Article content

Today’s top stories

Article content

9:15 a.m.

Prepare for 7% interest rates, stagflation, Jamie Dimon warns

Markets may be predicting the end of the United States Federal Reserve’s tightening cycle, but Jamie Dimon is still telling clients to prepare for a worst-case scenario of benchmark interest rates hitting seven per cent along with stagflation.

Article content

“We urge our clients to be prepared for that kind of stress,” the JPMorgan Chase & Co. chief executive said in an interview with the Times of India, saying a hard landing remains a risk for the U.S. economy.

His comments contrast with the consensus view after 5.25 percentage points of hikes that lifted the benchmark rate to 5.5 per cent — the highest level in 22 years. U.S. policymakers have signalled that rates will need to stay higher for longer to contain inflation, though money markets are pricing in cuts from next year.

“If they are going to have lower volumes and higher rates, there will be stress in the system,” Dimon said while visiting Mumbai for a JPMorgan investor summit. “Warren Buffett says you find out who is swimming naked when the tide goes out. That will be the tide going out.”

Dimon, who has said rates may need to rise further to fight inflation, added that the difference between five per cent and seven per cent would be more painful for the economy than going from three per cent to five per cent was.

Bloomberg

8:45 a.m.

Unifor starting contract talks with GM today

Article content

Article content

Contract talks between Unifor and General Motors Canada begin today.

The negotiations cover about 4,300 workers at the automaker’s St. Catharines Powertrain Plant, the Oshawa Assembly Complex and the Woodstock Parts Distribution Centre.

Unifor announced GM as the next target company in its negotiations with the U.S. automakers on Monday.

The talks come after workers represented by the union at Ford Motor Co. of Canada voted on the weekend to approve a new contract that Unifor plans to use as a pattern agreement in its talks with GM and Stellantis.

The Ford deal included wage hikes, pension and benefit improvements, and special EV transition measures for workers at Ford’s assembly plant in Oakville, Ont.

It also added two new paid holidays.

The Canadian Press

7:45 a.m.

COVID-19 is affecting air travel again, this time in the U.K.

Gatwick Airport in the United Kingdom, London’s second-busiest, is limiting flights this week, partly because of an outbreak of COVID-19 within air traffic control.

In a statement late Monday, the airport said a daily 800-flight limit, affecting both departures and arrivals, has been imposed until Sunday.

Article content

Gatwick said around 30 per cent of staff in the division within air traffic control are off sick for a variety of reasons, including COVID-19. Gatwick first suffered major disruptions over the weekend amid mounting sick leaves.

It said the daily cap will prevent last-minute cancellations and delays for passengers while National Air Traffic Services, or NATS, gets back to normal.

“This has been a difficult decision but the action we have taken today means our airlines can fly reliable flight programs, which gives passengers more certainty that they will not face last minute cancellations,” Stewart Wingate, the chief executive of of London Gatwick, said in a statement.

The largest number of cancellations will be on Friday, Sept. 29, with 33 departures affected.

The Associated Press, Bloomberg

7:30 a.m.

No new oil and gas projects needed with fossil fuel demand about to peak: IEA

Even if no new government climate policies are introduced before 2030, global demand for fossil fuels will still peak before the end of the decade, a new report by the International Energy Agency states.

Article content

The report released Sept. 26 says the worldwide rollout of key technologies such as renewable power, electric vehicles and heat pumps is happening so quickly that demand for coal, oil and natural gas is set to peak within the next 10 years.

The IEA says this means that no new major oil and gas extraction projects are needed anywhere around the globe, nor any new coal mines, mine extensions or unabated coal plants.

“If the world is successful in bringing down fossil demand quickly enough to reach net zero emissions by 2050, new projects would face major commercial risks,” the IEA stated.

Still, the report’s authors pointed out that while the transition is occurring, more needs to be done to hold global warming to the 1.5-degree Celsius target the international community agreed to at the 2015 climate summit in Paris.

While 1.5 C is still achievable, the IEA said, the paths available to get there are narrowing. Global carbon dioxide emissions from the energy sector reached a record high of 37 billion tonnes in 2022.

The world is set to invest a record US$1.8 trillion in clean energy in 2023, but the IEA said that needs to climb to US$4.5 trillion by the early 2030s in order to achieve net zero by 2050.

Article content

“The energy sector is changing faster than many people think, but more needs to be done and time is short,” the report states.

The Canadian Press

Read the full story here.

Stock markets: Before the opening bell

U.S. stock futures fell Tuesday morning, while shares in Europe retreated for a fourth day.

The threat of tight policy is undoing some of the market’s biggest gains this year in high-flying tech stocks. These growth companies are prized for their long-term prospects but hold less appeal when future profits get discounted at higher rates. That’s reflected in growing short positions against the technology-heavy Nasdaq 100 Index.

“With weak but positive growth holding recession at bay on both sides of the Atlantic, central banks will not be able to ease financial conditions between now and the end of the year,” said Nadège Dufossé, global head of multi asset funds at Candriam. “With positive surprises now largely priced in, there seems to be little room for further appreciation in equity markets, suggesting a degree of caution on risky assets.”

Positioning in the Nasdaq 100 is now one-sided net short at US$8.1 billion, with all long positions unwound, according to Citigroup Inc. strategists.

Article content

In Canada, the S&P/TSX composite closed in positive territory on Monday.

Bloomberg

What to watch today

Peter Routledge, superintendent of financial institutions, will deliver a keynote speech at the Global Risk Institute Summit, in Toronto, at 11:20 a.m. The speech will address “Safeguarding the Integrity and Security of the Financial System.”

The Canadian Club hosts an event with Evan Siddall, chief executive of the Alberta Investment Management Corp. (AIMco), at the Fairmont Royal York Hotel in Toronto, starting at 11:45 a.m.

B.C. Premier David Eby will be in Ottawa from Sept. 25-26 meeting with Prime Minister Justin Trudeau as well as other senior federal ministers to discuss opportunities in the clean-energy sector, support for critical infrastructure needs, and national support to respond to emergencies.

Costco Wholesale Inc., one of Canada’s five biggest grocers, will release its earnings report.

Need a refresher on yesterday’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Article content