BMO.TO - Bank of Montreal

Toronto - Toronto Delayed Price. Currency in CAD
99.14
-0.29 (-0.29%)
As of 12:25PM EDT. Market open.
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Previous Close99.43
Open99.54
Bid99.12 x 0
Ask99.15 x 0
Day's Range98.95 - 99.82
52 Week Range86.25 - 109.00
Volume468,199
Avg. Volume1,369,707
Market Cap63.333B
Beta (3Y Monthly)1.28
PE Ratio (TTM)10.52
EPS (TTM)9.43
Earnings DateAug 27, 2019
Forward Dividend & Yield4.12 (4.14%)
Ex-Dividend Date2019-07-31
1y Target Est108.85
  • Financial Timesyesterday

    Sterling plunges after Tory rivals harden Brexit stance

    Brexit strategy could lead Britain to a no-deal exit from the EU within months. Mr Johnson’s demand that the Irish backstop must be ditched has been repeatedly rejected by Brussels, with one EU diplomat warning that the frontrunner in the Tory leadership contest appeared to be living in “a fantasy” world. Mr Johnson’s allies denied a Sky News report that the man who hopes to become prime minister next week could suspend parliament for two weeks before the scheduled Brexit day on October 31 to stop MPs blocking it.

  • YouTube's Trampled Foes Plot Antitrust Revenge
    Bloomberg2 days ago

    YouTube's Trampled Foes Plot Antitrust Revenge

    (Bloomberg) -- Brian O’Kelley built AppNexus Inc. to help companies advertise anywhere on the internet. Its software plugged into virtually every digital ad-trading hub, including those from Google, the biggest ad seller, and Google’s YouTube video service. By 2014, AppNexus was valued at $1.2 billion.Then, in 2015, Google stopped letting companies buy ads on YouTube using outside software. The move got more marketers to use Google ad services. It also created a glaring hole for AppNexus: The startup could no longer give customers access to the largest supply of online video. It never really recovered.“They crushed our growth and ruined our product," said O’Kelley, who stepped down as AppNexus chief executive officer last year. YouTube represented a huge portion of the video inventory that AppNexus offered to advertisers. Those marketers couldn’t just ignore YouTube "because it’s pretty much a monopoly in that space," he added. "It’s not a supply-and-demand problem. It’s a ‘You just broke our entire business’ problem.’”The story is familiar to advertising and media entrepreneurs who built businesses around YouTube, only to be hobbled when the video giant changed the rules of engagement. Google used YouTube’s popularity to lure creators, media companies and tech firms onto the service, gaining access to more videos and ad space. YouTube then used that supply to control ad prices and amass data about viewers, squeezing out anyone that tried to compete, according to interviews with more than a dozen partners, rivals and former employees. Many asked not to be identified discussing sensitive information about a powerful industry player.YouTube didn’t wipe out competition in one fell swoop, or act maliciously, according to these people. Instead, YouTube made decisions to consolidate the video ad-buying process, with little regard for partners or competition, and few regulatory checks. That left a graveyard of failed companies in its wake and fewer choices for advertisers, the people said.In digital video advertising, YouTube has no peers. The U.S. market harnessed $16.3 billion in ad spending last year, according to the Interactive Advertising Bureau. YouTube accounted for the majority of that. Globally, the video giant generated $16 billion in 2018 sales, BMO Capital Markets estimates.YouTube disputes this depiction of its dominance. The company said it shares more than half its ad sales with video producers, and competes in a much bigger market than just online video ads. "Viewers have never had more choice when it comes to where to watch their favorite videos," YouTube spokeswoman Andrea Faville wrote in an email. "Similarly, advertisers have a wide and growing array of options, including traditional television, which still accounts for the majority of video ad spend."But U.S. regulators and politicians are now listening to claims that Google and YouTube may have run afoul of the law. The Department of Justice is considering an antitrust investigation of Google. The Federal Trade Commission is probing allegations that YouTube violated privacy laws protecting children, Bloomberg reported earlier this year. Congress, which has multiple investigations into Google and its peers, recently requested an interview with a former YouTube business partner, according to some of the people who spoke with Bloomberg.“If you’re looking into Google, it would be remiss not to look at YouTube,” said Sally Hubbard, director of enforcement strategy for Open Markets Institute, a think tank. “You’ve got monopolies upon monopolies.”YouTube may be preparing for scrutiny. Its executives recently reached out to partners to ask how its practices have affected their ad sales, according to one of the people who spoke with Bloomberg. YouTube did so as part of typical partner relationship management efforts, but this person interpreted the outreach as a sign of YouTube nerves about antitrust regulation.Vevo humbledFew companies show YouTube’s grip on the digital video market better than Vevo, which distributes music videos online from two of the three largest record labels.The company was conceived by Doug Morris, then head of Universal Music Group. Founded in 2009, Vevo collected music videos and original programming, and distributed those clips across the internet – on YouTube, on Yahoo and on Vevo.com. The ultimate goal was to turn Vevo’s site into the MTV of the internet and get higher advertising rates, Morris said.At a lunch with Morris, then Google CEO Eric Schmidt embraced the idea. Vevo could share ad revenue with the internet giant when Vevo clips ran on YouTube.As YouTube grew, though, the relationship frayed. Vevo music videos were popular on YouTube, and advertisers loved them. But YouTube couldn’t sell ads on these clips because Vevo had exclusive rights in every market where it operated. The Google unit set out to take control of this valuable inventory through aggressive contract negotiations, sneaky sales tactics and even an effort to buy its rival outright, according to the people who spoke with Bloomberg.In late 2012, YouTube proposed a new contract that would have allowed it to also sell ads on Vevo videos, and would have reduced Vevo’s share of the revenue from those ads. Google also offered to buy Vevo. When the record labels balked, YouTube said it would take down Vevo music videos before the existing contract expired, according to the people who spoke with Bloomberg.Vevo’s leadership called an emergency board meeting. The company stood to lose millions of dollars if it disappeared from YouTube, which then reached about 1 billion people a month and accounted for most of Vevo’s audience and sales.Vevo executives told YouTube they would file an injunction describing what they said was bullying tactics, and asking a judge to block the video giant from removing Vevo videos, according to former employees and music industry executives. The gambit worked. YouTube agreed to a new deal that let Vevo keep exclusive rights to its ad inventory.In July 2013, Google acquired a minority stake in Vevo. That didn’t give it full control, but offered more visibility into Vevo’s business.YouTube’s attempts to stifle Vevo continued, according to people familiar with the efforts. While it couldn’t access Vevo’s ad inventory, the video giant could reduce its influence, the people said.YouTube encouraged artists to go around Vevo by creating their own YouTube channels to replace the ones operated by Vevo, the people said. Faville, the YouTube spokeswoman, said the company encouraged artists to consolidate their presence on a single "official" channel to avoid confusion. "This product change was a net benefit to fans and artists," she added.YouTube also flirted with the limits of its Vevo deal. Some of YouTube’s sales pitches to advertisers included the Vevo logo and artists such as Rihanna, according to people who saw the documents. The documents suggested that YouTube could run ads on Vevo videos even though YouTube was contractually prohibited from doing so. Vevo executives flagged the problem to YouTube executives, who apologized and blamed the sales team, the people said. Faville called this a one-time error.Vevo tried to send viewers to its own website and mobile app, but YouTube’s algorithms made that risky. The software recommended videos that were watched a lot on YouTube. If Vevo clips were seen elsewhere, those views were not counted by the Google unit. The result: Vevo videos didn’t perform as well on YouTube, according to industry executives. Faville said YouTube’s algorithms don’t factor whether videos direct viewers elsewhere.In 2018, Vevo stopped competing with YouTube for a large consumer audience, shutting its app and website, and cutting product and engineering staff. Around the same time, YouTube secured a deal that gave it what rivals say it wanted all along: the right to sell Vevo’s ads.In thinking about what went wrong, Morris remembers discussing Vevo with Steve Jobs. “Why won’t Vevo be worth billions?” he asked before the Apple Inc. co-founder died in 2011. Jobs said Google already effectively owned Vevo because YouTube had a lock on Vevo’s viewers. "They’ll control it," Jobs warned, according to Morris.Once envisioned as a site that would compete with YouTube for views and ad dollars, Vevo is now mostly a logo with a small sales team.Machinima’s demiseMachinima Inc., like Vevo, started out as an asset for YouTube. In YouTube’s early days, it didn’t have an advertising sales team nor staff managing relationships with individual video creators. Machinima was one of the first companies to assemble a network of YouTube channels and creators. It sold ads on the channels’ behalf, struck deals with brands and developed YouTube stars, including PewDiePie, one of the most popular video bloggers. That success spawned clones, including Maker Studios, Fullscreen and AwesomenessTV. Known as multi-channel networks, or MCNs, they were seen as the cable networks of the future.But the relationship soured as MCNs got big enough to compete for ad dollars. YouTube executives didn’t want third parties getting in between viewers, video creators and advertisers, according to former MCN executives and employees. So YouTube made MCNs superfluous by replicating many of their offerings, while limiting their access to data and tools that would have helped them build their own businesses, these people said.In November 2013, YouTube instituted a policy that made it clear MCNs would need to look beyond YouTube if they wanted to thrive. The company said it would take 45% of ad sales from all partners on YouTube, up from the 30% it collected from some large media companies. Solo creators could survive on a 55% share, but the MCNs couldn’t support their growing staff and expansion plans.“These companies realized advertising sales weren’t enough,” said Peter Csathy, founder of advisory firm CREATV Media. “Too much of a share had to go to YouTube.” YouTube’s Faville said revenue sharing agreements with MCNs didn’t change.The MCNs tried using collective power to get more favorable terms. They wrote a letter asking YouTube to consider changes, but that went nowhere. Some MCN executives pitched their boards on going to the Justice Department to file an antitrust suit against YouTube, but directors refused to fund what would have been a long and expensive legal battle, according to people familiar with the deliberations.Relations between MCNs and YouTube deteriorated under Susan Wojcicki, who took over as chief executive officer of YouTube in 2014. The veteran Google advertising leader corralled the company’s huge digital sales force to focus more on YouTube. She also created Google Preferred, a package of the best-performing videos on YouTube that advertisers could buy.YouTube already sold more video ad space at attractive prices than any media company online. With Google Preferred, YouTube could also compete on quality. Google offered advertisers similar videos as Machinima at lower prices, with better targeting and more volume. YouTube had the relevant clips – and, with data from Google’s other popular services, it knew more about what viewers wanted to see. Smaller media companies like Machinima could not sustain their sales forces selling less-targeted ads at the lower rates offered by Google and YouTube.One by one, the MCNs either shrank, sold themselves or died. Earlier this year, Machinima laid off its remaining employees and ceased operations.AppNexus’s ordealBrian O’Kelley’s AppNexus had a similar experience. It flourished in a market that Google helped create: programmatic online advertising. For years, ads were placed with handshake deals between marketers willing to spend and websites willing to sell. With programmatic software, buying ads became more automated, effective, cheaper and faster. Several firms raised millions of dollars to pursue this opportunity. Rocket Fuel Inc., went public in 2013 valued at more than $2 billion. The Rubicon Project Inc. did an initial public offering in 2014, and AppNexus was tipped to follow.But in 2015, Google made a move that showed how powerful it was in this market. Google removed YouTube inventory from ad exchanges run by other companies including AppNexus. With a few exceptions, any advertiser that wanted to market on YouTube had to use Google’s software or ad exchange.Google saw a business rationale behind the decision. Outside exchanges handled less than 5% of YouTube’s ad slots at the time, according to the company. Also, YouTube’s most popular ad format -- a skippable one that ran before videos, called TrueView -- was "not supported" on external exchanges, YouTube’s Faville said. Keeping such a small slice of ads available to buyers through other exchanges wasn’t worth the extra work.However, O’Kelley and others in the ad-tech industry saw the move as a clear example of Google using YouTube’s assets to favor other parts of its business -- in this case, Google’s ad software -- at the expense of rivals. Five percent of YouTube ads may not be important for Google, but it’s a vast amount for smaller competitors.Dina Srinivasan, a former executive at ad agency WPP Plc, compared Google’s 2015 move to a company decreeing that investors can only trade popular shares on one stock exchange, and through one brokerage firm.Google ad prices are set in an auction and not public. But taking YouTube off outside exchanges probably reduced the number of marketers bidding on its ads, lowering prices, according to Srinivasan. “Google may have absorbed a loss in YouTube revenue for some other reason,” she added. “The question regulators will be asking is whether that reason was to drive out competition.”Despite a short-term dent in YouTube sales, the ploy likely increased the long-term value of Google by billions of dollars because it strengthened the company’s grip on advertising technology, according to O’Kelley. "That’s kind of how monopolies roll," he said.There’s a “no economic sense” test in U.S. antitrust law that may apply here, according Srinivasan. The Justice Department’s top trustbuster Makan Delrahim discussed this in a recent speech about big tech companies. When oil refineries refused to sell themselves to Standard Oil in the late 19th century, the giant cut prices to drive them out of business. Lower prices are the essence of competition, but a powerful company is not allowed to do things that make no business sense just to make it harder for rivals to catch up, he said.YouTube said its tactics were sensible. "Like any business, we make changes to how we operate to reflect the current climate," Faville said. "We make all these decisions with the same goal: to improve the YouTube experience for our users, creators, and advertisers."Since Google changed the YouTube ad-buying process, much of the rest of the programmatic market has withered: Rubicon Project is trading about two-thirds below its IPO price; Rocket Fuel Inc.’s valuation fell below $100 million before it was acquired. The AppNexus IPO never happened and it sold to AT&T Inc. last year for $1.4 billion. The Trade Desk Inc. is a rare thriving player, but it operates in China and other markets where Google is less active.In 2016, several ad tech companies, including AppNexus, met with Justice Department and Federal Trade Commission to discuss the industry, and some complained about YouTube’s behavior, according to O’Kelley. The response was tepid at best, he said.“We had a really hard time getting them to pay attention," O’Kelley recalled. "They would say, ‘It’s hard to understand.’" A spokeswoman for the FTC declined to comment, and the Department of Justice didn’t respond to a request for comment.But now, O’Kelley may have a more attentive audience. In May, he testified before the Senate Judiciary Committee on digital advertising. "This is not a functioning market," he said. "It enables Google, which doesn’t produce content, to monopolize all aspects of the programmatic business and take a disproportionate tax for its trouble."Later, over the phone, O’Kelley was less grim about the political response. "Maybe now they’re paying attention," he said.To contact the reporters on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net;Mark Bergen in San Francisco at mbergen10@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Alistair Barr, Emily BiusoFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Gold Declines as Treasury Yields Advance, Dollar Pares Losses
    Bloomberg6 days ago

    Gold Declines as Treasury Yields Advance, Dollar Pares Losses

    (Bloomberg) -- Gold slipped as the dollar pared losses and yields on U.S. Treasuries surged, damping the appeal of the metal because it doesn’t pay interest.Yields on 10-year Treasuries reached a one-month high after a key measure of U.S. consumer prices rose more than forecast in June. The price report could complicate the Federal Reserve’s assessment of inflation as policy makers weigh an interest-rate cut as soon as this month.Gold “is sort of caught between cross-currents,” Ed Meir, an analyst at INTL FCStone Inc., said by phone. “The bearish influence is the fact that the dollar has come back from being weaker today to unchanged and also the fact that rates are going up in response to the higher inflation numbers we got. So higher rates, stronger dollar is bearish for gold.”Gold futures for August delivery fell 0.4% to $1,406.70 an ounce at 1:32 p.m. on the Comex in New York, after rising as much as 1.2% earlier. An index of the dollar was down 0.1% after falling as much as 0.3%.Exchange-traded funds backed by the precious metal have been rising, with holdings reaching 2,311.3 metric tons as of Wednesday, the most since 2013.The sell-off in gold could be short-lived with central banks signaling a dovish stance, analysts said. Even with stronger-than-expected U.S. inflation data Thursday, traders are still pricing in a July rate cut by the Fed as a certainty.The price data was “probably not enough to change the mindset of the Fed given how long inflation has been quiescent,” Tai Wong, head of base and precious metals derivatives trading at BMO Capital Markets, said an email. “It will take more than one stronger print in inflation to even register for Fed policy makers.”In other precious metals, silver futures settled lower on the Comex. Palladium declined on the New York Mercantile Exchange, while platinum gained.\--With assistance from Elena Mazneva and Rupert Rowling.To contact the reporters on this story: Justina Vasquez in New York at jvasquez57@bloomberg.net;Ranjeetha Pakiam in Singapore at rpakiam@bloomberg.netTo contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Joe RichterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • CNW Group6 days ago

    BMO Harris Bank ranked one of Forbes' 2019 Best Employers for Women

    CHICAGO , July 11, 2019 /CNW/ - BMO Harris Bank, an industry leader in fostering diversity and inclusion throughout its organization, was recognized by Forbes' Magazine as one of America's Best Employers for Women in 2019.  This ranking comes from an independent survey sample of 60,000 U.S. employees nationwide, including 40,000 women, working for companies employing at least 1,000 people in their U.S. operations. "At BMO, our Purpose is to Boldly Grow the Good, in business and life, and we recognize the power that having a diverse workforce brings to our organization," said Mona Malone , Chief Human Resources Officer, BMO Financial Group.

  • Bloomberg8 days ago

    Mining Stocks Could Rebound With Help From Trump and China

    (Bloomberg) -- The backdrop for miners is ready to brighten in the second half of this year. They just need a resolution of the trade war between the U.S. and China to light a fire under their stocks.Metal prices and mining equities have been at the mercy of trade headlines all year, and business fundamentals have a taken a back seat. To be sure, easier central bank policies around the world have helped some metals, especially gold and silver. But a resolution of the trade tension between U.S. and China -- or at least some steps to bring down the temperature -- could prove the ultimate catalyst for the metals and mining complex.The S&P 500 Metals & Mining Index is up 12% so far this year, lagging the S&P 500 return of 19%. But that performance was mainly driven by gold stocks, while base metals underperformed. The BI Global Base Metals Competitive Peer Index is down 5.5% this year, while the VanEck Vectors Gold Miners ETF is higher by 21%.In fact, the discrepancy in performance between gold and base metal prices has widened heading into the second half of this year. Gold had a blockbuster start to the summer owing to expectations of a U.S. Federal Reserve rate cut, while base metals investors stayed cautious due to the potential impact of disputes on the commercial demand for metals. That’s led some industry analysts to ratchet up their preference for gold in the second half and into 2020 while remaining cautious on the base metals outlook.The supply and demand outlook for base metals is relatively tight, which means a healthy market for miners, according to a report from RBC’s Mining & Materials Equity Team. The outlook for gold in the near-term has improved due to expectations for lower rates, but there’s also risk to precious metals if geopolitical tensions in the Persian Gulf subside, the team said.BMO analysts led by Colin Hamilton agreed with that view. Precious metals prices have been quickly helped by rate cut expectations, but investors “still face a world where the industrial economy remains nervous about the impact of trade friction,” they said.RBC’s team has become “more constructive” on gold prices heading into the second half of 2019 and for 2020. The team also thinks base metals can go higher in the second half of 2019, since most of the macroeconomic concerns have been reflected in prices. But the recent rally in iron ore seems to be unsustainable and could turn back in the third quarter, RBC said.BMO also prefers precious metals, believing that the sentiment for gold has shifted to a new, higher range. The bank has a stable outlook for base metals but thinks any outperformance in the sector may have to wait until trade tension lifts. But in the copper market, BMO says the recent sell-off in copper prices is unjustified and expects higher prices into the year-end, with or without a trade accord.Easier trade rhetoric could translate into some downside for gold and silver, and a big rally in base metals. A continuation of the status quo might translate into further declines for base metal miners or, at best, leave the sector waiting for the next shoe to drop.What Bloomberg Intelligence saysGold-price appreciation is likely to be the dominant and most concerning 2H theme for the metals, especially if the peak-dollar theme that’s gaining credibility with a dovish Federal Reserve provides the final rally pillar. Gold has worthy catalysts for price gains after five years of caged trading. It stands to be the primary beneficiary, absent a definitive U.S.-China trade accord that reverses accelerating global declines in sovereign-debt yields, rate-cut expectations and increasing stock-market volatility.Industrial metals will benefit if the greenback declines, which places the broad sector on stable 2H footings. The Bloomberg All Metals Total Return Index is poised to reverse a prolonged period of underperformance vs U.S. equities, as we see it.-- Mike McGlone, commodity strategist-- Click here to read the research(Updates 3rd paragraph with share performances.)To contact the reporter on this story: Aoyon Ashraf in Toronto at aashraf7@bloomberg.netTo contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Scott Schnipper, Catherine LarkinFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Canada’s Jobs Market Pauses After Monster First Half of Year
    Bloomberg12 days ago

    Canada’s Jobs Market Pauses After Monster First Half of Year

    (Bloomberg) -- Canada’s booming labor market geared down in June, with employment little changed and a slight uptick in the jobless rate from historical lows.The economy shed 2,200 jobs on the month, Statistics Canada said Friday in Ottawa, versus economist expectations for a gain of about 10,000. The unemployment rate rose to 5.5%, after reaching a four-decade low of 5.4% in May.The flat reading for employment in June doesn’t alter the picture of a hot labor market powering Canada’s expansion, with most economists widely expecting a slowdown from the economy’s recent unsustainable pace of hiring. That leaves the Bank of Canada plenty of ammunition to resist any pressure to cut interest rates, even if the U.S. Federal Reserve decides to ease policy.“We’ll forgive Canada’s job market for taking an early summer holiday in terms of employment gains, given the massive surge in hiring that preceded it,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors.The economy has added 247,500 jobs since the end of last year -- the bulk of them full-time -- which is the strongest since 2002 and the second-best first-half employment gain in four decades.Even in June, there were a number of pockets of strength in the report. Full-time jobs were up by 24,100, offsetting a decline in part-time employment. Self-employment fell, with the number of “employees” increasing.Another good sign is that wage gains accelerated to the fastest in more than a year, with annual pay gains rising to 3.8% in June from 2.8% in May. Total hours worked accelerated to 1.8% on an annual basis, up from 1% in May.“Perhaps the most noteworthy aspect to today’s report was the massive rise in wages,” Doug Porter, chief economist at Bank of Montreal, said in a note to investors. “For the Bank of Canada, the strength in wages and hours, and a still-low jobless rate will give them no reason to seriously consider matching Fed rate cuts anytime soon.”The Canadian dollar fell after the report, which coincided the release of U.S. payroll data that topped all estimates. As of 9:36 a.m. in Toronto trading, the loonie was down 0.4% to C$1.3108 per U.S. dollar. Yields on Canadian two-year bonds were up, however, reflecting easing worries about rate cuts.The one area of weakness seems to be the goods sector, which saw employment contract 32,800 in June. Half of that came from manufacturers. Employment in goods-producing industries is down by 9,400 in the first six months of 2019.(Updates throughout.)\--With assistance from Erik Hertzberg.To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.netTo contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen WicaryFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • CNW Group12 days ago

    BMO Private Investment Counsel Inc. Announces New Sub-Advisor for BMO Private U.S. Equity Portfolio

    TORONTO , July 5, 2019 /CNW/ - BMO Private Investment Counsel Inc. ("BPIC"), the investment management arm of BMO Private Banking and the manager of BMO Private U.S. Equity Portfolio (the "Portfolio"), today announced the appointment of a new sub-advisor for the Portfolio. Effective on or about July 19, 2019 , Vontobel Asset Management, Inc. will be appointed as a new sub-advisor of the Portfolio.  BMO Asset Management Corp. will continue to act as a sub-advisor to the Portfolio.

  • U.S. Employment Is Looking Cooler Ahead of Friday’s June Jobs Data
    Bloomberg14 days ago

    U.S. Employment Is Looking Cooler Ahead of Friday’s June Jobs Data

    (Bloomberg) -- U.S. labor market data flashed mixed signals Wednesday ahead of the marquee monthly jobs report for June, with several private reports weakening while jobless claims improved.Hiring at U.S. companies rebounded by less than forecast in June, to 102,000 jobs from a nine-year low of 41,000 in May, according to ADP Research Institute data. The Institute for Supply Management said its measure of employment growth in service industries posted the steepest drop in 16 months. Applications for unemployment benefits, meanwhile, declined for the second time in three weeks and remain near the lowest since 1969, government figures showed.Federal Reserve policy makers are monitoring the jobs market for signs of strain as they consider whether to cut interest rates. A solid headline number Friday could dissuade them from lowering borrowing costs, while poor data could provide a green light.Financial markets are pricing in a rate cut later this month amid uncertainty over trade policy and slowing global growth. At the same time, robust job gains in recent years and the lowest unemployment rate in a half century have been sustaining consumer spending and boosting attitudes, extending the current economic expansion that’s now the longest on record.“Overall it’s still a tight labor market, but it’s becoming less tight," Jennifer Lee, senior economist at BMO, said by phone from Toronto. “It points to slower job gains at a time when you’re seeing slower growth across the country in almost all areas. I’m not going to hold my breath for something strong Friday."The Labor Department’s jobs report is projected to show the unemployment rate held at 3.6%, with payrolls climbing by more than 160,000 after a subdued 75,000 gain in May.The report from ADP showed job gains were less than almost all estimates in a Bloomberg survey of economists, whose median projection was for a 140,000 advance. The May tally was revised higher, though it remained the weakest gain since 2010. At the same time, analysts often point out that the link between ADP and the monthly government report can be tenuous.Among other job-market indicators, Challenger Gray & Christmas Inc. reported Wednesday that announced job cuts rose about 13% in June from a year earlier. That’s the 11th straight increase, the longest streak since the last recession.Economic growth is forecast to slow in the U.S. amid tepid global demand, a trade war with China, and a strong dollar that makes American-made goods more expensive abroad. Manufacturers have been particularly hard hit over the last year.The ADP report also showed small-business payrolls contracted. “Coupled with the deceleration in ADP manufacturing employment growth in recent months, this suggests that trade tensions are now weighing on trend payroll growth,” Goldman Sachs Group Inc. economists wrote in a note Wednesday.\--With assistance from Ryan Haar and Reade Pickert.To contact the reporters on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net;Katia Dmitrieva in Washington at edmitrieva1@bloomberg.netTo contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince GolleFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • CNW Group14 days ago

    BMO Private Banking Receives Best Private Bank Canada Award for Ninth Consecutive Year

    BMO Private Banking Receives Best Private Bank Canada Award for Ninth Consecutive Year

  • Can Anything Delay the Inevitable July Fed Rate Cut?
    Bloomberg14 days ago

    Can Anything Delay the Inevitable July Fed Rate Cut?

    (Bloomberg Opinion) -- For weeks now, financial markets have been treating a July interest-rate cut by the Federal Reserve as a sure thing. That’s a big deal because over the past quarter-century, the central bank has never failed(1) to deliver when implied odds reach 100%.I’m certainly not one to fight the bond markets. But … there’s a first time for everything. What would it take to spur Chair Jerome Powell and other officials to defy traders and keep interest rates where they are? It’s not a completely far-fetched question — a survey conducted this week by BMO Capital Markets showed respondents on average gave 20% odds that the central bank won’t lower its benchmark rate on July 31.How to get from here to there? The short answer: It would take a lot. The longer answer: It would take a string of strong data releases, no more unexpected trade threats out of the White House, and perhaps some help from abroad.There’s not much time for Fed officials to get the markets on board with a “no cut” scenario. Their decision is four weeks away, and the blackout period starts even sooner. That means this week’s employment data take on added significance. Without a convincing rebound from last month, it seems highly unlikely that policy makers will push to keep interest rates steady. Labor market strength has been the core pillar of this tightening cycle, and another lackluster payrolls report would probably push those on the fence toward a July “insurance cut.”Suppose, though, that payrolls increase by at least 164,000 (the median estimate in a Bloomberg survey); the 75,000 gain from May stays the same or is revised higher; the unemployment rate remains pinned at the lowest in five decades; and annual wage growth at least meets expectations of 3.2%. That’s all within the realm of possibility. A payrolls estimate from ADP on Wednesday showed a gain of 102,000 jobs in June, a healthy rebound from last month’s dismal 27,000. While lower than the expected 140,000, the report tends to have limited predictive power(2) over the more crucial Labor Department data. In last year’s June readings, ADP undershot by 36,000.Those figures, combined with the U.S.-China trade truce coming out of the Group of 20 meeting, would alleviate some of the “uncertainty” that has bothered Fed officials. Consider these comments from Powell on June 25: “The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation,” he said. “But we are also mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment. Doing so would risk adding even more uncertainty.” If the Fed sees the resilient labor market as reason to potentially stand pat, a parade of policy makers will have a chance to jawbone the market next week. St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic kick things off on July 9. Bullard, the lone dissenter in favor of lowering interest rates at the June meeting, last week effectively shifted traders away from expecting a sharp 50-basis-point reduction.Powell will testify before the House Financial Services Panel on July 10 and before the Senate Banking Committee the next day. It’s hardly the ideal environment to provide a clear message to markets — Democrats will likely ask about President Donald Trump’s persistently critical comments, while Republicans may argue the Fed is holding back economic growth.Notably, the Senate testimony will start after the release of minutes of the Fed’s June meeting and the latest round of consumer price index data. A surprisingly strong read of inflation could encourage Powell to reiterate that the central bank is meeting its dual mandate and perhaps deviate from some of the views expressed last month. As if that weren’t enough, on the same day, New York Fed President John Williams, Bostic, Richmond Fed President Thomas Barkin and Minneapolis Fed President Neel Kashkari are all scheduled to speak.Fed speakers have coordinated to sway the markets before. Less than three weeks before the central bank raised interest rates in March 2017, traders were pricing in about a one-in-three chance of that happening. The following day, some forceful comments from Williams, the president of the San Francisco Fed at the time, and William Dudley, the New York Fed president at the time, sent those odds above 70%. Within a week, the probability of a hike was 96% and just one of the Fed’s 23 primary dealers was calling for no hike.Simply put, market expectations can change in a hurry. And at least some non-voting Fed members seem to be thinking that July feels a bit rushed. Barkin, in a Wall Street Journal interview conducted June 28, said it’s too soon to say whether global economic weakness could prompt a rate cut. Cleveland Fed President Loretta Mester on Tuesday laid out the clearest case yet for not lowering interest rates. What would change her mind? “If I see a few weak job reports, further declines in manufacturing activity, indicators pointing to weaker business investment and consumption, and declines in readings of longer-term inflation expectations, I would view this as evidence that the base case is shifting to the weak-growth scenario,” she said.That’s quite the list. It’s possible that Mester is simply more hawkish than her colleagues who vote on policy this year and that the doves will win out.On the other hand, her warnings about financial imbalances and the risks associated with always caving to market expectations might resonate with a committee already buffeted by comments from Trump and administration officials. Most recently, White House trade adviser Peter Navarro specifically linked the Dow Jones Industrial Average reaching 30,000 with a Fed rate cut and Congress passing the reworked trade deal with Mexico and Canada. It closed Tuesday at about 26,787, close to its all-time high. Central bankers would probably prefer not to fuel the notion that they conduct policy based on the level of equity markets, or worse, because of political pressure.In the end, it’s Friday’s jobs report that could potentially set up a showdown between the bond market and Fed officials or firmly cement a July interest-rate cut in both groups’ minds. Either way, it ought to keep U.S. traders reluctantly glued to their screens after Independence Day.(1) From Bianco Research: Since February 1994, the Fed has had 201 planned meetings plus other gatherings where they made changes to monetary policy. Once a meeting is only 27 trading days away, the market has correctly predicted the Fed’s actions 87% of the time. “Since 1994, we cannot find an instance when the market’s implied odds hit 100% within 35 days of the next meeting without the Fed delivering,” Jim Bianco, the firm’s founder and president, who also writes for Bloomberg Opinion, wrote in a research note.(2) For those interested in precise correlations, this from BMO: "The historical forecasting power is somewhat modest with an R2 of 0.23...if we restrict to the 'actual release values’ (i.e. exclude revisions) the correlation weakens even further to an R2 of 0.12."To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

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