/Posthaste: Friday 13th could be TSX’s lucky day — Canada’s trade war casualty and how low will the Fed go?

Posthaste: Friday 13th could be TSX’s lucky day — Canada’s trade war casualty and how low will the Fed go?

Good morning!

Don’t break out the champagne quite yet, but the TSX is flirting with a record high. Canada’s main stock index hit an intraday high yesterday when it rose to 16,693.19, breaching the previous record set on April 23 at 16,672.71. The biggest winners were technology and financials and best performing stock was copper and gold producer First Quantum Minerals Ltd, up nearly 10%. The record slipped away over the afternoon, but the index is now about 23 points away for closing at a new high.

Just about everybody expects the U.S. Federal Reserve to cut rates at its meeting next week — but by how much? Donald Trump has ramped up the pressure on Twitter calling for everything from a 1% cut to slashing rates to “zero or less.” St. Louis Fed president James Bullard has also made it clear he will push for a 50 bp cut at the Sept. 17/18 meeting. The market disagrees. As of yesterday, traders were betting on a 89% chance of a quarter-point cut Wednesday, and a 11% chance of a hold. There are no bets on a 50 basis point cut (a month ago there was a 24% chance). Capital Economics is in the camp of a quarter-point cut, saying economic data haven’t yet deteriorated to justify 50 bp, which would “smack of panic.” However, Capital expects the economy to continue to slide, prompting another quarter-point cut in December.

Here’s what’s you need to know this morning:

  • NDP Leader Jagmeet Singh addresses Canadian Club in Toronto at 11:45 a.m. ET
  • NDP Leader Jagmeet Singh will make an announcement about the NDP’s plan to lower Canadians’ cellphone and internet bills
  • Conservative Leader Andrew Scheer makes an announcement in Mississauga at GO Transit Streetsville Bus Garage
  • Green party Leader Elizabeth May joins candidate John Kidder at a campaign office opening in Mission, B.C.
  • Alberta Premier Jason Kenney speaks at University of Lethbridge
  • Today’s data: Canadian national balance sheet and financial flow accounts, U.S. retail sales

Trade wars have hit Canadian provinces hard, but none as hard as Saskatchewan, which has the highest exposure to international trade in the country. China’s decision to block Canadian canola, soybeans and meat has hit 6% of Saskatchewan’s exports, says RBC Economics. Canola exports are down 27%, soybean 38%. Add to that weakness in consumer spending and the housing market and RBC is cutting its 2019 growth forecast for the province from 1.1% to 0.6%.

— Please send your news, comments and stories to [email protected]. — Pamela Heaven @pamheaven

With files from The Canadian Press, Thomson Reuters and Bloomberg


Original Source