This morning, it’s all about debt, Uber, and the fate of two Canadian companies, both family legacies: Bombardier, and Kit and Ace, the upstart clothing brand founded by the wife and son of Lululemon’s CEO.
Today, watch for news from Brazil, as the country’s scandal-plagued state oil company reports its latest earnings, which are expected to have fallen dramatically. McDonald’s will also celebrate its 75th anniversary today, offering another chance to speculate on how changing tastes will threaten the fast-food giant. Meanwhile, fines for the Libor scandal continue, and this time, Barclays is expected to be in the hot seat.
Today, Canada gets a whole bunch of numbers, including manufacturing sales and orders from March, flows of international securities in and out of the country for March, and existing home sales and prices for April. The U.S. will see industrial production and capacity utilization numbers today as well for April.
Tap here for debt. Love tapping your contactless credit card? You’re not alone. In its spring review yesterday, the Bank of Canada said the contactless cards were one factor behind an increasing reach for the credit card over the debit card – racking up the debt in the process. From 2009 to 2013, credit card use up to 31 per cent from 19 per cent, while debit card use slipped back from 25 per cent to 21 per cent. Canadians were increasingly less likely to pay card over cash – particularly Canadians who are higher-income, or younger – with cash payments down to 44 per cent in 2013, losing 10 per cent since 2009.
Bombardier cuts jobs. The Montreal-based company said yesterday it would cut 1,750 jobs, with the majority of those cuts – 1,000 – to be in Quebec. The job losses were attributed to falling demand for corporate jets in emerging markets, including Latin America, Asia and Russia – where, rather than helping to make fuelling a corporate jet less expensive, the falling oil prices have actually hollowed out the coffers of some who might be wealthy enough to own one. Slowing growth and a corruption crackdown in China have also put a dent in corporate jet sales as of late, with one air consultancy group saying sales have fallen since a high-profile austerity drive by the government two years ago. Nonetheless, the recent pace has still been hectic: Asian Sky Group, the consultancy, also said the number of jets purchased in China had increased by 16 per cent in 2014 alone.
The trouble with Uber. Uber had a hectic day yesterday in Canada: first, the company’s offices in Montreal were raided by tax officials, who allege the company has been sidestepping provincial laws. Montreal Mayor Denis Coderre has also refused his support for the company, and the tax authorities now have the ability to seize vehicles used by Uber. The company, which is often called a “ride sharing service,” has infuriated local taxi drivers, and following a supportive statement made by Toronto Mayor John Tory, a taxi protest blocked off roads around Toronto City Hall yesterday. The company doesn’t purchase local taxi licences or own the cars themselves, and their methods have launched protests around the world: you can see a map of protests and Uber conflicts around the world here.
Can the faces behind Lululemon do street wear? In many ways, they already have: the yoga brand brought leggings out of the yoga studio and the gym and onto Canada’s streets. But now, a company run by the former CEO’s wife and son are bringing the technical materials behind sportswear back to classic casual wear. The question of how successful this effort will actually be is the subject of a Canadian Business profile of Kit and Ace, the upstart clothing chain that sells simple shirts and pants – at high prices – made with what they call “technical cashmere.” The company has been around less a year, so it’s early days to see if they can have the success of Lululemon, but the chain is nonetheless expanding quickly, and looking to go international. The departure of Chip Wilson, the controversial founder and former head of CEO, from his Vancouver-based brand also lends his experience to the company. But ultimately, a big part of the brand’s success could come down to a simple question: would you pay more than $100 for a grey T-shirt?
Need to know:
TSX: 15,028.12 (+47.40), Thursday
Loonie: 83.38 (-0.18)
Oil (WTI): $59.60, Friday (6:13 a.m.)