The Daily Chase: Stocks under pressure as virus spreads; GDP inches higher

Global stocks are coming back under pressure this morning as investors interpret the latest wave of coronavirus headlines. At least 213 deaths are now being blamed on the respiratory illness and there are almost 10,000 confirmed cases globally, including a pair in the United Kingdom. Meanwhile, our Bloomberg partners are reporting Chinese provinces and cities that account for more than two-thirds of the country’s economy are extending their Lunar New Year holidays into the second week of February. All told, the mood of the market this morning has clearly changed after some apparent optimism about the World Health Organization’s messaging yesterday as it declared the outbreak a global emergency.

CANADIAN ECONOMIC UPDATE

The Canadian economy unexpectedly expanded in November. Gross Domestic Product inched up one-tenth of a percentage point despite the CN Rail strike that dominated headlines in the month. No doubt that eight-day walkout was a drag in November (with rail transportation slumping 3.8 per cent), but most other sectors posted growth, including a surge in activity for utilities due to a cold snap and a rebound in construction activity.

CIBC CUTS

Canadian Imperial Bank of Commerce is planning an unspecified number of job cuts, according to an internal memo sent by CEO Victor Dodig. “We … need to continue to challenge ourselves to be a more efficient bank by focusing on continuous improvement and keeping a careful eye on costs,” he wrote, while pointing to an efficiency ratio that needs to come down. We’ll assess what areas of the bank could be targeted and whether the big round of cuts announced by BMO during the last reporting period prompted its rivals to reevaluate their own staffing levels.

BREXIT DAY

At long last, Brexit takes effect today at 6 p.m. ET. For now, however, the United Kingdom’s separation from the European Union is largely a symbolic event due to an 11-month transition period during which time the two sides will seek agreements on thorny issues that will frame their future relationship (and as economist Simon French told Paul Bagnell this morning on The Street, the process will be tricky because the U.K. cannot be seen by the EU as having its cake and eating it, too).

ANOTHER POT CEO OUT

After Sundial Growers cleaned house yesterday, David George-Cosh remarked on how a trend of management overhauls was taking hold in the pot sector. Today, we have another case study after MedMen Enterprises announced its CEO (and co-founder) Adam Bierman is stepping down as of tomorrow. Seems safe to say the decision was made abruptly seeing as how the pot retailer said its board is cobbling together a committee to hunt for his permanent successor.

OTHER NOTABLE STORIES

-Amazon.com Inc. is the stock to watch today as its shares surge almost 10 per cent in pre-market trading after making a mockery of profit estimates late yesterday. The e-commerce giant touted spectacular growth in its Prime membership. But those coveted users come at a cost: to wit, global shipping costs surged 43 per cent year-over-year to almost US$13 billion in the fourth quarter. Read all about it here.

-Investors are cheering IBM’s announcement that Ginni Rometty is on her way out as the company’s CEO, to be replaced by senior cloud VP Arvind Krishna, who’s credited as being the architect of IBM’s acquisition of Red Hat.

-Canadian billionaire Lawrence Stroll (father of F1 driver Lance Stroll) is leading a consortium that signed up to play a big role in Aston Martin’s plan to raise 500 million pounds. Stroll will become the vehicle maker’s executive chairman as part of the arrangement.

-Cott made good on its plan to narrow its focus this morning, announcing the sale of its S&D Coffee and Tea business to Westrock Coffee for US$405 million.

-OpenText announced a restructuring alongside its quarterly earnings late yesterday; the company declined to provide any specifics on the number of anticipated job cuts when we contacted its communications team.

-Reminder that it’s a high-stakes weekend for Cineplex. It has until Sunday to drum up a better offer than the $34/share friendly takeover arrangement with Cineworld. We’ll keep an eye out for any sign of a superior proposal.

-Canadian billionaire Lawrence Stroll (father of F1 driver Lance Stroll) is leading a consortium that signed up to play a big role in Aston Martin’s plan to raise 500 million pounds. Stroll will become the vehicle maker’s chairman as part of the arrangement.

NOTABLE RELEASES/EVENTS

-Notable earnings: Imperial Oil, Exxon Mobil, Chevron, Caterpillar, Colgate-Palmolive, Honeywell

-Notable data: Canadian GDP, U.S. personal income and spending

-9:00 a.m. ET: Prime Minister Justin Trudeau visits Vêtements Peerless in Montreal to discuss new NAFTA (plus avail)

-10:30 a.m. ET: Trudeau meets with business and community leaders in Montreal

-Brexit date (as of 6:00 p.m. ET)

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.