Here are five things you need to know this morning:
Back at it: Futures are a bit skittish after Moody’s changed its credit outlook on U.S. government debt to negative late Friday. Moody’s is the last of the big three rating agencies to retain AAA status on U.S. debt. The reason for the revised outlook isn’t new, with Moody’s citing persistently large budget deficits, rising interest costs, and government dysfunction. Speaking of which, there might be a government shutdown by the end of the week if Congress can’t pass a new stopgap funding bill. But before that, we will get a key read of U.S. inflation tomorrow. It might be the tie-breaker between markets, which basically have priced in the end of rate hikes, and U.S. Federal Reserve officials who continue to threaten the possibility of another rate hike. In Canada, we don’t have much in the way of tier one economic data, but we did just get a read of consumer confidence that came in the lowest since March.
99 problems: The hits keep coming for First Quantum. With its future in Panama at risk of ending pending a referendum in December, it is now dealing with a blockade by a pod of small boats. The boats have anchored at its port and are keeping out key supplies. First Quantum has reduced operations at its Cobre Panama copper mine as a result. We can put a lot of big numbers around how much this is costing the local economy and First Quantum. Estimates suggest this is a US$60- to $90-million hit per day to Panama’s economy. Further disruptions could impact the 7,000 direct employees First Quantum has at Cobre Panama. National Bank says that when you add in additional service providers, First Quantum is responsible for two per cent of the Panamanian national workforce. Reducing processing capacity by a third is likely costing the company $12 million per week, according to National Bank.
Let’s try it the other way: After Dye & Durham was forced to abandon its bid to buy Australia’s Link Administration, the company is now announcing plans to sell off non-core assets. The software provider to legal professionals says this is all part of their plan to reduce leverage “as soon as possible”. They are willing to look at selling either all or part of their “non-core” assets which they say include their financial services business. Shares of Dye & Durham recently hit their lowest level since 2020, the year it went public.
On the wings of a 777: Shares of Boeing are trading up in the pre-market after Emirates Air announced it would buy 95 Boeing planes. At face value the deal is worth US$52 billion dollars. It’s the first major deal from this year’s Dubai airshow. Boeing is also rallying because of hopes that China will consider lifting its freeze on buy jets from the planemaker. Boeing’s chief commercial officer said he’s optimistic about talks scheduled to take place between U.S. president Joe Biden and China’s president Xi Jinping in San Francisco this week.
Where’s the beef?: Shares of Tyson Foods are under pressure after its beef division swung to a loss for the first time since 2015 and the company wrote down the value of that part of the business. The issue seems to be on the supply side. Apparently there is just less cattle available to turn into… edible product. Add to this the fact that the chicken and pork divisions are also struggling. The company’s outlook for revenue growth next year was tepid and that is weighing on shares as well. It did manage to boost its dividend modestly, but the stock is bouncing off the lowest level since 2020 as all those pandemic gains fully unwind.