In the Money: 5 Things to Know

June swoon, oil higher, former CEO of Dye & Durham calls for change, BCE upgraded to buy, CAE gets a new CEO

15 years ago I published my first - and only - article in The Globe and Mail. It had nothing to do with business. In fact, I broke a national story about a fertility doctor who was inserting the wrong sperm into women needing assistance with pregnancy. And then I went straight to being a TV intern. Talk about one hit wonder. Well, I am back, albeit with slightly lower takes. I’ll be writing a weekly column previewing the 5 things to know ahead of the trading week. Have a read of what’s ahead this week and read below for what’s happening today.

Swoon: Stocks are starting the first trading day of the month in the red this morning. It seems like the truce between the US and China is off with both countries trading accusations of acting in bad faith. The US dollar is bearing the brunt of these concerns, trading near the lowest level since 2023. US President Donald Trump announced that steel & aluminum tariffs will double to 50% by Wednesday. Steel stocks in the US are loving it with Cleveland Cliffs (+23%), Steel Dynamics (+11%), and Nucor (+11%) all surging in the pre-market. Canada has threatened to retaliate. Oil prices are bucking the global risk-off trade this morning after OPEC+’s increase in oil production for July was less than feared (more below). As I mentioned in my Globe column, June is typically an unpleasant month for stocks. It is positive the least of any month of the year for the TSX and offers only tepid returns for the S&P 500. Having said that, May bucked the seasonal “sell in May and go away” trade. The S&P 500 put in its best month of trading since November 2023 (+6%) while the TSX had its best month since November 2024 (+5%). This week we’ve got the Bank of Canada rate decision with many economists now believing there will not be a rate cut. Today we will hear from Federal Reserve Chair Jerome Powell.

Energized: Oil prices are moving higher as the OPEC+ increase in production was less than feared and wildfires raging in Alberta threaten production. OPEC+ increased oil production in July by 411,000 barrels per day. Some feared that it would be more and analysts say this amount isn’t actually much higher than what exists considering other countries have been cheating on the limits. “There is also no denying that another supersized supply increase would firmly signal the Saudis’ intention to punish cheaters and recapture market share, including from US shale,” wrote Desjardin’s Chris MacCulloch ahead of the meeting, “…We have seen this movie before—if it looks like a price war, walks like a price war and quacks like a price war, then it’s probably a price war.” There are also the wildfires in Alberta that threaten nearly 200,000 barrels of oil per day. Currently there are 24 fires classified as “out of control”. Cenovus has already shuttered some production. This could narrow the discount on Canadian oil prices as supply becomes constrained. “Recent surge in AB wildfires (>200mbbl/d at risk per media), another item to add to the laundry list of factors supporting sustained tighter WCS heavy diffs (currently ~US$10.25/bbl). Recall, 2016 wildfires led to ~1.0mmbbl/d of shut-ins (largely oil sands) and ~300mbbl/d in 2023 (largely conventional),” wrote TD’s Menno Hulshof.

Drama: The former CEO of Dye & Durham is coming out swinging against the current board of the company and agitating for a sale. Plantro, which is backed by former DND CEO Matthew Proud who is still a top shareholder, is demanding the company sell its financial services business and pursue a full sale of the remaining company. In doing so, Plantro/Proud believes they could unearth over $20/share in value from private equity players. The stock is currently trading around $10/share. This is not the first time Proud has said the company is worth as much. Earlier this year, Proud made an unsolicited offer for $20/share. We recently had David Barr of the Penderfund on the podcast who had Dye & Durham as one of his top ideas and talked candidly about Proud’s involvement. “I'm not going to tender my shares to Matt at $20 because I think this business and the reason Matt wants to do it is he knows private equity would pay $25 plus for this business all day long,” said Barr.

Another chance: BCE is getting it’s first upgrade to buy since cutting its dividend. Scotia’s Maher Yaghi is upgrading the stock to Outperform on the view that after two years of price wars, things may start to stabilize and carriers will start to charge more. “Over the last two years, all 4 wireless operators in Canada have seen their service revenue growth decelerate materially or even turn negative, putting all of them in a worse situation,” wrote Yaghi. “If our thesis pans out, we expect wireless pricing to bottom in early 2026. Coupled with actions by BCE’s mgmt team to rightsize the dividend, immunize the balance sheet from dilution in the US, and attractive valuations, we are upgrading BCE to (buy) from (hold).” Yaghi said he could even become more constructive on Rogers when there is more clarity on balance sheet and leverage.

I’m the captain now: CAE announced a new CEO this morning and that former Air Canada CEO Calin Rovenescu would become Executive Chair. This comes as an activist investor (Browning West) has been agitating for change at the flight simulation software provider. Matthew Bromberg will be replacing long-time CEO Marc Parent effective mid-June.