63.80 +0.02 (0.03%)
After hours: 5:49PM EDT
Commodity Channel Index
|Bid||63.68 x 800|
|Ask||65.78 x 1300|
|Day's Range||60.89 - 63.82|
|52 Week Range||49.55 - 82.74|
|Beta (5Y Monthly)||0.72|
|PE Ratio (TTM)||10.15|
|Earnings Date||Nov 30, 2016 - Dec 05, 2016|
|Forward Dividend & Yield||3.07 (5.22%)|
|Ex-Dividend Date||Apr 22, 2020|
|1y Target Est||88.84|
Canadian Prime Minister Justin Trudeau has spoken to the heads of the country's six big banks to get their views on the state of the economy and the COVID-19 relief efforts, the Globe and Mail reported on Sunday, citing multiple sources. This was Trudeau's first one-on-one dialogue with the CEOs since the beginning of the coronavirus outbreak, according to the report, which added that the calls took place around the Victoria Day long weekend. The topics covered included adjustments required in relief efforts rolled out by the government, need for further support and pressures faced by clients of the banks, the report said, adding that the talks were 'high-level check-ins rather than deep policy discussions'.
(Bloomberg) -- Elevator queues, mandatory masks and staggered start times may await Toronto’s office workers when they start venturing back to North America’s second-largest financial center.These are among the measures Cadillac Fairview Corp. Ltd. is pursuing as the commercial property firm prepares for a “measured” return of workers to downtown buildings. The company is landlord to some of Canada’s largest banks as the owner of office towers such as TD Centre and RBC Centre.“It’s going to be a gradual but steady climb back to normalcy,” Sal Iacono, Cadillac Fairview’s executive vice-president of operations, said in an interview.Ontario has been easing restrictions on business as the Covid-19 pandemic, which has killed nearly 2,000 people in the province, finally eases.Office workers should brace for dramatic changes, with numerous precautions to protect them and the public. Cadillac Fairview, which is owned by the Ontario Teachers’ Pension Plan and oversees 70 properties in Canada including the Toronto Eaton Centre shopping mall, is just one of the city’s large landlords adopting new measures to make returning to work safe.Elevators will have limits of four people and Cadillac Fairview plans to add thin anti-microbial film over the buttons. It’s looking to introduce digital apps so people can schedule their elevator rides instead of waiting in line, Iacono said, “so that you know with certainty that you’re not going to have to wait a long time in order to be able to access your floors.”Shift WorkThe company is also working with tenants on ways to stagger start and end times for employees to avoid crowding in lobbies and common areas.“In order to be able to allow the maximum number of people to come into those office buildings, we’re going to have to change our behaviors for a period of time,” Iacono said.Building occupants at Cadillac Fairview office properties will be required to wear non-medical face masks or coverings in elevators and they’ll be “strongly encouraged” to wear them in common areas, including the underground PATH network that links downtown office buildings in Canada’s largest city.Commercial landlords including Brookfield Properties and Oxford Properties Group have already put down social distance markings and signage throughout downtown. But the many bankers, investment managers, accountants and lawyers who typically populate Toronto’s cluster of skyscrapers likely haven’t seen them yet due to weeks of working from home.In the depths of the pandemic shutdown the number of people in office buildings were no more than 5% to 10% of normal levels, Iacono estimated. He got a first-hand look at how the city’s core has become a ghost town a couple weeks ago during a visit to his office by the shuttered Eaton Centre to sign some paperwork.“The mall under normal circumstances has 53 million people a year going through it, so to see Toronto Eaton Centre as empty as it was on the day that I was there was a little dystopian,” he said. “I took the elevator up to my office and we had two people on our floor.”Even with restrictions easing, Iacono doesn’t anticipate a rush back to the office. Ontario has kept schools and daycares closed, which means a slow return for many workers.In markets that have reopened, Iacono is seeing between 15% and 30% of office workers returning at first, with that percentage increasing over time.“I try to dispel the notion that on the first day that the government lifts restrictions in the market that everybody shows up back at the office all at the same time like any normal day pre-Covid,” he said. “That’s not going to be the case.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The United States Oil Fund, the biggest oil exchange-traded fund in the world, said on Thursday that RBC Capital Markets had stopped it from buying any more oil futures, in a step that could force USO to scale back or adjust its operations. Meanwhile Royal Dutch Shell said it would no longer act as a dealer for WisdomTree — a move that pushed the fund manager to shut eight crude oil-based products as well as a carbon price tracker that have combined assets of about $550m. In March a drop in oil prices to the lowest level in almost two decades lured in a rush of amateur investors expecting to see a rebound, but a fresh plunge in prices the following month left many of them nursing losses.
Royal Bank (RY) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
TORONTO , May 20, 2020 /CNW/ - Today, RBC announced a new virtual performance series, First Up with RBCxMusic that will support and promote emerging Canadian recording artists and musicians through the challenging circumstances caused by the COVID-19 pandemic. Musicians and recording artists who traditionally rely on income from paid performances continue to experience financial hardship with the suspension of live events. According to a recent survey by Music Canada and Connect Music Licensing, nearly half of artists reported they have lost more than 75% of their income since the crisis.
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Shares of the bank had had a rough start to the year, but it currently offers an over 7% dividend yield Continue reading...
Royal Bank of Canada announces results of NVCC Non-Cumulative 5-Year Rate Reset First Preferred Shares Series BD conversion privileges
Sara Mahaffy, U.S. Equity Strategist at RBC Capital Markets By John Jannarone The coronavirus pandemic has prompted companies to take extraordinary measures, including actions and statements that demonstrate their commitment to environmental, social, and governance (ESG) matters, according to Sara Mahaffy, U.S. Equity Strategist at RBC Capital Markets, the investment bank within Royal Bank of […]
(Bloomberg) -- Saudi Arabia’s state-controlled oil giant retained its massive dividend despite a 25% plunge in profit, and signaled it would keep spending in check as it braces for deeper damage from the oil crisis.Saudi Aramco, the world’s most valuable listed company, will pay a dividend of $18.75 billion for the first three months of 2020. That would leave it on track to meet its full-year goal of $75 billion, though it didn’t specify if it was still committed to that number.The payout is crucial for the kingdom, which holds about 98% of Aramco and is facing its worst financial turmoil in decades as revenue falls. On Monday, the government tripled value-added tax and cut bureaucrats’ allowances as it looks to rein in a fiscal deficit that could reach 13% of gross domestic product this year.At the time of Aramco’s record initial public offering in December, the dividend was a huge part of its appeal. A stress test carried out by JPMorgan Chase & Co. showed that if oil fell to $40 a barrel and production was 9 million barrels a day, Aramco would only remain within its self-imposed borrowing target if it cut the dividend by 30% and slashed spending dramatically.Arab Light crude, one of the nation’s main grades, plunged to as little as $13.34 a barrel last month as an OPEC+ agreement to curb supply fell apart and Saudi Arabia ramped up production. The kingdom has now changed tack and pledged to reduce output to an 18-year-low of 7.5 million barrels a day in June.The war over market share started just as the first quarter was ending, and the impact of low prices will probably be more pronounced in the second quarter. It was in April that benchmark prices turned negative in the U.S. for the first time.“Clearly, Aramco’s financial metrics will deteriorate significantly in the second quarter, like its peers,” said Biraj Borkhataria and Erwan Keroureda, energy analysts at Royal Bank of Canada.Big Oil’s generous payouts have long been a key attraction for shareholders, but now they are threatened. Exxon Mobil Corp. last month froze its dividend for the first time in 13 years while slashing capital expenditure, and Royal Dutch Shell Plc cut payouts for the first time since the Second World War.Aramco’s first quarter free cashflow came in at $15 billion, less than the dividend for the period.“Effectively, Aramco would be borrowing to pay its dividend, which cannot be sustainable in the long term,” said analysts at AllianceBernstein including Neil Beveridge and Oswald Clint.Crude Truce“We retain significant flexibility to adjust expenditures and have considerable experience in managing the business through times of adversity,” Aramco’s Chief Executive Officer Amin Nasser said. “This resilience will enable us to continue delivering on our commitments to our shareholders.”Aramco’s income declined 25% year-on-year to 62.48 billion riyals ($16.6 billion) between January and March, less than the consensus forecast of around $17.5 billion. Refining swung to a loss before earnings and tax are included, while production operations earned almost $38 billion. Aramco continues to forecast between $25 billion and $30 billion of capital spending this year but expenditure for 2021 is under review, it said.It could generate about $133 billion for the government in 2020 across royalties, taxes and dividends, according to Credit Suisse Group AG. That’s “a far cry from what it had expected originally and insufficient to cover the original government budget,” analyst Thomas Adolff said in a research note.Saudi Arabia needs an oil price of $76 a barrel to balance its budget this year, according to the International Monetary Fund. But efforts to contain the coronavirus pandemic by shuttering swaths of the world economy have seen Brent crude more than halve since the end of 2019 to $30.33 a barrel.Aramco has already decreased spending to protect shareholder payouts. The Dhahran-based company said in March that it would limit capital expenditure to $30 billion in 2020, down from previous plans to spend as much as $40 billion.As well as the dividend, major spending commitments include the first installment for a $69 billion acquisition of a stake in Saudi Basic Industries Corp. Aramco is buying 70% of the chemicals maker from the kingdom’s sovereign wealth fund.The takeover’s on track to close by the end of June, according to a spokesperson.“Looking ahead to the remainder of 2020, we expect the impact of the Covid-19 pandemic on global energy demand and oil prices to weigh on our earnings,” Nasser, the chief executive, said. “We continue to reinforce the business during this period by reducing our capex and driving operational excellence. Longer term we remain confident that demand for energy will rebound as global economies recover.”Aramco’s stock rose 1.3% to 31.30 riyals by 1:53 p.m. in Riyadh. It is down 11% this year, compared with Brent’s 54% drop. The company’s market value has declined from a peak of over $2 trillion to $1.6 trillion, still $200 billion more than that of Microsoft Corp., the second-biggest firm globally.(Updates throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Like people, whole countries can have pre-existing conditions. A particularly insidious one is oil dependency, which can leave a state destitute at the very moment it requires all its strength. In recent years, crises in Venezuela and Libya have sent shockwaves through the global oil market. The country to watch in this year of Covid-19 is Nigeria.Late last month, the International Monetary Fund approved $3.4 billion of emergency funding for Nigeria. Official figures suggest the spread of Covid-19 there has been low. But as analysts at the Council on Foreign Relations point out, only about 12,000 Nigerians out of a population of more than 200 million had been tested as of two weeks ago. Last month, the disease claimed Abba Kyari, the powerful chief of staff to President Muhammadu Buhari, a political bombshell. Meanwhile, there is no denying the pandemic’s impact on oil, which accounts for roughly 10% of Nigeria’s economy (more on that figure below).While Nigeria has supplied more secretary generals of OPEC than any other country — including the current one — it is also among the group’s weakest members. Nigeria has ranked lowest within OPEC in terms of oil export revenue per capita virtually every year this century.(1)As Nigeria’s population swelled, oil production dwindled. Helima Croft, a former CIA analyst who now heads global commodity strategy at RBC Capital Markets, recalls the years just after the 9/11 attacks. Nigeria, having recently transitioned out of military rule, was regarded as a potential “fulcrum of U.S. energy policy,” supplying more barrels from outside the Middle East. Back then, it produced more than two million barrels a day, of which about 40% was shipped to the U.S., and Croft remembers projections at the time for production to double.Things didn’t work out that way.“Nigeria’s challenge, that pre-dates Covid by at least a decade, is lack of investment in the oil sector in Nigeria,” says Matthew Page, an associate fellow at Chatham House, a London-based think tank, and former U.S. intelligence expert on Nigeria. Unrest in the Niger Delta since the 1990s intensified after 2003 with attacks directed increasingly at oil infrastructure. This, combined with persistent corruption, deterred foreign oil companies(2). By the mid-2010s, with shale oil starting to transform the Atlantic oil market, there was even less reason to invest in Nigerian barrels. President George W. Bush was the last U.S. president to visit a country whose oil supply is no longer viewed in Washington as critical; President Donald Trump slapped immigration restrictions on Nigeria in February. The Covid-19 crisis, coming amid mounting expectations of peak oil demand anyway, means even less incentive for foreign oil companies to deploy scarce dollars there.Oil sits at the nexus of Nigeria’s politics, economy and security. Even though it accounts for only about one-tenth of GDP, it generates more than half of government revenue. And government revenue can also be thought of as a form of oil, greasing the complex machine that is Nigeria: more than 200 million people split among more than 300 ethnic groups(3), encompassing Islam and Christianity and spread across 36 states. While the economy is relatively diversified, many Nigerians rely on subsistence farming or work for the civil service. Nigeria is estimated to account for one in seven of the world’s very poorest people.(4) Outside of Lagos, large parts of the country rely heavily on oil-funded allocations from central government. Peace deals with militant groups are sealed with cash. And the government funds security forces fighting Boko Haram’s jihadists in the northeast of the country.“Where this becomes problematic, in terms of socio-political dynamics, is that oil money is one way in which Nigeria smooths over its poor governance and its lack of services,” says Judd Devermont, who directs the Africa Program at the Center for Strategic and International Studies, a Washington-based think tank. “Nigeria’s always been very effective at managing one or two crises at a time,” he adds — before listing the current slate of issues: the oil crash, Covid-19, Boko Haram, clashes between farmers and herders in Nigeria’s middle belt, an uptick in unrest in the northwest. Despite its fault lines and weaknesses, Nigeria has endured multiple crises in the past. What’s different this time is the sheer multiplicity of problems against a backdrop of weak oil prices — and at a time when the medium and long-term health of the oil market is already in question. In a forthcoming essay for Chatham House, Page lays out a grim set of cascading effects whereby the government, with all of $72 million in its rainy-day fund, can’t cut checks to state governments, which in turn can’t pay the obligations they’ve built up on the back of oil money. And it’s all too easy to imagine a vicious circle developing whereby the government struggles to pay off militants in the Delta region, who then resort to the old tactic of disrupting oil supply, thereby exacerbating the lack of funds.The risk of economic and political disruption in Africa’s biggest oil exporter is rising. Today’s market, choking on its own supply, may not particularly care right now.But Nigeria’s situation, although it reflects the country’s unique characteristics, also shares something in common with other petro-states. It’s an inherently fragile system — beset by corruption, regular bouts of violence, economic mismanagement and weak institutions — that has been held together with oil rents. At the other end of the scale, Saudi Arabia has a far healthier oil industry; a more cohesive state; a smaller, wealthier population; and a giant rainy-day fund. Yet it also faces potentially existential challenges to its oil-funded model.The crisis for Nigeria isn’t so much that oil prices are low; rather that it is hardwired for much higher prices. The oil market’s slow-burning crisis is that so much of its supply depends on such countries.(1) Ecuador ranked lower in 2014 with net oil export earnings per head of just $367 (2018 dollars). Source: Energy Information Administration.(2) Nigeria ranked 146 out of 180 in Transparency International's "Corruption Perceptions Index 2019."(3) The three largest - the Hausa/Fulani, Yoruba and Igbo - account for about half the population. (Source: "Nigeria: What Everyone Needs To Know" (Oxford University Press, 2018).(4) Source: World Poverty Clock.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The e-commerce rebels are making their advance.Last October, Shopify Inc. CEO Tobi Lutke said his company’s goal was to “arm the rebels” against the Amazon.com Inc. empire. Since then, the mantra has become a rallying cry for Shopify’s employees and the merchant customers that use its e-commerce store software. And now, the business turmoil sparked by the Covid-19 pandemic is creating an opportunity for the online seller rivals to gain some valuable ground over their giant competitor.Amazon is widely considered one of the biggest beneficiaries of the e-commerce boom, as self-isolating consumers shift their shopping behavior to purchase more online. The numbers are bearing out the trend: While most companies are suffering from dramatic business slowdowns, Amazon last week posted first-quarter revenue of $75.5 billion, up 26% from a year earlier, and projected continued momentum by giving a sales growth forecast range of 18% to 28% for the June quarter.(1) Amazon’s growth hasn’t come without issues, though. The company has faced severe logistical challenges to meet demand – including the rapid hiring of 175,000 additional workers. And the stress put on its supply chain and delivery networks, along with the prioritization of certain essential items, has led to shipping delays and many shortages for its customers. Questions revolving around workplace safety have also dogged Amazon.With Amazon so much in the spotlight, it may be surprising to know that consumers are increasingly going elsewhere for their online shopping needs. In fact, several e-commerce sellers are showing dramatically faster growth rates than the tech giant. On Wednesday, Shopify revealed the aggregated online sales of its merchant customer base grew 46% in the first quarter and accelerated further in April. That news came after online furniture retailer Wayfair Inc. said it had revenue growth of roughly 90% so far in its second quarter, a significant increase versus the 20% growth it generated for the three months ended in March.Traditional retailers are flourishing as well. On April 23, Target Corp. said its online business had risen more than 275% month-to-date to that point, while electronics retailer Best Buy Co. also pointed last month to recent triple-digit growth trends for its website. Costco Wholesale Corp., meanwhile, reported April e-commerce sales growth of 86%. For all the antitrust scrutiny Amazon has gotten for crushing the competition in e-commerce with its leading 37% share in the U.S. last year, according to eMarketer, these recent numbers point to share losses for the tech giant. Rivals now have an opening to show they, too, can delight customers with good service and build consumer loyalty. And if they can take advantage, perhaps the e-commerce race isn’t over yet.What is the clearest signal investors, at least, are noticing the progress? On Wednesday, Shopify briefly surpassed Royal Bank of Canada as the most valuable company in Canada for the first time. Yes, the rebels may have a fighting chance.(1) Amazon first-quarter revenueincludes its sales at its online and physical stores, third-party seller services, subscription services, AWS cloud-computing sales and other businesses.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
TORONTO , May 7, 2020 /CNW/ - While continuing to provide financial relief to thousands of Canadians coping with the impacts of COVID-19, RBC is also focusing on keeping seniors safe by helping them bank online with confidence. RBC has introduced customized support, including special services for seniors, reinforcing the message: be safe and stay home. In just a few weeks, digital enrollment by clients aged 60+ has grown significantly, as has adoption of electronic money transfers and online payments.
(Bloomberg) -- Shopify Inc. surged on Wednesday to become Canada’s most valuable company -- but can the e-commerce giant survive being No. 1?Ottawa-based Shopify edged past Royal Bank of Canada to become the largest publicly listed company in Canada. The achievement comes with a dubious distinction, however: those that leapfrogged the value of Canada’s largest bank in the past have faltered.Royal Bank, incorporated in 1869, has been Canada’s most valuable company for years, but has been been eclipsed on a few occasions. Shopify closed with a market value of C$121.3 billion ($85.6 billion), surpassing Royal Bank’s C$120.5 billion.The last company to surpass Royal Bank’s market capitalization was drugmaker Valeant Pharmaceuticals International Inc. in July 2015. Months later, the value of the Quebec-based company plunged amid controversies over business practices, accounting and drug pricing. Valeant has since been renamed Bausch Health Companies Inc. and has new management and a different ticker symbol.Before that, BlackBerry Ltd. --- the inventor of the smartphone and then known as Research in Motion Ltd. -- crossed Royal Bank briefly in 2007. It held the top spot for about five months in 2008, before Apple Inc.’s iPhone and other handset makers rose up to steal its market away.Further back, Nortel Networks Corp. became the biggest Canadian company in 2000, swelling to a market value of C$366 billion and accounting for as much as 35% of Canada’s benchmark index, before crashing in the tech wreck. The telecommunications-equipment maker ultimately filed for bankruptcy in 2009 and was liquidated.The dramatic collapse of two Canadian tech giants in a country more known for being hewers of wood and drawers of water has hung over the country’s corporate psyche for years. So Shopify’s rise has been cheered on by many.“I think it’s obvious in hindsight the leadership of both those companies got disconnected from their underlying markets,” said Eric Jackson, founder of a Toronto-based tech-focused hedge fund EMJ Capital Ltd., referring to BlackBerry and Nortel.Jackson believes Shopify “should be held up as a poster child for what Canada should be trying to encourage in it’s tech sector because it’s been remarkable what they’ve done,” he said. Jackson had owned the company’s stock but doesn’t currently have a position. Its U.S.-listed shares have risen by 43 times since the initial public offering at $17 in 2015.Too Fast?This year’s rally, which has seen the stock double, has drawn its doubters.“On just about any valuation metric, this is one of the most expensive stocks in Techland,” Mark Mahaney, an analyst at RBC Capital Markets in San Francisco told clients in a note Wednesday. Shopify also holds the highest sales multiple, though has the largest sales growth outlook, RBC added. The bank rates Shopify with the equivalent of a buy.The rally has made founder and chief executive officer Tobi Lutke, Canada’s fourth-richest person, according to the Bloomberg Billionaires Index. The 39-year-old has added $2.8 billion to his wealth this year, and is now worth $6.3 billion. The billionaire has about 7% of Shopify, according to its 2019 proxy circular.Lutke, a German immigrant with vivid blue eyes and a penchant for tweed caps, began building software to launch an online snowboard store in 2004. It became obvious that the software was more valuable than the snowboards, according to his website profile, and he went on to launch the Shopify platform in 2006. RBC was incorporated in 1869.Shopify sells tools to help companies set up an online, a business model seen flourishing during the coronavirus pandemic that has shuttered bricks and mortar stores. In April, the company’s chief technology officer tweeted Shopify was handling “Black Friday-level traffic every day” to bring thousands of businesses online.Amazon ComparisonAt Bloomberg’s Sooner Than You Think conference in New York last year, Lutke said Shopify isn’t competing with Amazon.com Inc. but helping other people do so.“They’ve obviously become the anti-Amazon, they’re all about empowering everybody else except Amazon on the online e-commerce world to be successful and they’ve expanded and expanded their suite of services,” Jackson said.He believes Shopify has the opportunity to keep rising and have a market value of several hundred billion dollars in the years ahead.“They are still just getting going. People who complain they are ‘too expensive’ don’t understand how much revenue and profits they’ll drive in the years ahead,” Jackson said.(Updates with new information on value of Lutke’s stake, gain since IPO.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Shopify Inc. has become Canada’s largest public company, soaring past the nation’s largest bank amid growing conviction the future of retailing lies online.The e-commerce company’s shares jumped 6.8% to a record, pushing its market value to C$121.6 billion ($86.1 billion). That nudged it past Royal Bank of Canada, which was up 0.1% to a market value of C$120.8 billion.Shopify’s soared Wednesday after reporting first-quarter revenue that topped analysts’ expectations as it brought more businesses online during the coronavirus pandemic.Sales grew by 47% to $470 million from the same quarter a year ago, Ottawa-based Shopify said in a statement Wednesday. Analysts had expected about $443 million, according to data compiled by Bloomberg.Shares of the company, which launched its Shopify platform in 2006, have doubled this year, making it the best-performing Canadian company on the S&P/TSX Composite Index. Shares of Royal Bank, incorporated in 1869, have dropped 17%.“We are working as fast as we can to support our merchants by re-tooling our products to help them adapt to this new reality,” Chief Executive Officer Tobi Lutke said in the quarterly release.The key metric of gross merchandise volume, which represents the value of all goods sold on the platform, increased 46% or $5.5 billion to $17.4 billion from a year earlier. Analysts were expecting a 40% increase on a year-over-year basis to $16.9 billion.Still, Shopify noted the drop in point-of-sale purchases from bricks-and-mortar stores and questioned the sustainability of some of the online switch.Shopify suspended its 2020 financial guidance in April. Today, it said it is closely monitoring the impact rising unemployment has on new shop creation on its platform and consumer spending, the rate at which consumer spending habits transition to online shopping and the ability of brick-and mortar retail merchants to shift sales online.Moving OnlineIt reported gross merchandise volume through its point-of-sale channel fell 71% between March 31 and April 24 as stores shut down through the pandemic. Companies also downgraded from its Shopify Plus plan to cheaper-priced options.Yet, the switch online appeared fairly painless for many. Shopify retailers managed to replace 94% of the volume with online sales, according to the company statement.“Retail merchants are adapting quickly to social-distance selling, as 26% of our brick-and-mortar merchants in our English-speaking geographies are now using some form of local in-store/curbside pickup and delivery solution, compared to 2% at the end of February,” Shopify said.Colin Sebastian, an analyst at Robert W. Baird, said the strong results reinforced his firm’s positive view of Shopify’s growth strategy. Its ability to adapt quickly was also a reflection of “strong product and engineering capabilities.” But sustainability of the recent sales growth and how that translated to revenues will be key, he added.In April, its Chief Technology Officer Jean-Michel Lemieux said the e-commerce company was seeing U.S. Black Friday-type of traffic as it adds “thousands” of businesses to its platform amid the coronavirus outbreak. Many brick-and-mortar businesses have used Shopify to keep their companies afloat as nationwide lockdowns force retail store closures across the world.Shopify offers tools to allow businesses to open their own digital stores across multiple channels, including social media. The company launched a redesigned point-of-sale service earlier this month that brings online and offline sales together, offers curbside pickup and local delivery options and greater flexibility to move inventory between various locations. Its rivals include tech giant Amazon.com Inc. and Square Inc.Even so, there has been a growing sense that Shopify’s stock rally may be overdone. Last week, Canaccord Genuity downgraded the stock, warning “we’re not entirely convinced” that gross merchandise volume “is as bulletproof as perceived.Read more: Shopify Too Hot to Handle for Some Analysts After Latest SurgeThe company said new stores created on it platform grew 62% between March 13 and April 24 versus the prior six weeks, driven by both first time and established sellers. But it added, “it is unclear how many in this cohort will sustainably generate sales, which is the primary determinant of merchant longevity on our platform.”Adjusted net income rose to $22.3 million, or 19 cents a share in the quarter from 6 cents a year earlier.(Updates with market values.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
RBC Global Asset Management Inc. announces April sales results for RBC Funds, PH&N Funds and BlueBay Funds
Some Canadian banks have frozen new lending for smaller commercial property purchases, in some cases withdrawing letters of intent, as the coronavirus crisis raises concerns about owners’ ability to make payments, mortgage and real estate brokers said. The tighter lending environment will likely result in a rise in distressed sales of commercial properties in coming months as buyers vanish, industry players said. "If you’re a landlord, and looking to refinance, you can’t get that," said Roelof van Dijk, director of market analytics at CoStar Group.
(Bloomberg) -- Alphabet Inc.’s advertising sales slowdown in March and April wasn’t as severe as some analysts had feared.A number of firms lifted their price targets on the Google parent after quarterly results that also benefited from revenue growth in the company’s YouTube business and a strong cloud division performance. The average target currently stands at $1,501, up from $1,452 over the weekend.The Covid-19 pandemic has led to more usage across the group’s assets, MKM Partners analyst Rohit Kulkarni wrote in a note. “More people are searching on Google, watching more YouTube videos, downloading Android apps right now,” Kulkarni said as he reiterated his buy rating.Shares gained as much as 9.5% in their biggest one-day gain since July 2019. While the stock has gained nearly 30% off a March low, it remains more than 10% below a February peak.Here’s a summary of what analysts had to say.RBC, Mark S.F. MahaneyOutperform, PT raised to $1,500 from $1,350Company reported results that were better than feared.YouTube and Cloud revenue were robust, but March and April have seen major advertising revenue weakness.Morgan Stanley, Brian NowakOverweight, PT raised to $1,400 from $1,3102020 and 2021 revenue estimates raised by 4% and 3%, respectively, given YouTube’s better first quarter and stronger-than-expected March search trends.While search revenue trends deteriorated, the company hinted it’s seen some very early signs of users returning to commercial behavior.2020 and 2021 share buyback forecasts increased by about $6b and $4b, or 27% and 18%, respectively.Jefferies, Brent ThillBuy, PT $1,450Advertising revenue slowed significantly in late March, but less than some had feared.There are some faint signs of recovery in the ad business, and non-ad segments like Cloud held up well.Notes first quarter share repurchase of $8.5 billion was a record, and increased more than $2 billion from 4Q.Loup Ventures, Gene MunsterInitial calculations suggest revenue was flat year-over-year in the final three weeks of the quarter, “not bad, all things considered.”While Google has a sustainable ad business that’s “a fabric of our lives,” top-performing companies post-pandemic will be focused more on working from home: healthcare, wearables, augmented reality, and mobility.(Updates trading to market open)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- With interest rates near zero, Federal Reserve policy makers are likely to turn attention to other steps they could take to ensure a strong U.S. economic rebound once the coronavirus lock-down ends.The Federal Open Market Committee is all but certain to keep its benchmark overnight rate in a target range of 0-.25%, where it was lowered at an unscheduled FOMC on March 15 to help soften the pandemic’s blow. The committee will release a statement at 2 p.m. with Chairman Jerome Powell holding a press conference 30 minutes later. Forecasts are not scheduled to be released at this meeting.“Never underestimate the Fed,” said Diane Swonk, chief economist with Grant Thornton in Chicago. “The Fed will affirm it is still willing to use all tools at its disposal.” A Bloomberg survey of economists expects the central bank to keep rates near zero for three or more years.Facing an unprecedented disruption that has put 26.5 million people out of work in the last five weeks, the Fed has slashed rates and pledged up to $2.3 trillion in loans to aid businesses and state and local governments. Government data released on Wednesday showed the U.S. economy shrank at an annualized 4.8% pace in the first quarter, the steepest decline since 2008.Powell can expect questions on whether the Fed is prepared to expand the scope of some of its lending programs, provide assistance to specific industries, and is it considering yield-curve targeting, among other topics.Here’s a preview of what to expect:Lending FacilitiesThe Fed has already announced an expansion of its lending to municipalities to include smaller cities and counties than initially planned. Another area that might need support is mortgage servicers, and Powell has previously noted the important role the housing market plays in the economy.In addition, Treasury Secretary Steven Mnuchin has raised the possibility of extending aid to oil companies struggling with the collapse in the price of oil. But that prospect may face significant hurdles because the central bank is averse to lending to specific industries to avoid picking winners and losers.Because lending facilities are authorized by the Fed’s board of governors, they could be announced in conjunction with an FOMC meeting or at another time.Forward GuidanceForward guidance for interest rates will be a key issue for the committee. At the last meeting, the FOMC said it would keep rates near zero until the economy weathers the crisis and moves toward meeting the central bank’s full employment and price stability mandates.“The current forward guidance is confusing,” said Roberto Perli, a former Fed economist and partner at Cornerstone Macro LLC in Washington. “I expect the FOMC to clarify and lean more” in the direction of meeting its mandates, which may mean zero rates for several years.Some Fed watchers advocate officials adopt specific thresholds to anchor how long they will keep rates near zero, including reprising targets the Fed used back in 2012 to assure investors that there would be no rate hike until unemployment falls to a certain level and inflation rises.But this meeting may be too soon to provide that level of guidance, which is deliberately designed to stimulate economic activity, given millions of Americans are still sheltering from the virus at home.What Bloomberg Economists Say“As consequential as Fed actions have been over the past several weeks, Bloomberg Economics expects the April FOMC meeting to be comparatively quiet with no major policy announcements.”\-- Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza WingerFOMC StatementThe committee will need to adjust its statement to reflect very weak economic data since the last meeting, including record jobless claims, rising unemployment and falling consumption. First-quarter economic growth likely declined by the most since the last recession, according to economists surveyed by Bloomberg.“I’d expect the opening paragraph to reference the grim employment and consumer spending data that have come out, as well as the unprecedented decline in energy prices and the broader disinflationary forces that are at work,” said Jonathan Wright, economics professor at Johns Hopkins University in Baltimore and a former Fed economist.Balance SheetThe FOMC is also certain to discuss its balance sheet expansion with purchases of Treasury notes and mortgage-backed securities during the crisis. It has bought hundreds of billions of dollars of bonds in recent weeks, ballooning its balance sheet to a record $6.57 trillion and declaring on March 23 that its purchases would be open-ended and “in the amounts needed to support smooth market functioning.” But it has more recently been scaling back the buying as market conditions calmed, though it continues to add to its securities holdings.While the Fed has primarily been buying assets to smooth market functioning, one option would be to explicitly shift to say it was buying securities to try to push longer term rates lower as a financial stimulus measure also known as quantitative easing. That might be an announcement for the months ahead as the economy reopens, rather than this meeting with the lock-down still in place in many parts of the U.S.Yield Curve ControlYield curve control -- a cousin of QE -- where the Fed announces it is targeting a specific yield for a specific maturity of Treasury securities, has been discussed by policy makers including Governor Lael Brainard as an option to strengthen the central bank’s forward guidance. At the moment the Fed sets the overnight rate and allows market forces to determine longer-term borrowing costs.The Bank of Japan began experimenting with yield-curve control in 2016 and currently maintains a target of 0% for the yield on 10-year government bonds, versus a target of -0.1% for its benchmark rate. Advocates say the benefit is a central bank may have to purchase fewer assets overall if it commits to pegging yields at a certain maturity.Again, it may be too soon for the Fed to announce a decision to adopt such a measure -- but Powell could certainly flag it as a possibility in the future if it comes up during the press conference.Interest on ReservesOfficials could tweak a secondary rate, known as interest on excess reserves, which helps to keep their benchmark rate in its target range. But that would be a technical move, not a change in policy.The effective rate -- the average rate paid by U.S. banks when borrowing dollars overnight from other banks -- dipped to 0.04% on April 27 after trading at 0.05% for most of April. The Fed has on multiple occasions adjusted IOER when the effective rate drifted to within 5 basis points of the range’s upper or lower bound.Press ConferencePowell, in his recent public appearances including on NBC’s “Today” show on March 26, has tried to strike a reassuring posture, noting that while the economy is declining, this is not a typical downturn and he remains hopeful for a robust recovery.“Powell is unlikely to change his tone much, while reiterating his recent optimism that there’s no reason that the economy can’t quickly recover following the end of the Covid-19 pandemic,” said Tom Garretson, senior portfolio strategist for RBC Wealth Management.(Updates with GDP report in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
RBC Investor & Treasury Services: Defined benefit pension plans lost ground in wake of steepest market selloff in recent history
(Bloomberg Opinion) -- Alphabet Inc., the parent of digital-search giant Google, is facing one of the most difficult internet ad-spending markets in its history. The company’s recent actions signal it is taking the prospect of a downturn seriously.Late Tuesday, Alphabet reported March-quarter sales results that beat Wall Street estimates. The company posted first-quarter revenue ex-traffic acquisition costs of $33.7 billion, up 14% from a year earlier, versus the $32.6 billion Bloomberg consensus. In its earnings release, CFO Ruth Porat said the company’s performance was strong during the first two months of the quarter, before experiencing a “significant slowdown in ad revenues” in the month of March. She added on the investor call that the company hasn’t seen a further deterioration thus far in April, but cautioned the second quarter will be a “difficult one” for the company. Alphabet shares climbed 7% in post-market trading, after a 3% decline during the regular session, with investors seemingly taking solace that the environment hasn’t gotten materially worse in recent weeks. The backward-looking results aren’t as important, compared to what lies ahead — and the future still looks murky. Alphabet simply won’t be immune to the impending global recession triggered by the Covid-19 pandemic. For all of its disparate subsidiaries, the company’s core business is still paid search advertising. To illustrate, RBC Capital Markets estimates the Google search engine accounts for more than 80% of Alphabet’s earnings.On the earnings call, management repeatedly said Google’s ad business is dependent on an improvement in the macro-economic environment. That’s a problem, as many industries that are key advertising customers are seeing their revenues plummet — including travel, physical retail stores, restaurants, outdoor entertainment, autos and apparel. As a result, these sectors are likely to slash their marketing budgets for the next few quarters. According to a recent survey by the Interactive Advertising Bureau, 70% of advertisers have already cut their digital ad spend budgets by one-third on average for the March to June time period, with paid search plans down 25%.While Alphabet says it will invest in its long-term opportunities, it is also clearly aware it can’t continue business as usual. Earlier this month, CEO Sundar Pichai sent an email to his staff, saying the company will “significantly slow down” the pace of hiring and adjust its pace of investments. And last week, CNBC reported the company plans to cut marketing budgets by as much as 50% for the second half of the year, citing internal documents. The company confirmed it will reduce spending on promotions during the earnings call.Fortunately for Alphabet, the company’s leading market position should allow it to implement austerity without fear of getting usurped. According to eMarketer, Google had more than 60% share of the search ad market last year. Consequently, the company may have freedom to lower costs and easily maintain its leadership position. Frankly, Google doesn’t need to worry too much about consumers switching over to Microsoft’s Bing, even if it takes the foot off the accelerator a bit. Further, the company also has the financial wherewithal to last through even the worst recession with $117 billion in cash and just $5 billion in debt on its balance sheet.But still, Alphabet is prudent to hunker down with the internet ad cliff likely upon us. It will weather the pandemic and come out on the other side, but many of its customers will not.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.