The Daily Chase: U.S. inflation slows; Rogers selling Cogeco shares
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Here are five things you need to know this morning.
Expecting the expected: Inflation in the U.S. came in exactly as expected this morning. Headline inflation fell to 3.1 per cent growth from last year in November, the slowest pace of price growth since June. However, there are some blemishes. Inflation perked up a little month-over-month when economists were expecting no change, and yearly inflation excluding food and energy are still a robust four per cent and have been sticking around that level for the last four months. Monthly core inflation also ticked up. Markets are holding up for now. Stocks and bonds are rallying. There is some comfort that inflation expectations have been coming down and lower oil prices will provide relief. The U.S. Federal Reserve will take this into consideration as it begins its two-day meeting this morning and comes out with its rate decision tomorrow at 2 p.m. ET.
Family ties: We will watch shares of Cogeco and Cogeco Communications after Rogers Communications announced it would sell its stake in both to the Caisse for $829 million. For Rogers, this represents a logical end to a failed pursuit. In 2020, Rogers was interested in buying Cogeco but the controlling Audet family wasn’t interested. Of course, since then Rogers made its bed with the Shaw family in a deal worth $20 billion. Now, Rogers can use the proceeds of this sale to pay down debt it took on for the Shaw purchase. Caisse isn’t going to hang on to all the shares it is buying from Rogers. Cogeco will buy back some of it and in the end Caisse will have a 16.1 per cent stake. Both Cogecos are likely to come under pressure as the shares traded hands at a lower price than yesterday’s close.
Did the oracle see that coming?: Shares of Oracle are plunging in the pre-market after sales fell short in its latest set of earnings results. Investors have been cheering Oracle for its greater emphasis on cloud sales, but have become disappointed with the slower pace of growth. Cloud sales grew 25 per cent, which seems like nothing to sneeze at. However, last quarter it grew at 30 per cent, so you see the problem. Executives said this was not at all about the demand picture and more about their ability to meet demand. Chairman Larry Ellison emphasized that “demand is over the moon.” Shares are near record highs and up nearly 41 per cent so far this year, so perhaps investors have gone to the moon and are coming back.