Top headlines: Canadian banks have never had job cut ‘carnage’ like this, David Rosenberg says

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Top headlines

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4:50 p.m.

Market close: TSX down, led by energy and base metals, while U.S. markets also in the red

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Canada’s main stock index moved lower, dragged down by losses in energy and base metals, while U.S. markets also ended the day in the red, led by weakness on the Nasdaq.

The S&P/TSX composite index closed down 42.66 points at 20,410.21.

In New York, the Dow Jones industrial average was down 41.06 points at 36,204.44. The S&P 500 index was down 24.85 points at 4,569.78, while the Nasdaq composite was down 119.54 points at 14,185.49.

The Canadian dollar traded for 73.85 cents U.S. compared with 74.04 cents U.S. on Friday.

The January crude oil contract was down US$1.03 at US$73.04 per barrel and the January natural gas contract was down 12 cents at US$2.69 per mmBTU.

The February gold contract was down US$47.50 at US$2,042.20 an ounce and the March copper contract was down 10 cents at US$3.84 a pound.

The Canadian Press

4:07 p.m.

CBC to cut 600 jobs, reduce programming budgets

The Canadian Broadcasting Corp. and Radio-Canada will eliminate about 600 jobs and an additional 200 vacancies will go unfilled as it contends with $125 million in budget pressures.

The public broadcaster says CBC and Radio-Canada will each cut about 250 jobs, with the balance of the layoffs coming from its corporate divisions like technology and infrastructure.

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It has also identified about 200 currently vacant positions that will be eliminated.

Along with the job cuts, CBC will be reducing its English and French programming budgets, resulting in fewer renewals and acquisitions, new television series, episodes of existing shows and digital original series.

It attributed the cuts to rising production costs, declining television advertising revenue and fierce competition from the digital giants.

At the end of March, CBC had some 6,500 permanent employees, about 2,000 temporary workers and roughly 760 contract staff.

The cuts at CBC come days after the Liberal government suggested it may cap the amount of money CBC and Radio-Canada could get under a $100 million deal Ottawa recently signed with Google.

The Canadian Press

2:38 p.m.

Vancouver home sales rise in November as newly listed properties add to supply

The Real Estate Board of Greater Vancouver says home sales ticked up last month as the continued increase of newly listed properties has given prospective homebuyers in the region among the largest selection to choose from since 2021.

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The board says November home sales totalled 1,702, a 4.7 per cent increase from the same month last year, though it marked a slowdown from the prior month of October. The total was 33 per cent below the 10-year seasonal average of 2,538 for November.

There were 3,369 new listings of detached, attached and apartment properties last month, a 9.8 per cent increase from a year earlier, as new listings were 2.8 per cent below the 10-year seasonal average.

The composite benchmark home price in November for Metro Vancouver was $1,185,100, a 4.9 per cent increase from November 2022 and a one per cent decrease from October 2023.

Andrew Lis, the board’s director of economics and data analytics, says the region has seen balanced market conditions since the summer, which are known to produce flatter price trends.

He says with most economists forecasting mortgage rates to fall modestly in 2024, market conditions for buyers “are arguably the most favourable we’ve seen in some time in our market.”

The Canadian Press

2:29 p.m.

Canada Life signs residential mortgage partnership with Nesto

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Canada Life has signed a partnership deal with online mortgage company Nesto that will see the company take over the service and administration of the insurer’s residential mortgage customers starting in January.

In addition to servicing the existing mortgages, Nesto will also be responsible for the Canada Life mortgages at maturity.

The partnership follows Canada Life’s 2022 decision to withdraw from the residential mortgage market.

Canada Life says customers will receive a modern, digital experience with the move to Nesto, which launched in 2018.

It says Canada Life mortgage customers will gain access to Nesto’s customer service platform as part of a phased implementation plan in mid-2024.

Canada Life is a subsidiary of Great-West Lifeco Inc.

The Canadian Press

12:48 p.m.

Midday markets: Wall Street and TSX start the week down

Stocks slipped on Wall Street Monday ahead of some key reports this week on the United States job market that might provide more insight into the Federal Reserve’s thinking about interest rates.

U.S. Treasury yields were higher, putting some pressure on stocks. The yield on the 10-year Treasury, which influences mortgage rates, rose to 4.29 per cent from 4.21 per cent.

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Technology companies were among the biggest weights on the market. Microsoft fell 2.6 per cent and Apple fell 1.8 per cent.

Spotify surged seven per cent after announcing its third round of layoffs this year. Uber gained 5.6 per cent after the ride-hailing service was named to join the S&P 500 index.

On Wall Street, the S&P 500 was off 0.54 per cent at 5,470.72. The index is coming off its best month in more than a year, and reached its highest level in more than a year on Friday.

The Dow Jones Industrial Average fell or 0.23 per cent, to 36,167.43 while the Nasdaq composite fell 0.88 per cent to 14,179.17.

In Toronto, the S&P/TSX composite index was down 0.17 per cent at 20,417.33 on losses in energy and base metal stocks.

The Associated Press, The Canadian Press

11:41 a.m.

November new car sales see biggest monthly gain so far this year: DesRosiers

DesRosiers Automotive Consultants Inc. says new car sales in November soared 20.7 per cent compared with last year, as vehicle supply improves.

Andrew King, managing partner at DesRosiers, says November saw the largest percentage gain in sales so far this year.

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The data shows car sales continued to defy affordability woes and high borrowing costs, with November marking the thirteenth straight month of year-over-year gains.

King says improving vehicle availability and strong pent-up demand from the pandemic are continuing to fuel sales.

However, he adds the monthly total for car sales was still below the pre-pandemic November market.

King says this year’s car sales have already topped 2022 levels, even with December sales yet to come, pointing to an important recovery since the COVID-19 pandemic.

The Canadian Press

10:07 a.m.

Markets open: ‘We’ve had the great rally and now it’s just kind of a chillax’

Wall Street kicked off the week with losses, with both stocks and bonds down in a signal that traders’ aggressive pricing of United States Federal Reserve rate cuts may have gone too far.

A raft of key jobs readings over the next few days will be closely watched for clues on the Fed’s next steps, with the potential to rekindle volatility that has recently shown signs of anemia. Technically “overbought” conditions and long positioning have left markets in a more fragile state after the impressive rallies in both Treasuries and equities last month.

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“We’ve had the great rally and now it’s just kind of a chillax,” Tony Dwyer, chief market strategist at Canaccord Genuity, told Bloomberg Television. “Inflation is not the problem,” he noted, adding that he still expects to see a recession.

U.S. stocks are headed for a rocky end to the year, according to Morgan Stanley’s Michael Wilson. The strategist said December could bring “near-term volatility in both rates and equities” before more constructive seasonal trends as well as the so-called “January effect” support stocks next month. JPMorgan Chase & Co.’s Mislav Matejka said markets expecting a soft landing leave no room for error.

“Perhaps one should be contrarian yet again,” Matejka said.

On Wall Street, the S&P 500 was down 0.56 per cent at 4,568.52. The Dow Jones Industrial Average was down 0.29 per cent at 36,140.30 while the Nasdaq composite was down 1.04 per cent at 14,157.62.

In Toronto, the S&P/TSX composite index was down 0.01 per cent at 20,450.05.

Bloomberg

9:15 a.m.

Canadian banks job cut ‘carnage’ unprecedented: David Rosenberg

Economist David Rosenberg says “unprecedented” layoffs at Canadian banks are a sign the latest labour report numbers are not nearly as rosy as they seem at first glance.

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The Canadian economy added 25,000 jobs in November, Statistics Canada reported Dec. 1. But the unemployment rate ticked up to 5.8 per cent as jobs created couldn’t keep up with the rate of population growth.

Here’s what Rosenberg, president of Rosenberg Research & Associates, had to say about the report in this morning’s Breakfast with Dave newsletter:

“A real red flag is coming out of the banks: the financial sector has now chopped its headcount for four months in a row and by a combined 63,000, which is unprecedented. Going back to 1976 and spanning six recessions, we have never seen carnage like this before in the Canadian financial industry from a job-reduction perspective. And this sector is a leading indicator.

“There is something else. The workweek was cut the most since April 2022 and down to a nine-month low. Something like this rarely happens and is equivalent to having reduced the national head count by over 150,000. In other words, when counting not just the bodies but the hours spent working, it’s as if Canada shed 125,000 jobs last month.

“In a period when a country is experiencing an epic immigration boom like Canada has been in recent years, the most relevant labour market data point arguably is the employment-to-population ratio. And this metric has eroded from 62 per cent in September to 61.9 per cent in October to 61.8 per cent in November — nearly a two-year low. In other words, there was quite a bit of hair on a report that showed a false glow at the top-line level.”

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Financial Post

7:30 a.m.

Brookfield’s $12.8-billion Origin bid rejected by investors

Origin Energy Ltd. rejected a A$19.1 billion (US$12.8 billion) Brookfield Asset Management Ltd.-led takeover, after the fund’s yearlong pursuit of a utility that’s vital to Australia’s energy transition.

About 69 per cent of ballots cast by investors were in support of the deal, below the required threshold of three-quarters of the votes, Origin said Dec. 4 in a statement, following a shareholder meeting.

Origin’s largest investor AustralianSuper, which holds about 17 per cent of the company, had opposed the offer as too low, effectively blocking the prospects for an acquisition. The intervention by Australia’s largest pension fund showcased an increasingly assertive approach from managers of the country’s A$3.5-trillion retirement savings pool.

Brookfield and EIG Global Energy Partners, which made a first offer in November last year, revised their proposal last month and the deal value was A$9.39 a share, based on Wednesday’s exchange rate, Origin said last week.

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Origin’s board had supported the proposal, though last week rebuffed a suggested alternative transaction under which Brookfield would pay A$12.3 billion for the company’s energy generation and retailing business in the event of an unsuccessful takeover vote.

“Brookfield will evaluate its next steps, if any, with respect to Origin,” the Canada-based investment fund said in a statement. Executives have flagged Brookfield, which planned to acquire Origin using its Global Transition Fund, won’t return with any immediate new offer and intends to review the implications from new Australian energy policy.

Harry Brumpton and David Stringer, Bloomberg

Read the full story here.

Stock markets before the opening bell

Stocks and bonds retreated as traders pause after November’s blockbuster rally and debate the case for interest rate cuts. Bitcoin surged past US$41,000, while gold briefly touched an all time high.

The 10-year Treasury yield added five basis points to 4.25 per cent while United States futures posted modest losses.

The S&P/TSX composite index closed up 216.58 points at 20,452.87 on Friday.

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Bloomberg

What to watch today

The Institute for Peace & Diplomacy (IPD) and the Canada West Foundation (CWF) co-host the third annual Indo-Pacific Strategy Forum (IPSF 2023) in Ottawa.

Michael Medline, chief executive of Empire Co. Ltd., which owns Sobeys Inc., will appear before the House of Commons agriculture committee studying efforts to stabilize the price of groceries.

Federal Environment Minister Steven Guilbeault will make an announcement regarding Canada’s next steps to address methane emissions from the oil and gas sector while he is at the COP28 summit in Dubai.

United States factory orders for October will be out at 10 a.m. ET.

Need a refresher on Friday’s’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

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