Aurora Cannabis shares fall 40% after share sale amendment

Aurora Cannabis shares tank

Aurora Cannabis Inc.'s share price fell by about 40 per cent, after the company announced it sold US$150 million worth of shares.

The Edmonton marijuana company's share price was $3.47 when trading ended Thursday, but by mid-morning Friday, had fallen to $2.07 and closed at $2.14.

The sale of shares was part of an amendment Aurora made to a previously announced bought deal financing.

The amendment made it possible for a syndicate of underwriters led by Canaccord Genuity and BMO Capital Markets to purchase 61.2 million Aurora units for US$2.45 each.

Each unit is comprised of one common share in Aurora and one common share purchase warrant, which can be used to acquire one common share for US$3.20 each in the next 36 months.

Aurora has yet to record a profit and in recent years has been trying to drive revenues by better aligning supply with demand, laying off staff and closing facilities.

Analysts say natural gas could go even higher after breaking 14-year record this week

Natural gas hits 14-yr high

The price of natural gas hit heights not seen since 2008 this week and analysts say it could go even higher this summer.

The U.S. benchmark natural gas price hit is currently trading at around US$8.60 per million British thermal units, or MMBtu. It surged to over $9 earlier in the week.

Analysts say the price could break $10 this summer due to low inventories and global concerns about energy security.

Summer heat waves could also push prices higher by driving up electricity demand.

The surging prices are good news for Western Canada, where the country's natural gas production is concentrated.

But an industry group says labour shortages remain an ongoing challenge for drillers.

Canfor sawmills to remain on reduced capacity in Western Canada

Canfor mills still curtailed

Canfor's Western Canadian sawmills will continue to operate at reduced capacities in answer to ongoing supply chain challenges, the company said Thursday.

They've been running at about 80 per cent since late March.

In addition, the company said it will be implementing two weeks of rotating downtime across its primary sawmills in the region in July and August, with the aim of resume normal operating schedules once summer is over.

They've been running at about 80 per cent since late March, due to the ongoing global supply chain challenges,

"The global supply challenges are continuing to significantly limit our ability to transport products to our customers and our inventory levels remain very high," Canfor CEO Don Kayne said.

"We are working to bring our inventory levels back into balance by reducing our production, while also working to meet the needs of our customers."

Growing number of Canadians consider changing retirement date

Rethinking retirement

One-third of retired Canadians between ages 55 and 75 have retired sooner than originally planned, according to a recent RBC survey.

And while the survey didn't provide insight into why people decided to take advantage of their golden years earlier, Selene Soo, director of wealth insurance at RBC Insurance, offered her guess.

"If I had to wager a guess, with the last two years, it could have been that it wasn't of their own choice. Just because of businesses going under, companies downsizing or streamlining their staff. Over the past two years, maybe they were able to save a little bit more. I don't know how much more but they were able to save a little bit more because of not travelling or doing a lot of those types of activities and just decided that life is too short, and they wanted to retire sooner."

Another 30 per cent of Canadians have plans to change their retirement date, in part because of economic uncertainty and inflation.

For recently retired Canadians, the survey found more than a quarter are exceeding planned expenditures, while four in 10 reported having unexpected expenses to cover. That includes health-care costs and home repairs, which have become exacerbated by inflation.

Soo says this trend could be looked at in two ways.

"Number one would be... they're spending some of their retirement savings helping out family. When I look at my own parents, they're constantly buying things for my kids. So it's like, instead of travelling, they're spending it on other things. Because my parents are avid travellers, and now that they're not travelling there, they're doing other things with their money. And a lot of people are doing upgrades to their home. And, just using their retirement savings that way," she says.

But the second aspect is inflation.

"I think we're kind of all feeling the pinch of inflation these days," says Soo, pointing to high gas prices and the increasing cost of groceries.

And that's why Soo advises Canadians to have a diversified portfolio that can withstand the "ups and downs of the market."

A diversifed portfolio means spreading one's assets in different forms such as cash, equities, mutual funds, ETFs. In short, not putting all your money in one basket, as the saying goes.

"And by having all of these different types of portfolios, it'll help protect your retirement money, and ensure that it lasts longer," says Soo.

She notes receiving guidance from a financial advisor is key when it comes to a person's retirement plans.

"Speaking with an advisor will make sure that they're on track to make sure that their portfolios are able to withstand rises of inflation. They're able to withstand market volatility that we've seen over the past, I would say, two to five years. It's able to withstand emergencies in case you need to dip into your savings," she says.

The survey also found that more than half of Canadians rely on TSFAs, RRSPs and CCPs, respectively, while only seven per cent of Canadians are using annuities, and three per cent are relying on segregated funds.

Annuities provide guaranteed income streams that don’t fluctuate with the market, and segregated funds include guaranteed investment funds (GIFs) that keep the original investment safe while it grows.

For example, Soo says, "if you invest $100,000, into a segregated fund, and three years later, the market tanks and your market value of your investment is only $75,000, the insurance company will top up your investment to $100,000. It's a really good tool to use, if you want to protect the value of what you put into the product [investment account]."

International flight delays at Pearson airport jump by factor of 275

Flight delays soar at Pearson

The number of international flights delayed on arrival at Toronto Pearson International Airport jumped by 275 times last month compared with April 2019.

The Greater Toronto Airports Authority says it held 2,204 planes from abroad on the tarmac last April versus just eight in the same period before the COVID-19 pandemic.

Staffing shortages at security and customs checkpoints along with public-health protocols have seen airport wait times soar as travellers flood the skies after two years of pent-up demand.

In the second week of May alone, some 18,000 arriving international passengers at Pearson were held on board longer than 30 minutes, and 3,000 longer than 75 minutes.

The authority is calling on the federal government to scrap public-health requirements such as random testing upon arrival and to invest in staffing and technology to improve passenger clearance times.

Transport Minister Omar Alghabra has said Canada’s airport security agency is working to boost staffing levels.

S&P/TSX composite up more than 100 points, U.S. stock markets also rise

Markets look to rebound

Canada's main stock index posted a triple-digit advance in late-morning trading as gains in the energy and technology sectors helped lead the market higher, while U.S. stock markets also gained ground.

The S&P/TSX composite index was up 135.28 points at 20,667.46.

In New York, the Dow Jones industrial average was up 298.44 points at 32,935.63. The S&P 500 index was up 64.39 points at 4,122.23, while the Nasdaq composite was up 276.92 points at 12,017.57.

The Canadian dollar traded for 78.42 cents US compared with 78.17 cents US on Thursday.

The July crude oil contract was down 64 cents at US$113.45 per barrel and the July natural gas contract was down 22 cents at US$8.68 per mmBTU.

The August gold contract was up US$2.30 at US$1,856.20 an ounce and the July copper contract was up four cents at US$4.30 a pound.

The Wall Street rally kept the market on track for its first weekly gain after seven weeks of losses.

The gains were broad, led by technology stocks. Apple rose 3.3% and Microsoft rose 2.2%. Retailers also made solid gains as Wall Street continues reviewing the latest round of earnings to get a better sense of just how much pain rising inflation is inflicting on businesses and consumers. Beauty products company Ulta Beauty surged 11% after raising its profit forecast for the year. Amazon rose 2.8%.

European markets were higher and Asian markets closed higher overnight.

The broader market has been in a slump for nearly two months as concerns about inflation and rising interest rates pile up. Investors were spooked last week by disappointing reports from key retailers, including Walmart and Target, which stoked fears about rising inflation hitting profit margins and crimping consumer spending.

Inflation is at a four-decade high and has been persistently squeezing businesses. Higher costs prompted companies to raise prices on everything from food to clothing to protect their margins and consumers remained resilient. Russia's invasion of Ukraine worsened the inflation picture by pushing global energy and food prices even higher.

Canopy Growth reports Q4 net revenue down 25 per cent from year ago

Canopy revenue down 25%

Canopy Growth Corp. reported a smaller quarterly loss compared with a year ago as its net revenue fell 25 per cent.

The cannabis company says it had a net loss of $578.6 million or $1.46 per diluted share for the quarter ended March 31 compared with a net loss of $616.7 million or $1.85 per diluted share a year earlier.

Net revenue in what was Canopy's fourth quarter totalled $111.8 million, down from $148.4 million in the same quarter last year.

The drop in revenue came as the company's global cannabis net revenue fell to $66 million in its latest quarter compared with $101.3 million a year earlier.

Other consumer products revenue amounted to $45.8 million for the quarter, down from $47.1 million.

Canopy chief executive David Klein says the company will remain focused on building its market share in the key segments that will drive profitable growth and continuing to grow its premium brands across North America.

Banks sound notes of caution as outlook worsens, even as latest results show growth

Banks sound caution

Canada's Big Five banks all sounded notes of caution in releasing results this week as pressure builds on the economy, though each pointed to somewhat different strategies in preparing for a potential recession.

TD Bank was the only one not to raise its dividend in what it said was a move to preserve capital, CIBC was alone in increasing its provisions for credit losses (though BMO warned that it will likely do so soon), while Scotiabank and RBC said they were taking various approaches to tighten their risk analysis scenarios in light of the worsening outlook.

Risk officers took centre stage on earnings calls as words like "uncertainty" and "fluid" came up repeatedly, as all warned of the potential for the economy to go into retreat on the combined pressures of supply chain problems, Russia's invasion of Ukraine, a tight job market, and central banks trying to rein in the rampant inflation that all those factors are causing.

"There's certainly more uncertainty," said BMO chief risk officer David Casper.

RBC chief executive Dave McKay said that while he believes the economy is more mid-cycle, the need for central banks to hit demand "really hard" to reduce inflation is creating increasing unpredictability on how it will play out.

"From that perspective, markets are struggling to predict how we land the economy, do we land it with a slight recession? And our message today is, it could go either way, it's 50-50."

The economic picture has shifted markedly from last quarter as energy prices have spiked since Russia's invasion of Ukraine, while China's pandemic lockdown measures have worsened supply chain issues.

"Since February, things have changed," said TD Bank chief executiveBharat Masrani.

"The war is a reality in Europe. You see energy prices are all over the place. So there is a lot of volatility here. And as is usual from TD, to address volatility and uncertainty of this type, we want to be prudent," he said in explaining the bank's move not to raise its dividend.

But as McKay noted, there are also still many healthy indicators, at least looking back over the three months to the end of April.

All the banks reported loan growth either nearing or into double digits from a year earlier, while credit card spending has jumped as COVID-19 restrictions fade away.

And while mortgage-fuelled loan growth has raised concerns about over-leveraged households, the banks emphasized the improved credit profile of its clients during the pandemic and the strong job market that is helping to support spending.

All banks but TD increased their dividends in a sign of financial confidence.

The banks themselves are also poised to benefit from rising interest rates, with RBC noting it has already seen a $75 million bump from the recent Bank of Canada rate hikes, while TD Bank said that every 50 basis point increase brings it US$350 million a year after-tax.

But the banks are no doubt preparing for a potential change in the economic picture as they plug in tougher scenarios to their risk analysis.

"Given the macroeconomic environment, we run stress tests that would have more harsh inputs today than we would have possibly a year ago," said Scotiabank chief executive Brian Porter on an earnings call Wednesday.

The mortgage market is already slowing on the higher rates, while banks are seeing expenses rise on salary and other pressures, leading some to strike especially strong notes of caution.

TD chief risk officer Ajai Bambawale said the bank is expecting a correction in the housing market, and may have to build up more loan loss allowances if the overall economy worsens.

"The situation is quite fluid right now. And what the future holds, who knows. But to the extent we are in a recessionary scenario, or even in a stagflation kind of scenario, it is possible we may have to build results. I think, at this point, because we are seeing all this uncertainty, we're just being very prudent, very careful, thoughtful and deliberate."

Amid high inflation, baby boomers offer saving advice to younger Canadians

Boomers offer saving advice

They survived the roaring inflation of the early 1980s and now they have some advice for younger generations: Take the bus, pack a lunch and skip the overseas vacation.

As the cost of living rises at its fastest pace in decades, people who lived through the last round of record-high price hikes are sharing tips for how they got through it.

"Millennials may have to make some lifestyle sacrifices," said Larry Short, senior investment advisor and portfolio manager with ShortFinancial, iA Private Wealth.

"We have a standard of living now that only the very rich had back in the 1980s ... everybody's trying to live like a Kardashian."

Short started his career in 1981 when mortgage rates were 18 per cent. He drank instant coffee, ate simple meals at home and drove an older car.

"Younger generations have grown up with very different expectations," he said. "It might be time for a bit of a correction. Everybody hates the word, but you need a budget."

Canada's consumer price index rose 6.8 per cent in April compared with a year ago, Statistics Canada reported last week.

Groceries jumped 9.7 per cent — the largest increase since September 1981 — while gasoline prices were up 36.3 per cent year over year.

With the rising costs of necessities like food and fuel, some Canadians may be forced to rethink how they spend their money.

"If your discretionary income is being redirected right now to pay for basic expenses, some financial habits might have to change," said Pattie Lovett-Reid, a chief financial commentator for HomeEquity Bank who also started her career in the early 1980s.

While there's no "cookie-cutter approach" to financial planning, she said there are tried-and-true ways to save money.

Some difficult lifestyle changes may be needed, but Lovett-Reid said baby boomers faced similar challenges in the 1980s.

"Keeping up with the Joneses has always been around," she said. "You've got to learn the difference between a want and a need and live within your means."

Meanwhile, the Bank of Canada has signalled further interest rate hikes could be coming next week in an effort to cool stubbornly high inflation.

"This might be a good time to lock in your mortgage if you're likely to lose sleep over rising interest rates," said Michael Dorfman, senior portfolio manager and senior investment advisor with BMO Private Wealth.

"For others, it could make more sense to roll the dice with a variable mortgage."

The flip side to high mortgage rates is that investments are likely to grow faster as they accumulate more interest.

But given the dramatic increase in the cost of everything, he said it's likely a difficult time for many people to save enough to invest.

Still, Dorfman said there are ways to be more thrifty to make your dollars go further.

"It's about being more frugal, whether through clipping coupons and shopping at discount stores or taking public transit instead of driving," he said.

Dorfman, who also started his career in the 1980s, said there are lifestyle changes younger adults who have never experienced inflation may want to consider.

"This generation has a real expectation of a certain lifestyle but may not have the economic wherewithal to make it happen," he said.

Cutting back on subscriptions to various streaming services, forgoing the latest smartphone, making lunches rather than going to the food court and using the office coffee machine instead of paying for a pricey latte can all help save cash at the end of a month, Dorfman said.

"If you're buying lunches and coffees even three days a week that adds up quickly," he said. "It's not that hard to save money if you just make certain choices."

Canada's big banks treat Indigenous, visible minority customers unequally: watchdog

Watchdog slams big banks

Pressure sales tactics. Ill-fitted suggestions. Misleading information.

Visible minority and Indigenous customers at Canada’s big banks more often received inappropriate treatment from sales staff, part of a wider trend of "concerning" interactions between those institutions and shoppers, a federal consumer watchdog has found.

In a mystery shopping review conducted in 2019 by the Financial Consumer Agency of Canada, customers who identified as a visible minority or Indigenous person more frequently encountered recommendations that were less simple and unsuitable to their financial circumstances compared with shoppers who did not identify as such.

They were also pitched more heavily on optional products. One in three were offered overdraft protection — the service guarantees that charges to a debit account will clear even if the balance falls below zero, but often involves heavy fees and interest — versus 18 per cent of other shoppers. They were also three times more likely to be offered balance protection insurance, according to the report, released Thursday.

"These findings indicate that banks can do more to ensure that the demographic groups at higher risk are protected from experiencing concerning sales practices," the federal agency said, highlighting younger shoppers and students as well.

Mystery shopping is a method of market research where individuals use semi-scripted scenarios to pose as customers and and talk with employees, in this case at bank branches. The shoppers, who recorded their observations, asked about chequing accounts and credit cards and reported on their interactions.

Overall, the report found 74 per cent of the shoppers at 712 bank branches described their experiences as positive. However, the agency said the banks could improve service when it comes to product recommendations and employee communication.

“Canada’s banks are client-focused with a deep commitment to high ethical standards and complying with established laws and regulations when providing products and services to help customers meet their financial goals," the Canadian Bankers Association said in an email, noting that a majority of mystery shoppers described their overall experience as positive.

Credit cards were a particular area of concern. Some 28 per cent of credit card suggestions were for premium cards that require a baseline income of $60,000 or a household income of $100,000, the report stated. But four in five shoppers received no questions about their income "at any point when a premium card was recommended."

Some 15 per cent of chequing account interactions and 20 per cent of credit card chats "led to recommendations that shoppers did not find appropriate for their needs," the agency said.

While only three per cent of sit-downs resulted in shoppers feeling pressured to sign up for a product or service, that low proportion "does not tell the full story," the study found. Twelve per cent of customers said they were pitched products or services at least twice, and that some employees "explicitly attempted to overcome" the turndowns of would-be clients.

"Despite these reports, many in this group did not report feeling pressured," the agency added, noting shoppers define pressure differently.

New federal rules that come into effect June 30 aim to enhance customer protections by obliging banks to speed up complaint processes and sell products and services that are aligned with clients' financial needs.

"We expect banks to focus on the areas for improvement that have been identified as they implement Canada's new financial consumer protection framework and ensure they consider the needs and abilities of consumers, including those in vulnerable circumstances," agency commissioner Judith Robertson said in a release.

Canada's Bix Six banks are the Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank.

Ottawa proposing new internet, phone rules to the CRTC

Feds plan new internet rules

Smaller internet service providers (ISPs) are cautiously optimistic about the new telecom policy directives unveiled by the federal government Thursday that are aimed at the Canadian Radio-television and Telecommunications Commission.

Brad Fisher, chief revenue officer at an independent telecom company Distributel, says he is "disappointed" in Ottawa's decision not to overturn a controversial CRTC ruling made last year that reversed the regulatory agency's own 2019 decision to reduce the fees big telecom providers charge smaller internet service providers for access to their broadband networks.

"It's a missed opportunity to put money back in the pockets of Canadians," he said.

After assessing petitions from smaller ISPs on the issue, Ottawa says it concluded that the 2019 rates included a series of errors and that it would be "irresponsible" to implement them. The government says the rates implemented in 2016 will remain in place.

Fisher adds that the decision will make the market a difficult one for smaller ISPs to operate in, although the government has provided a "clear set" of directives that are "pro-competition longer term."

Meanwhile, telecom researcher Ben Klass says that the measures don't do enough to support competition.

"This direction appears primarily to be an effort by the government to deflect attention from its refusal to address the CRTC’s failure to support competition through fair rate regulation for internet providers," he said.

Although the government stopped short of implementing the CRTC's 2019 proposed rates, the directives also require the CRTC to "take action to have more timely and improved wholesale rates available."

The government is also directing the CRTC to improve its hybrid mobile virtual network operator (MVNO) model and says it is prepared to move to a full MVNO model to support competition if necessary.

MVNOs are wireless providers that buy cell phone network service from the big carriers at a wholesale rate and then sell access to customers at a more affordable rate.

Ottawa is also calling on the CRTC to address what it calls unacceptable sales practices and lay out new measures to improve clarity around service pricing and the ability for customers to cancel or change services.

It also wants to see service providers implement mandatory broadband testing so Canadians will understand what they're paying for.

Ottawa's telecom policy proposal lands as concerns increase about Rogers Communications Inc.'s $26 billion acquisition of Shaw Communications Inc.

Statistics Canada says retail sales virtually unchanged in March

Retail sales stay flat

Canadian retail sales were flat in March as a slump in new car sales offset healthy consumer spending gains elsewhere, Statistics Canada reported Thursday.

Total retail sales in Canada hit $60.1 billion in March, virtually unchanged from the month before, the federal agency said.

The result compared with an initial estimate for the month that suggested sales rose 1.4 per cent. The preliminary estimate for April indicates retail sales rose 0.8 per cent for the month, but the agency cautioned the figure will be revised.

"With a rotation of demand away from goods and towards services, we would expect retail sales to slow in coming months," Karyne Charbonneau, executive director and senior economist with CIBC Capital Markets, said in an email.

For March, retail sales figures show healthy growth outside of vehicle sales.

Statistics Canada said sales were up in 10 of the 11 subsectors it tracks, representing 75 per cent of retail trade.

However, sales at motor vehicle and parts dealers fell 6.4 per cent as new car dealers saw a drop of 5.9 per cent, the agency said.

"A lack of supply, as chip shortages hamper production, continues to weigh on vehicle sales," Benjamin Reitzes, managing director of Canadian rates and macro strategist with BMO Capital Markets, said in a client note.

"That's been a theme for some time, but is expected to ease as we work through 2022."

Sales at gasoline stations rose 7.4 per cent in March, but he said "a good chunk of that underlying strength was due to broadly higher prices."

Core retail sales — which exclude gasoline stations and motor vehicle and parts dealers — increased 1.5 per cent in March.

The increase was led by higher sales of building material and garden equipment and supplies, which climbed 3.7 per cent, Statistics Canada said.

Clothing sales also continued to post strong gains with a 2.2 per cent increase following the strong 15.5 per cent hike from last month.

The increase in clothing sales reflects the growing number of workers returning to the office and upgrading their wardrobe, Charbonneau said in a client note.

In volume terms, retail sales fell one per cent in March.

Economists have suggested that sales volumes — the total number of items sold — could face headwinds as inflation drives prices higher.

"It's clear that inflation is eroding purchasing power," Reitzes said.

Consumer enthusiasm could wane in the months ahead as higher interest rates ripple through the economy, he added.

"We expect the impact of surging inflation on household disposable incomes to be a stronger headwind to sales volumes in (the second quarter) and in the second half of the year," Charbonneau said.

Meanwhile, retail sales grew roughly 2.7 per cent compared with a year ago, she said.

However, that gain comes from higher prices given sales volumes fell 5.1 per cent compared with March 2021, Charbonneau said.

Retail e-commerce sales were down 1.9 per cent in March on a seasonally adjusted basis compared with a year ago, she said. On an unadjusted basis, online retail sales fell 24.6 per cent year over year, she said.

However, that comparison is against a period where non-essential retailers were still impacted by the pandemic and many Canadians looked to online sales to avoid going outside their homes, Charbonneau said.

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