Morning Minutes 5/7/2020

Morning Minutes

Stocks and Oil Climb Through Mixed Earnings and Economic Reports

May 7, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

Stocks and crude oil continue to climb a wall of worry in the face of mixed news. On the economic side, China reported better than expected trade numbers as its exports increased by 3.5% in April, instead of falling 15.7% as the street had anticipated. US weekly employment numbers, however, remain grim. US first time jobless claims were 3.16M, worse than the 3.0M the street had guessed, bringing the total number of claims since the week of March 20 to 33.45M. Continuing claims increased to 22.6M, which was worse than the 18.0M street estimate.

In the face of all this news, stock markets continue to climb. In Europe, the FTSE and the DAX are both up about 1.0% while US index futures are up about 1.4%. Dow futures are up about 300 points clawing back all of yesterday’s 218-point loss. Commodities also continue to recover with China’s news propelling copper up 1.4% this morning. Crude oil is also on the rise again with WTI up 9.4% toward $26.25/bbl and Brent crude rising 6.6% toward $31.75.

Yesterday afternoon and this morning have seen a lot of companies reporting earnings, particularly in Canada. Highlights include:

In Canada, Canadian Tire reported worse than expected losses per share (-$0.13 vs street -$0.11 and previous year $1.12) as some of its stores (Sport Chek and Marks) faced temporary closures. Magna International announced an 18% drop in sales to $8.7B as global light vehicle production fell by 27% in Q1. Manulife Financial reported EPS of $0.64, better than the $0.59 street estimate, but down from $1.08 in the same quarter a year ago. Fertilizer producer Nutrien reported a loss per share of $0.12 which was worse than the $0.04 loss the street had expected, and down from a $0.20 profit last year. Bausch Health reported EPS of $0.89 down from $1.03 in the same quarter a year ago, missing the street by a penny.

In the US, a number of companies have beaten expectations including ViacomCBS ($1.13 vs street $0.96, 51% increase in streaming revenue), Bristol-Myers Squibb ($1.72 vs street $1.49), and Raytheon ($1.78 vs street $1.22). Hilton had a mixed report, beating expectations on earnings ($0.74 vs street $0.55) but indicating that systemwide revenue per available room fell by 22% and that the impact of COVID-19 really started to bite in March.  Lyft* and Peloton are up 16.1% and 18.3% in premarket trading today with investors focusing more on sales increases over year of 23% and 66% respectively and shrugging off larger than expected losses from both companies.

Other companies scheduled to report results in Canada today include: BCE, Bombardier, Constellation Software, Enbridge, Home Capital, Sierra Wireless, and many others. In the US, Uber is due to report after the close.

*Shares of Lyft are held in some portfolios managed by SIA Wealth Management


New Video: Market Commentary and Portfolio Update – May 6, 2020

With Jeremy Fehr – Founder and CEO, Paul Vendrinsky – Portfolio Manager and Ted Bader – President of SIA Wealth Management

A new webinar replay is available featuring Jeremy Fehr, founder of SIACharts and SIA Wealth, discussing current trends in world markets. Paul Vendrinsky, Portfolio Manager, discusses recent transactions and updated sector weightings in the five funds which SIA Wealth sub-advises on for BMO Global Asset Management. SIA Wealth President Ted Bader discusses investment strategies related to the portfolios that SIA Wealth Management sub-advises for BMO Global Asset Management. A PDF version of the presentation is available.

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