Daily Pulse

Canada

BHP Group is in talks with Nutrien Ltd. about a potential partnership in its massive Canadian potash venture as the world’s biggest mining company moves closer to a final decision on the project. The pair are discussing multiple options, including Nutrien becoming the operator and selling the potash through its existing channels, or the Canadian company taking a stake in the Jansen mine, according to people familiar with the matter.

U.S. Commerce Secretary Gina Raimondo said she wants to find a “long-term solution” to Washington’s long-running dispute with Canada over lumber, the cost of which has soared to records. “The silver lining could be that we use this as an opportunity to all get around the table, including USTR, to find a long-term solution with Canada,” she said at a Senate Appropriations subcommittee hearing Wednesday in response to a question from Kansas Senator Jerry Moran.

United-States

US bond yields have fallen somewhat in recent days. The 10-year Treasury yield is back below 1.6%, well off its early-April peak of 1.73%. Falling bond yields are difficult to square with all the talk of spiking inflation, but a broader look at economic data surprises shows that the economic data are no longer consistently beating consensus expectations. That is, investors have largely priced in a rapid economic recovery and a neutral Economic Surprise Index tends to be consistent with rangebound bond yields. What’s more, the Federal Reserve has made it clear that it views recent strong inflation readings as “transitory”, and if the Fed is willing to see through rising inflation then the bond market will do so as well. The one thing that would move the needle on Fed policy is evidence of a quicker-than-expected labor market recovery. The Fed has pledged not to lift rates until “maximum employment” is achieved, and Fed Chair Jay Powell said that he wants to see a “string” of strong nonfarm payroll reports before he is comfortable tapering asset purchases.

Exxon Mobil Corp. CEO Darren Woods was dealt a stunning defeat by shareholders when a tiny activist investment firm snagged at least two board seats and promised to push the crude driller to diversify beyond oil and fight climate change. The vote was unprecedented in the rarefied world of Big Oil and underscores how vulnerable the industry has suddenly become as governments around the globe demand an acceleration of the shift away from fossil fuels. It’s also a sign that institutional investors are increasingly willing to force corporations to actively participate in that transition.

Europe

Airbus SE is preparing to gear up production of its best-selling A320-series jets beyond pre-pandemic levels within two years, lending a jolt of optimism for a recovery in global aviation. The shares jumped after the world’s largest maker of commercial jetliners told suppliers to be ready to raise output of the narrow-body planes to a rate of 64 per month by the second quarter of 2023. That figure could rise to 70 a month early the following year, with 75 a possibility by 2025, Airbus said in a statement Thursday.

HSBC to exit unprofitable U.S. retail banking. The bank, whose retail business has long struggled to compete with America’s big banks, said it will sell 90 of its 148 branches, and wind down another 35 to 40. The shift will take it from about 1.4 million U.S. customers to roughly 300,000.

Asia

The leaders of Japan and the European Union institutions referred to the importance of peace and stability in the Taiwan Strait in a joint statement following a virtual summit, a move indicating their concern over China’s assertive push in regional affairs.

The author

Michel Doucet

Michel Doucet

Vice-President and Portfolio Manager
After obtaining a Bachelor's degree from the Faculty of Social Sciences at the Université du Québec in Montréal and his Master’s degree, Michel Doucet began his career as a junior economist at the National Bank head office in Montreal. In 1992 he joined the institutional equities and fixed income group at Lévesque Beaubien Geoffrion as an economist and market analyst. Over the years, he has led various projects related to the North American and international economies as well as Canadian public finances. In 1996, the team of institutional economists to which he belongs was ranked first in Canada by Brendan Wood International. In August 1997, Mr. Doucet joined the personal services division of Lévesque Beaubien Geoffrion where he served as an economist, fixed income market analyst and vice president. In 2004, he joined the Desjardins Securities full service team as Vice President. He now occupies the roles of fixed income strategist, economist and portfolio manager. He manages the Securities Portfolio Advisory Group, advisor marketing and distribution of financial planning and insurance.