Steve Eisman revealed on BNN Bloomberg that Canadian Tire is on his short list. “If I’m right about the credit in the Canadian banks, those problems will show up in Canadian Tire’s credit card business,” he said, while adding he reckons the retailer is “feeling the heat from Amazon.” Worth pointing out that on the company’s Aug. 8 earnings call, CFO Dean McCann said: “Credit metrics are performing extremely well and we continue to monitor the health of the Canadian economic conditions on our portfolio.” He also said past-due credit card receivables were basically flat (at 2.59 per cent) – “an indication there were no concerning trends in our customers’ payment behaviour.”
Eisman also said his conviction in shorting RBC, CIBC is unshaken by this week’s numbers. Though he admitted to being puzzled that neither of the banks that have reported so far have shown the same “explosion” in bad loans as what he’s witnessed at ATB Financial. He’s also dumbfounded by the growth in the banks’ commercial loan books.
POWELL IN THE SPOTLIGHT AS TRADE TENSION HEATS UP
One basic question: can the U.S. Federal Reserve chair deliver what the market craves and signal imminent additional rate cuts? From friend of the station Craig Erlam at Oanda: “The Fed is clearly very reluctant and split, as comments from various officials on Thursday highlighted, which makes me think markets are positioned for disappointment.” We’ll have breaking analysis at 10 a.m. ET with David Rosenberg from Gluskin Sheff. And the backdrop became even more compelling this morning when China unveiled its tariff retaliation strategy, with US$75 billion in U.S. goods targeted for levies in two batches on Sept. 1 and Dec. 15.
CARGOJET WOOS AMAZON
Cargojet is deepening its ties with Amazon.com by issuing warrants that could translate to a 14.9 per cent stake in the cargo hauler in a bid to “incentivize” use of its services. Cargojet says the arrangement will be “meaningfully accretive” to earnings and cash flow. Begs the question of whether this could eventually become an even deeper partnership.
HASBRO BUYING ENTERTAINMENT ONE
It’s a US$4-billion all-cash bet on cross-over content opportunities, and it’s about so much more than Peppa Pig. Entertainment One is a sprawling Toronto-based conglomerate, with tentacles reaching into television, film and music. And Hasbro selected it as its dream partner. Jon is walking us through the strategic rationale.
OTHER NOTABLE STORIES
-Canadian consumers are in better shape than Bay Street anticipated. Retail sales were flat in June. Economists were expecting a 0.3 per cent drop. Excluding autos and gasoline, sales rose 1.7 per cent. And StatsCan notes sales were particularly strong at clothing, accessories and sporting goods stores amid the Toronto Raptors’ NBA playoff triumph.
-Transat will tally the shareholder vote on its proposed takeover by Air Canada today. Even if investors sign off on the deal, significant regulatory hurdles still need to be cleared. BNN Bloomberg’s Paige Ellis will track developments.
-HP shares are sliding in pre-market trading after the computer maker announced its CEO is stepping down.
-Gap’s turnaround remains a work in progress, with same-store sales falling across all of the company’s banners in the second quarter.
-Notable earnings: Foot Locker
-Notable data: Canadian retail sales, U.S. new home sales
-10:00 a.m. ET: U.S. Federal Reserve Chair Jerome Powell delivers speech at Jackson Hole Economic Policy Symposium
-10:00 a.m. ET: Transat shareholder vote on takeover by Air Canada
Every morning BNN Bloomberg’s Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg’s editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.