Everything You Need to Know on Tuesday: Tilray Brands Down 12% In US Premarket Although Q3 2024 Net Loss Narrows and Net Revenues Rise

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,340.20, down 0.04%.

● Faulty inflation forecasts hold Bank of Canada back on rate cuts

● Oil market tightness, geopolitical uncertainty to prevent further price slides, Commerzbank says

● Dave McKay: failure to lower housing costs could 'put our entire economy at risk'

● Stocks to watch: Tilray Brands, Endeavour Silver

Today, the Canadian dollar is trading at 73.55 cents US, a slight decrease from Monday.

The S&P/TSX 60 Index Standard Futures (SXF) are currently trading at 1,340.20, which is down 0.04% from the previous close.

The Bank of Canada is making progress in its battle against inflation, but Governor Tiff Macklem still has a big reason to be cautious about launching into rate cuts too soon — his credibility's on the line.

The central bank, after enduring one of its toughest trials of the last 50 years, is edging closer to getting inflation back to its two per cent target. Economists are forecasting it will get close by the end this year, without a recession.

That would be a major win for the institution — which, like the U.S. Federal Reserve and other central banks, has been scrutinized and criticized for the surge in consumer prices that began in 2021.

Lowering rates prematurely, only to see inflation take off again, would be a brutal outcome for a central bank that’s been dragged through the mud by politicians on the left and right. That’s an incentive for Macklem to hold the policy rate at the current level at least until June.

“They need to be completely sure that they’re in a position to cut rates before they cut,” Andrew Kelvin, head of Canadian and global rates strategy at Toronto-Dominion Bank's securities division, said in an interview. “The longer we run inflation around three per cent, the greater the risk is that people just accept three per cent is what inflation's going to be going forward.”

Despite a brief dip in crude oil prices at the start of the week, it is still too early to sound the all-clear and the oil market remains tight, Commerzbank said in a Tuesday note.

After rising to nearly US$92 per barrel on Friday, the highest level since October 2023, oil prices came under pressure following news of a partial withdrawal of Israeli troops and possible ceasefire negotiations between Israel and Hamas, leading to a decline in the geopolitical risk premium, the bank noted.

However, prices bounced back after Israeli Prime Minister Benjamin Netanyahu announced a ground offensive on Rafah. Iran also continues to threaten to retaliate after an attack on its consulate in Syria.

The falling forward curve indicates tightness in the oil market and the time spreads, or the price differences along the curve, have noticeably widened, Commerzbank said. Saudi Arabia's raising of its official selling prices for May deliveries also fits into the picture.

RBC President and Chief Executive Officer Dave McKay says Canada’s housing crisis presents a longer-term risk to the overall economy.

In an interview with BNN Bloomberg, McKay said many people are experiencing difficulty finding shelter within the country. He says high housing costs are one of the top issues the country faces and worries it could drive people away and impact the overall talent available in the Canadian economy.

He said the real estate sector currently faces a “catch-22” as higher interest rates deter development needed to increase supply.

“There's a huge demand for housing,” he said. “As we know it’s stabilizing house prices in what would normally be a down market. But we can't satisfy that pent-up demand with more supply because rates are too high.”

McKay also highlighted that the permitting process takes too long and needs to move at a faster pace.

“It's been a challenge for our country from business to construction. It takes too long to get permits to move forward,” he said adding that the slow process results in losing out on business to the U.S.

Net loss decreased to $105 million, or $(0.12) per diluted share, in the third quarter compared with the net loss of $1.2 billion, or $(1.90) in Q3 2023.

Tilray reported that its beverage-alcohol net revenue increased 165% to $54.7 million, from $20.6 million last year. The increase was related to the company's new Craft Acquisition brands while existing brands stayed consistent.

Cannabis net revenue increased 33% to $63.4 million, from $47.5 million in the same period, reflecting the acquisitions of HEXO and Truss as well as growth in Canadian medical, Canadian adult-use, wholesale, and international.

For its fiscal year ending May 31, 2024, Tilray reports that it is now guiding to an adjusted EBITDA target of $60 million to $63 million. The company no longer expects to generate positive adjusted free cash flow for the full fiscal year 2024, due to delayed timing for collecting cash on various asset sales.

First-quarter consolidated silver production fell 10% year over year to near 1.5 million ounces, driven by 7% lower silver production at the Guanacevi mine and 32% lower silver production at the Bolanitos mine while gold production rose 8% to 10,133 ounces due to 17% higher gold production at Bolanitos mine, offset by 2% lower gold production at Guanacevi mine.

Source: BNN Bloomberg, Financial Post, MT Newswire