The Daily Chase: Bank of Canada decision day; Earnings season ramps up

The Bank of Canada could be about to deliver its first half-point rate hike since May 2000.

The Bank of Canada could be about to deliver its first half-point rate hike since May 2000. The market and economists are widely anticipating the main policy rate will jump from 0.5 to 1.0 per cent today as the economy exceeds expectations (most recently with the lowest unemployment rate since at least 1976) and with inflation running away from the central bank's target range. We'll have insight throughout the day on the implications for borrowers, the housing market, the loonie, and the economy as a whole.

MANCHIN CHEERS CANADIAN ENERGY

Joe Manchin, the Democrat senator from West Virginia, said he wants to invite Alberta Premier Jason Kenney and a delegation from the province to testify before the Senate Energy Committee on Capitol Hill to inform U.S. lawmakers about “what you do…and how well you do it” in a bid to steer the U.S. away from oil imports from OPEC nations. Manchin, who has decried the Biden administration’s decision to effectively kill Keystone XL, also told reporters in Calgary late yesterday afternoon that he “can’t guarantee” any Canadian company would be willing to invest in a project like that again, nor that the White House would reconsider that type of cross-border pipeline. “That rubbed me wrong,” Manchin said about the White House looking to OPEC nations instead of North American oil sources.

MARKET WATCH

Futures are pointing to some modest gains at the start of trading, but we’ll see if sentiment takes a cue from the ramp-up in earnings today, most notably with JPMorgan Chase & Co.’s results — which had all the hallmarks of the uncertainty that permeates the globe: net income sank 42 per cent year-over-year to US$8.3 billion. The bank said it booked US$1.5 billion in credit loss provisions, while citing downside risks tied to inflation as well as the war in Ukraine. Digging into specific divisions: revenue from home loan activity tumbled 20 per cent, while fees from investment banking sank 31 per cent. Delta Air Lines likely won’t get as much attention, but its stock is moving a whole lot more. Shares have been up more than five per cent pre-market; hard to pin that on any single factor. Management talked up a “strong rebound in demand” in the release, which showed adjusted revenue and profit were roughly in line with expectations in the latest quarter. Two items catching my eye deep in the results: cargo revenue surged 51 per cent compared to pre-pandemic levels in 2019, while the average fuel price was up 35 per cent.

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