The Daily Chase: Investors await Powell speech; Open Text is betting $6 billion for its growth

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Everyone knows what the most important story today is. The question is to what extent US Federal Reserve Chairman Jerome Powell can surprise the market. Will he stick to the scenario of making a strong commitment to lower inflation and pursuing unusually large rate hikes? Or will it give the bulls what they want and signal that a pivot/break is in sight? We’ll find out at 10 a.m. EDT.

If you missed it, check out Jacqueline’s conversation with former Atlanta Fed President Dennis Lockhart, who suggested that investors (who he says have been “grabbing the straws” for signs that the rate hikes will subside) may be disappointed. “I think that [Powell] should and will do is that it will give a compelling voice to this committee’s determination to stay the course and beat inflation,” Lockhart said. See this full interview here.

EYES ON THE BANKS

The Toronto-Dominion Bank is getting new love from the analyst community. RBC Capital Markets’ Darko Mihelic upgraded the stock to outperform the sector following yesterday’s third-quarter results, saying “it’s getting too hard to ignore growth.”

And Canadian Western Bank is the only lender reports today; its adjusted profit fell 11% year-over-year and was in line with expectations. A recent trend has also continued as central Canada grows in importance: lending in Ontario Pink 13 percent year over year, and lending in Quebec accelerated 14 percent. We’ll speak with CWB CEO Chris Fowler at 1:10 p.m. EDT.

THE OPEN TEXT DOES ANOTHER BUSINESS

And that’s a big one at a hefty premium. The Canadian software company is purchase UK-based Micro Focus International with an offer that is almost double yesterday’s closing price. Add Micro Focus‘ cash and debt, and the deal has an enterprise value of $6 billion. According to the Micro Focus website, the company has annual sales of $2.9 billion and more than 11,000 employees in 48 countries. Deal Focuses on Growth: Open Text said it will double its total addressable market to US$170 billion and allow it to tap into a “brand name customer base”. We plan to speak with Open Text CEO Mark Barrenechea around 9:40 a.m. EDT.

OTHER NOTABLE STORIES

  • A global hunt for rare earths is driving some deal news this morning: Australia Hastings Technology Metals said he pays Oaktree $135 million for a 22.1% stake in the Toronto company Neo-Performance materials. Hastings is bringing a household name to its corner to help fund the investment: Wyloo Metals. We got to know Wyloo last year when he fought BHP in a bidding war for Noront Resources.
  • Difference drawn his forecast for the entire year as he tries to find a way forward while shedding too many clothes. Case in point: He took a $58 million write-down in the second quarter on what he calls “unperforming inventory.” This contributed to a sharp decline in margins. Meanwhile, its sales at stores open for at least a year in the quarter fell 10%. And yet its shares rose nearly 10% in premarket trading amid a surprise adjusted profit.
  • Inventory management is also part of the history of Dell Technologiesas vice president and co-COO Jeffrey Clarke of the computer maker said on a call with analysts that “macro dynamics have become more difficult as customers take a more cautious view of their needs.” Dell said its consumer revenue fell 9% year-over-year in the second quarter, while commercial operations revenue rose 15%.

NEWS RELEASES / NOTABLE EVENTS

  • Notable Data: US Personal Income, Expenses, and PCE Deflator
  • Notable Profits: Canadian Western Bank
  • 1000: US Federal Reserve Chairman Jerome Powell speaks at the Jackson Hole Economic Policy Symposium (1000)
  • 12 p.m.: Ontario Premier Doug Ford and Transportation Minister Caroline Mulroney make an announcement in Niagara Falls
  • 2 p.m.: Deputy Premier and Minister of Finance Chrystia Freeland holds a press conference in Grande Prairie, Alta., after meeting with farmers
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