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A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web

The results of the Bank of Canada’s Business Outlook Survey (BOS) were published Tuesday and the news was generaly favourable.

Bank of Montreal’s summary noted, “Outside the oil-producing region, the survey underscores a still-healthy economy not heading for a major slowdown anytime soon. That gives the BoC more time to comfortably sit on the side-lines.

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National Bank economist Krishen Rangasamy, however, noted a discrepancy – hiring expectations are not terrific,

“Firms reported labour shortages (particularly in the services sector), but their intentions to increase employment dropped to the lowest since 2016Q3 as many respondents aimed for increased efficiency via automation. While positive for productivity, that does not bode well for 2020 job growth.”

“@SBarlow_ROB BMO: Business survey shows surprising optimism’ – (research excerpt, chart) Twitter

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CN Rail has been a huge boost to the S&P/TSX Composite in 2019 – adding 92 points to the indexes’ 2068-point year-to-date climb – but Citi analyst Christian Wetherbee notes downward management earnings guidance and significant hurdles in the way of future profit growth,

“Despite 3Q core results beating by ~4c (although somewhat lower quality) volume and profit headwinds appear to be intensifying. .. The variance in 4Q is partially due to … a relatively quick and meaningful deterioration in the volume outlook.

“@SBarlow_ROB C: headwinds for CN Rail” – (research excerpt) Twitter

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Rogers Communications reported quarterly results this morning and they were …. not good. Desjardins analyst Maher Yaghi provided the analysis,

“RCI reported 3Q19 financial results which were below expectations…, management reduced its 2019 guidance below the Street’s expectations as a result of the rapid adoption of unlimited plans... the company also reduced EBITDA guidance as the short-term impact from overage revenue declines was too much to offset. The stock’s relative valuation vs peers is at a multi-year low but given the precipitous drop in earnings growth, it could take investors a few quarters to regain confidence in the medium-term outlook”

“@SBarlow_ROB Desjardins: Rogers results = not terrific” – (research excerpt) Twitter

More earnings news:

“Caterpillar cuts 2019 outlook as trade war weighs on profit” – Report on Business

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“What Texas Instruments’ Weak Forecast Signals About the Broader Economy” – Bloomberg (video)

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Signs of strain deep in the bowels of the credit market offered some uncomfortable reminders of the financial crisis. There’s nothing disastrous apparent yet but the problem with interbank financing is that it’s not worth thinking about 98 per cent of the time but that two per cent of the time it really, really matters,

“When the Fed buys bills to expand its balance sheet, it credits commercial banks with an equal amount of reserves. The intervention aims to replenish those reserves to a level where even a spike in demand for cash will not send short-term borrowing costs significantly higher. The Fed has begun this process in earnest, so far hoovering up more than $20bn of Treasury bills. In order to get reserves back to the roughly $1.5tn level it says is adequate for the system to run smoothly by early 2020, the Fed needs to buy approximately $300bn of the shorter-dated debt.

At that pace, the Fed will end up owning about 12 per cent of the entire bill market by early next year. “

“Federal Reserve steams back into the US Treasury bill market” – Financial Times (paywall)

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“Worries grow over the Fed’s efforts to fix funding issues: ‘This is all likely to get much worse’” – CNBC

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Diversion: “Half of millennials and 75% of Gen Zers have left their job for mental health reasons” – CNBC

Column: “The important relationship between retail sales and Canadian housing prices” – Globe Investor

Tweet of the day:

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