The Daily Chase: Suncor reports high production levels

Here are five things you need to know this morning.

New year, same Fedspectations: If you thought we could turn the page on rate-cut talk in 2024, today is not your day. Futures are soggy this morning as we play another game of “will they or won’t they” cut rates by as much as expected. This morning we heard from Richmond Fed President Tom Barkin, who will be voting this year. Barkin offered some feed for the doves, saying inflation is coming into range of the U.S. Federal Reserve’s two per cent target. This morning at 10 a.m. we get a read of the U.S. manufacturing sector and job openings, then at 2 p.m., we will get the minutes from the last Fed meeting in which they delivered the much anticipated “pivot.” Investors will look for confirmation that they haven’t gotten ahead of their skis in pricing in so many rate cuts. While the markets are tepid this morning, keep in mind the S&P 500 is coming off a nine-week hot streak that was the longest winning stretch since 2004. Then there is the TSX. We may struggle today as the U.S. dollar continues to advance. Gold is down one per cent and copper prices hit a two-week low.

Drill baby drill: Suncor announced its production for Q4 hit the second-highest level in company history. Upstream production in the fourth quarter hit 808,000 barrels per day with Fort Hills producing at record levels. Suncor shares have obviously suffered with lower oil prices, but they have also performed worse than the broader energy group. Investors are looking for signs of operational excellence amidst struggling oil prices and turnaround efforts by CEO Rich Kruger, who is still less than a year into the job. 

Shifting gears: We will watch shares of Magna after Goldman Sachs downgraded the auto part maker. One of the big structural calls on Magna is that it is poised to benefit from the ramp-up of electric vehicles and getting more of its content into cars. This morning, Goldman is poking holes in both those ideas. Goldman says Magna will see slower content per vehicle growth compared to peers, and ramp-up of electric vehicle production from customers like Ford and GM will be slower.