technology officer, Frank Weber.
Weber said the company has worked with suppliers to duplicate, not relocate, the wire harnessing production to attempt to keep jobs in the country.
“When you look at Ukraine, this wire harnessing industry gives work to maybe 20,000 people,” Weber told reporters Wednesday during a remote roundtable. “We didn’t just want to take away the work there.”
In total, S&P on Wednesday said it removed nearly 25 million units from global light-duty vehicle production from its forecast between now and 2030.
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Inflation rate hits new three-decade high as price pressures broaden
Inflation rate hits new three-decade high as price pressures broaden
Canada’s inflation rate hit a new three-decade high in February as consumers faced an onslaught of price hikes, adding pressure on the Bank of Canada to tame the situation with a speedy course of policy tightening.
The Consumer Price Index (CPI) rose 5.7 per cent in February from a year earlier, up from 5.1 per cent in January, Statistics Canada said Wednesday. That was the highest inflation rate since August, 1991, and it marked the 11th consecutive month that inflation has surpassed the Bank of Canada’s target range of 1 per cent to 3 per cent.
Households are feeling the pinch on several fronts. Shelter costs rose 6.6 per cent for the largest annual increase since 1983. Groceries rose 7.4 per cent, the most since 2009. And gas prices jumped 6.9 per cent in a single month.
Canadian dollar notches nine-day high as inflation accelerates
Wholesale sales rose 4.2 per cent in January: Statscan
The average of the central bank’s core measures of inflation – which strip out volatile components and give a better sense of underlying price pressures – rose to 3.5 per cent, also the highest since 1991.
Around two-thirds of the goods and services that make up the CPI basket are experiencing inflation of more than 3 per cent, showing how sticker shock is getting tougher to avoid.
“If it feels like everything is getting more expensive, it’s because it is,” Royce Mendes, head of macro strategy at Desjardins Securities, said in a note to clients.
Central bankers are now trying to tamp down inflation. The U.S. Federal Reserve joined the Bank of Canada on Wednesday in raising its benchmark interest rate from record lows and for the first time since 2018. Both central banks are expected to raise borrowing costs several times this year and next.
Throughout the pandemic, central bankers have consistently underestimated the scale and duration of inflation. The Bank of Canada in January projected that inflation rates would average 5.1 per cent in the first quarter of 2022 – a forecast that is already short of reality. The U.S. inflation rate hit a 40-year high of 7.9 per cent in February.
The latest threat to consumer prices is the Russia-Ukraine war, which has led to surging costs of wheat, gasoline, fertilizer and other products, on fears of supply shortages. There is, however, very little that central bankers can do to calm volatility in global commodity markets, making the situation even more complicated.
Several analysts said Wednesday that Canada’s inflation rate could reach – or exceed – 6 per cent in short order.
“Whether it’s a supply or demand shock is becoming less and less consequential,” said Jean-François Perrault, chief economist at Bank of Nova Scotia. The central bank is “behind the curve” on rate hikes “and they need to move aggressively to try and signal that they’re very serious about bringing inflation back to target.”
In a recent speech, Bank of Canada Governor Tiff Macklem would not rule out a rate hike of 50 basis points later this year. (A basis point is 1/100th of a percentage point.) A hike of that magnitude has not happened since 2000.
A key concern is that consumers, who are sensitive to price hikes at gas pumps and supermarkets, come to think that steep inflation is a long-term reality.
Inflation can be self-fulfilling, in that companies set prices and workers negotiate wages in anticipation of expected costs. Their expectations of inflation over the next two years have risen substantially, but remain “well anchored” over a five-year horizon, the central bank has said.
Not everyone agrees. Scotiabank said Tuesday that inflation expectations have already become unmoored. “This recent de-anchoring of expectations means that the bank’s monetary policy will need to be more aggressive to bring inflation back to target,” read the report, which was co-written by a former research director at the Bank of Canada.
Scotiabank estimates the central bank’s policy rate – now at 0.5 per cent – will end the year at 2.5 per cent, which is the quickest pace of rate hikes that a major bank is projecting.
That would heap pressure on a Canadian consumer that’s loaded up on debt. The household debt burden – more formally known as the ratio of credit market debt to disposable income – rose to 186 per cent in the fourth quarter, the highest on record. The pandemic debt surge has been entirely driven by demand for residential mortgages.
Mr. Perrault said Canadians can handle a quick pace of rate hikes. The economy is growing quickly, highlighted by the addition of nearly 340,000 jobs in February, which took the employment rate back to pre-pandemic levels.
“Rates are rising in a remarkably strong growth environment,” he said. “To us, that means households are going to have much greater flexibility and greater ability to manage these higher rates than would be the case if inflation was going up and growth was not there.”
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The Fed is about to hike rates. Here’s what history shows should happen to the stock market next
The Fed is about to hike rates. Here’s what history shows should happen to the stock market next
The Federal Reserve is set to raise interest rates for the first time since 2018 to rein in inflation, and here’s how the stock market could react to the move, if history is any guide.
The central bank is widely expected to raise its target fed funds rate by a quarter-percentage point from zero at the end of its two-day meeting Wednesday. The Fed will also release its new forecasts for rates, inflation and the economy, given the uncertainty from the escalated geopolitical tensions.
Here’s the bottom line: When the Fed embarks on a series of rate hikes in a row, the stock market still typically manages to go higher during that time, but the gains are harder to come by than normal times, or when the central bank is lowering rates.
It especially struggles in the short term, according to Sam Stovall, CFRA chief investment strategist, who studied market performance and the Fed’s moves going back to 1946.
The S&P 500 has edged up an average of 1.3% six months after the start of a rate-hiking cycle since 1946, compared to an average gain of 5.5% six months after a rate cut, according to the data.
The underperformance continues 12 months and 18 months later with the S&P 500′s returns significantly lagging the periods after an easing cycle begins, the data showed.
Perhaps it’s not too surprising that the market tends to underperform during a tightening cycle as contractionary monetary policy is intended to slow down overheated economic growth and curb surging price pressures. Boosting interest rates increases the cost of borrowing and could negatively impact growth-oriented company performance.
Tech stocks are seen as sensitive to rising rates because increased debt costs can hinder growth and can make their future cash flows appear less valuable. They have suffered a particularly severe sell-off recently with the Nasdaq Composite falling into bear market territory recently, or down more than 20% from its record high.
Will market struggle more this time?
Some investors believe history may not be the best guide this time around and the stock market could struggle even more because the Fed is not dealing with a typical economic upturn. Inflation is the highest in four decades, which could cause the central bank to act faster and bigger than is typical of past rate cycles.
“Investors need to recognize that this hiking cycle could in all probability look very different than recent ones, and its exact nature is still ill-defined,” said Scott Ruesterholz, a portfolio manager at Insight Investment.“Higher inflation could force the Fed to move even more quickly than our expected 5 hikes this year while additional growth shocks could mean the economy needs fewer hikes than currently expected to slow sufficiently to stifle inflation,” Ruesterholz added.
Inflation hit a fresh 40-year high of 7.9% in February. Notable investor Jeffrey Gundlach said he sees the likelihood for inflation to hit 10% this year, calling for more aggressive tightening than the market expects. Current pricing indicates the equivalent of seven total rate increases this year — or one at each meeting.
“To the extent that the Fed can continue down the path the market expects — deliberate rate hikes all year long — the areas that have held up since the stock market became unglued five months ago look set to continue functioning as havens,” said Jeff Weniger, Head of Equity Strategy for WisdomTree.
Weniger said opportunity lies in indexes that have lighter exposures to “trouble” groups such as consumer discretionary and speculative tech stocks.
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Russia’s war on Ukraine sets the stage for worst food crisis in decades
Russia’s war on Ukraine sets the stage for worst food crisis in decades
Russia’s invasion of Ukraine has roiled commodity markets and set the stage for the worst food crisis in decades, one that risks not just sharply higher prices at grocery stores but the spread of social unrest around the globe.
Russia and Ukraine make up a quarter of global wheat exports, and are near the top of the production list when it comes to other agricultural goods such as barley, corn, potatoes, sunflowers and sugar beets.
Food shipments from the two countries have already ground to a halt, sending shock waves through commodity markets. Wheat futures in Chicago were up by 70 per cent this year at the start of last week before tumbling. They remain up 40 per cent from mid-February.
Inside a frantic race to get Ukrainian corn and wheat to world markets
How Russia’s invasion of Ukraine is affecting investments in the agriculture sector
The collapse in grain supplies, sparked by both the war and Western retaliatory sanctions, have led to fears of shortages in countries that depend heavily on wheat from the region.
Egypt, which draws more than two-thirds of its wheat imports from Russia and Ukraine, imposed its own ban on the export of food staples such as flour and lentils last week.
Other countries, such as Lebanon and Indonesia, have banned exports of some vegetables, grains and palm oil in an effort to safeguard domestic food supplies. Those protectionist measures are in turn leading to higher prices.
“Having interconnected global markets was always a huge benefit, because we gained from trade and lower prices, but we’re seeing how shocks can ripple across many markets and countries when you get a huge disruption like this,” said Jill Hobbs, a professor of agricultural and resource economics at the University of Saskatchewan.
Global food prices reached record levels, even before the full shock to commodity prices from the Russian invasion had been felt, according to the benchmark index of the United Nation’s Food and Agricultural Organization (FAO).Global food prices hit record highUN
On Friday, the agency warned that other grain-producing countries could only partly make up for the shortfall in exports from Russia and Ukraine, meaning international feed and food prices could jump by another eight to 22 per cent in the coming months.
“The likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally,” FAO director-general Qu Dongyu said in a statement.
With Russia’s bombardment of Ukraine widening by the day, planting season in a country often described as Europe’s breadbasket is certain to be disrupted.
One Ukrainian farmer near Odesa, Oleksandr Chumak, said he expects wheat output from his farm to at least be cut in half. “Every day, I see rockets fly over my house,” he said.
But the war in Ukraine is also wreaking havoc on global food supplies in less direct, yet critical ways.
Energy prices have surged to historic highs amid concerns of tight oil supplies and disruptions to the supply of oil and gas from Russia. The U.S. has banned energy imports from Russia, while Moscow is threatening to shut off gas to Europe. Soaring energy prices are making it vastly more expensive to produce, process and transport food.
The war has also threatened the global supply of fertilizer, which farmers rely on to boost crop yields. Russia is the world’s top exporter of nitrogen fertilizers and the second largest supplier of both potassic and phosphorous fertilizers.
Moscow has proposed a ban on raw-material exports, but has yet to say which commodities it will cover, with some analysts saying that fertilizer nutrients could be among them. Fertilizer prices have begun to climb higher on concerns of a supply disruption.
The combination of factors pushing up food prices are sparking fears of widespread suffering, particularly in developing countries. French President Emmanuel Macron last week warned that “several African countries will be affected by famine within 12 to 18 months precisely because of this war.”
Some in the fertilizer industry share that concern.
“For me, it’s not whether we are moving into a global food crisis, it’s how large the crisis will be,” said Svein Tore Holsether, president of Norway’s Yara International, the world’s largest maker of nitrogen-based fertilizers.
Mr. Holsether said he worries that food shortages will leave tens of millions of people around the world without enough to eat.
It’s a volatile situation, given the history of how food shortages and hunger have contributed to unrest. Food insecurity is widely seen as one of the contributing factors behind the Arab Spring revolts in the early part of the past decade.
In a report last week, BCA Research warned that the disruption to food and fertilizer markets will have far-reaching geopolitical consequences.
“Lenin famously called wheat the ‘currency of currencies,’ implying that those who control the distribution of wheat can control the political system,” BCA chief strategist Peter Berezin wrote. “With countries such as Egypt desperately dependent on Russian and Ukrainian wheat exports, a shortage of this critical foodstuff could lead to political turmoil in a number of developing nations.”
In Canada, the cost of food is already rising at the fastest pace in 13 years. That’s a result of the effects of the COVID-19 pandemic such as labour shortages, rising energy prices and disruptions to supply chains.
Canadians will get the latest update on food costs on Wednesday when Statistics Canada releases consumer prices for the month of February, which are expected to confirm the pain grocery shoppers are already feeling.
In the United States, where inflation numbers for February were released last week, food prices jumped 7.8 per cent over the year before.
Farmers in Canada are eyeing the surge in grain prices as they decide what to plant in the spring, said Prof. Hobbs. However, they will also have to contend with skyrocketing energy and fertilizer costs, which could erase any windfall gains from higher prices.
At the same time, farmers in Western Canada had already seen their output of wheat last year slashed by drought, with wheat production down 38.5 per cent from the year before, according to Statistics Canada.
The latest drought assessment from the federal government for February found that 65 per cent of Canada’s agricultural areas were experiencing some level of drought conditions, suggesting another bleak year.
“It sounds great for farmers when people say prices are high, but it’s a more complex picture than that,” Prof. Hobbs said.
