HEADLINES
Employment Retreated in August, Though Jobless Rate Held Steady
Canada's job market stalled last month, giving back some of the recent job gains but holding the unemployment rate steady at a two-year low ahead of what could be a rocky patch as trade tensions reignite uncertainty.
Employers in the country cut a net 41,700 jobs in August, surrendering some of the more than 180,000 jobs added to the economy over the prior three months, Statistics Canada said Friday.
Yet with the labor force contracting slightly and the job-market participation rate dipping slightly, the unemployment rate held at 6.4% after having fallen half a percentage point from the recent 6.9% high in April. When calculated using U.S. Labor Department methodology, Canada's unemployment rate was unchanged for a third straight month at 5.3%.
DOJ Staff Were Told to Pause Antitrust Work With Canadian Government
The Justice Department's antitrust division was instructed earlier this week to pause all work with the Canadian government, according to emails reviewed by The Wall Street Journal, the latest development in the escalating trade dispute between the two countries.
In a Wednesday email with the subject line "Pause on Canada," Lynda Marshall, the chief of the antitrust division's international section, ordered officials to stop all cooperation on cases and engagement on policy issues with Canadian authorities. She provided no reason for the directive but said she would "circle back if the guidance changes."
On Friday, section chiefs in the division were asked in another email to provide lists detailing areas of cooperation with Canada by the end of the day.
After The Wall Street Journal's article was published, Justice Department spokeswoman Emily Covington said the official who sent the Wednesday email directing the pause had misunderstood a directive. She had been told to push back a scheduled meeting, Covington said, adding that there is no pause on the division's work with the Canadian government.
Quebecor Shares Up on 12-Year NHL Broadcast Rights Deal with Rogers Communications
Shares of Quebecor rose after reaching a 12-year sublicensing agreement with Rogers Communications for French-language broadcast rights to National Hockey league games.
Shares rose 3.2% to C$63.94.
The Montreal-based telecommunications and media company late Thursday said that it will offer regular season NHL games on its TVA Sports and TVA Sports Direct channels. Financial terms of the agreement weren't disclosed, but the contract will cover the 2026-2027 through 2037-2038 seasons.
Keyera Shares Fall After Lowering Full-Year Marketing Guidance on Pipeline Disruption, Facility Repairs
Keyera shares fell after the company lowered its guidance for the year due to pipeline disruptions and equipment issues at its Alberta processing facility.
Shares fell 3.7% to C$56.33.
The Calgary, Alberta-based energy infrastructure company late Thursday said it now expects realized margin at its marketing segment to be between C$320 million and C$350 million, down from a previous C$360 million to C$390 million.
New Pacific Metals Shares Fall on Wider-Than-Expected Loss
Shares of New Pacific Metals fell after the company's loss in the most recent quarter came in wider than analyst expectations.
Shares fell 7.6% to C$8.55.
The Canadian exploration and development company on Thursday reported a net loss of $990,000, or 1 cent a share, for the three months ended June 30. That compares with a loss of $890,000, or 1 cent a share, for the same period a year earlier.
Analysts polled by FactSet were expecting the company to break even on a per-share basis.
Aclara Says U.S. Export-Import Bank Considering $750 Million Financing for Its Rare-Earths Project
Aclara Resources is in line for up to $750 million government-debt financing from the U.S. Export-Import Bank to build its rare-earth and metals plant in Louisiana.
The nonbinding letter of interest is in support for Project Dynamo, Aclara's planned rare-earth separation, metals and alloys facility in Port of Vinton. The company said that the support would provide a pathway to bring its capabilities together at an industrial scale.
For the project, Export-Import Bank, or EXIM, has indicated that the potential financing could cover up to $750 million of costs with repayment to be done over the course of 15 years.
Euro Sun Mining Inks Preliminary Agreement for Up to $400 Million in Financing
Euro Sun Mining has signed a preliminary agreement for up to $400 million in senior debt financing for its gold-copper project in Romania.
The mining company said that it has signed a memorandum of understanding with Macquarie Bank and Trafigura for the proposed financing to support the development the Rovina Valley project.
The companies will work together over the next 18 months to do their due diligence and develop a structure for the financing, Euro Sun said.
TALKING POINT
Lululemon Stock Has Plunged. Why It Faces a Long Road to Recovery.
By Teresa Rivas, Barron's
No matter how Zen an investor might be, it's hard to be hopeful in the face of a stock's double-digit drop, particularly when it pushes shares below $100 for the first time since 2018.
Little wonder then that so many Lululemon Athletica investors are throwing in the towel.
The yoga and athletic wear maker reported fiscal second-quarter results that were disappointing in nearly every way, with its revenue, comparable sales, third-quarter and full-year forecast coming in below expectations. The shares were initially down more than 20% in premarket trading on Friday, before falling 17.4% to $100.61.
The downbeat report comes after its previous results also missed consensus estimates, sending the shares tumbling; at the time, that they were still no bargain, and that still looks to be the case, even with the day's big selloff.
It might seem overly pessimistic to warn of more declines to come. After all, 2026 was widely seen as a "reset" year, when painful changes made under new leadership would need to work their way through the stock, in order for it to emerge stronger later.
Yet the timeline for that process remains long and murky.
Consider that even with the newly reduced guidance, there could still be risk. As Morgan Stanley analyst Alex Straton notes, the fourth quarter forecast implies gross margins inflecting to a year-over-year expansion, with selling, general and administrative expenses declining-reversing recent increases.
That could prove "overly optimistic...especially considering the highly promotional broader sportswear backdrop," Straton wrote. That leads her to reiterate an underweight rating and $83 price target on the shares.
Incoming Chief Executive Officer Heidi O'Neill was already a show-me story for many on Wall Street, as she comes from struggling sportswear giant Nike, and after the most recent results has more work ahead of her when she starts next week. And even the most visionary CEO can do little to speed up the product cycle.
Barclays' Adrienne Yih writes that Lululemon is at the 'Trap' phase of her firm's proprietary sales cycle model, "where fundamentals are deteriorating as competition in all categories remains stiff and pricing power is fleeting for its core franchises. As market share erodes, the lack of sales is causing operating deleverage...management's strategy is on the defensive-meaning actions are being taken to change business trends, but the issues have not yet stabilized."
She lowered her price target to $95 from $113.
Likewise, UBS analyst Jay Sole warns of further earnings per share declines ahead if that operating deleverage continues.
Lululemon's EBIT (earnings before interest and taxes) margin has already fallen by more than 1000 basis points in the last two years, meaning it's now low enough that "further declines will have a much more sizable negative impact on earnings. The lower a company's margin, the more impactful it is to EPS when it contracts," Sole wrote.
His research shows that even if the company could cut out all discounting, that still wouldn't push EBIT margins back toward prior peaks-that can only come with true sales growth. That's a major reason "why the pullback isn't a reason to buy the stock."
At some point, that will change. But for now, sentiment on the stock is likely to remain sour.
Write to Teresa Rivas at teresa.rivas@barrons.com
Expected Major Events for Monday
05:00/JPN: Jul Indexes of Business Conditions - Preliminary Release
06:00/UK: Aug Lloyds House Price Index
06:00/GER: Jul Industrial Production Index
23:01/UK: Aug BRC-KPMG Retail Sales Monitor
23:30/JPN: Jul Provisional Labour Survey - Earnings, Employment & Hours Worked
23:50/JPN: Aug Provisional Trade Statistics for 1st 20 days of Month
23:50/JPN: Aug Bank Lending
23:50/JPN: 2Q 2nd Preliminary Quarterly GDP Estimates
23:50/JPN: Jul Balance of Payments
23:50/JPN: 2Q Quarterly External Debt & International Investment Position
23:50/JPN: Aug International Transactions in Securities
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Expected Earnings for Monday Amrep Corp $(AXR)$ is expected to report $0.44 for 1Q.
Eco (Atlantic) Oil & Gas Ltd (EOG.V) is expected to report for 1Q.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
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