Hot ticket

MARKETS

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Markets this week: It could be a turbulent week for markets. South Korea’s KOPSI index plunged by more than 8% at open, triggering a pause in trading. On the earnings front, software giant Oracle will headline the week with its earnings on Wednesday, while Montreal-based Dollarama will report its results on Thursday before markets open.

GOVERNMENT

Toronto is scalping its own World Cup tickets

BMO Field in Toronto. Source: Wikipedia Commons.

Hoping for a little extra cash, Toronto is moonlighting as a parking-lot scalper trying to flip a hot ticket.

Driving the news: The City of Toronto quietly bought over 3,500 tickets for its six FIFA World Cup matches and has been reselling them at an undisclosed markup as a “revenue generation strategy.” The city has sold all but 70 of the tickets and has already turned a profit.

In addition to selling seats to corporate buyers, city officials said tickets have been sold to “the passionate supporters of the countries playing in Toronto.”

Why it matters: Between Toronto and Vancouver, over $1 billion in taxpayer money will be spent to host 13 matches. The fact that Toronto has resorted to scalping tickets to “ensure a return on its investment” doesn’t inspire confidence that there will be a real economic benefit from the tournament.

If history is any indication, it won’t be easy for Toronto and Vancouver to come out ahead. One study found that since 1966, only one World Cup host city has turned a profit (Russia in 2018).

Zoom in: While Canada’s hosting duties have been bankrolled almost entirely by taxpayers, other host cities, like San Francisco, used mostly private funding to finance their World Cup games.

The Bay Area also applied a $6 surcharge to ticket sales to generate revenue for the city (which neither Toronto nor Vancouver negotiated in their FIFA deals) and refused to allow any public funds to be used for stadium upgrades, which has been one of the largest hosting costs for the Canadian cities.

Our take: Toronto might need to earn a little extra cash after splurging to host the Cup, but it's pretty ironic that the city is upselling soccer fans right after Ontario passed a law banning the resale of tickets above face value.—LA

BIG PICTURE

Tehran, Iran. Source: Unsplash.

Iran launched missiles at Israel. The barrage, which Israel says it intercepted, was retaliation for an Israeli strike in Beirut, Iran said. It was the first Iranian attack on Israel since a ceasefire began in April. Donald Trump said he had told Israeli prime minister Benjamin Netanyahu not to retaliate and risk an escalation that could derail U.S.-Iran peace talks, which were already on thin ice. (Axios)

OpenAI is planning to overhaul ChatGPT into a “super-app.” The AI company is reportedly preparing the biggest product overhaul since ChatGPT’s launch in 2022, shifting its focus toward business customers, coding tools, and AI agents. So far, OpenAI has largely prioritized the growth of the free version of ChatGPT, but the company now believes personalized agents — not chatbots — will be the future of AI (and the key to turning a profit). As one senior OpenAI exec put it, “Chat is dead.” (Financial Times)

Airlines are facing a US$100 billion hit from jet fuel prices. Global airlines are expected to pay ~$100 billion in additional fuel costs this year due to the war in Iran, according to an industry report. That surge, according to the report, will make airfare price hikes “inevitable” to cover the extra costs. Since the Strait of Hormuz was first blocked in February, jet fuel prices have doubled. (Guardian)

📡 What else is on our radar:

A new OECD report found that foreign aid from wealthy nations declined by 23% last year.
New York, California, and other U.S. states are preparing a lawsuit to block Paramount’s acquisition of Warner Bros.
After Google raised US$85 billion to fund its AI ventures, Meta is reportedly considering a major equity raise of its own.
Prime Minister Mark Carney will travel to Dublin and Paris for bilateral talks next week ahead of the G7 summit.

MARKET RESEARCH BY BULLPEN

Timbercreek Financial (TF): a steady dividend payer trading at a discount

Following an aggressive Bank of Canada rate hike cycle beginning in 2022, commercial real estate investors were faced with higher debt service costs and lower asset values.

That impacted Mortgage Investment Corporations (MICs) like Timbercreek Financial, who saw abnormally high credit stress in the portfolio – resulting in the market pricing in $110M+ of impairments based on its current valuation.

We believe investors may have mispriced this risk, creating an opportunity to secure a >10% dividend yield with potential valuation upside – as the company resolves most of its underperforming loans and redeploys that capital.

Let’s look at the portfolio:

$1.2B: Timbercreek Financial’s current net mortgage investments
67%: The average loan-to-value ratio
81%: The percentage of mortgages tied to income-producing assets

Learn more about Timbercreek Financial with Bullpen’s free research.

* Bullpen receives compensation from Timbercreek Financial for research coverage.

LOOKOUT

What’s happening this week

Source: Unsplash.

⚽️ The FIFA World Cup kicks off. Don’t let our first story sour you on what will surely be a highly entertaining sporting event. Play gets underway on Thursday with Mexico battling South Africa in the first match of the tournament. Canada plays its first game on Friday against Bosnia and Herzegovina and is favoured to come out ahead. It will need to do so without star Alphonso Davies, who will miss at least the first match (and likely the second as well) due to injury. Fortunately, Canada is playing in a relatively weak group — neither Qatar nor Bosnia and Herzegovina are well-rated — and has a good shot of advancing further into the competition.

🚀 SpaceX’s record-breaking IPO. Elon Musk’s space, connectivity, data centre, and AI company (are we forgetting anything?) will debut on the Nasdaq on Friday at US$135 per share, fetching a valuation of US$1.77 trillion and raising US$75 billion. That will make it the largest IPO ever, almost triple the size of Saudi Aramco’s 2019 offering. Anthropic and OpenAI are also expected to go public soon, both of which are also expected to command valuations well north of US$1 trillion.

🏦 Bank of Canada interest rate call. The central bank is expected to hold interest rates steady for a fifth consecutive time on Wednesday. Disruptions caused by the Iran war have pushed inflation back up above the Bank’s 2% target, but it will want to be sure that temporary shock is turning into broad-based price growth across the economy before it hikes rates in response, particularly when recent GDP numbers have been poorer than expected.

BUSINESS

Canada blocks Texas cattle over deadly parasite

Source: Unsplash.

Texas cattle are no longer welcome in Canada, and this time, it’s not because of a trade dispute.

What happened: The Canadian Food Inspection Agency (CFIA) temporarily restricted the import of livestock from parts of the U.S. affected by an outbreak of New World screwworm, a flesh-eating parasite that threatens to inflict major economic losses on the beef industry.

The parasite causes an infection that often kills livestock within two weeks if left untreated. It can also infect and kill humans, but the fatality rate is significantly lower.
Two cases of the parasite have been identified in Texas so far, the first seen in the U.S. since the 1960s, when it was successfully eradicated after plaguing ranchers for decades.

Why it matters: If screwworm spreads, it could lead to culls that further thin out already small cattle herds, resulting in higher beef prices for consumers.

Just because screwworm doesn’t survive Canadian winters doesn’t mean we won’t be affected. Canada is the largest buyer of U.S. livestock exports, and a supply crunch will translate into higher prices at the supermarket for Canadians, too.

What’s next: U.S. officials said they are releasing sterile screwworm flies in the affected area as a way to collapse the parasite’s population, but experts say not enough flies can be produced to respond effectively and Texas Governor Greg Abbott conceded that screwworm is “likely to spread over the course of the summer.”—TS

ONE BIG NUMBER

🎾 ~1 million. Canadians who started playing tennis last year who didn’t play at all in 2024. Interest in the sport has ballooned across the country, leading to lengthy waitlists at private clubs and massive wait times at public courts (as well as some heated arguments over court time).