Morning Minutes 7/20/2020

Morning Minutes

Earnings, Energy and Europe In Focus

June 20, 2020

At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

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

Stock markets around the world are seeing a mixed start to the trading week. Shanghai sored 3.0% overnight after China allowed insurance companies to increase their allocation to equities, while the People’s Bank of China held its interest rates steady.

European markets are mixed this morning as investors await the results of an EU summit which started on Friday, continued all through the weekend and is ongoing as leaders haggle over the details of a big fiscal stimulus package. The Dax is up 0.45% this morning while the FTSE is down 0.5%.

In the US, Dow are down about 45 points or 0.1%, while NASDAQ futures are up about 25 points or 0.2% as investors digest last week’s swings and look ahead to a busy week for corporate news. So far, Energy stocks have been in the spotlight. Over the weekend, Chevron announced that it has agreed to purchase Noble Energy for $5B in an all-share deal. This purchase suggests that some managements in the oil patch may be thinking the worst of the oil crisis has passed and are starting to look for opportunities. On the other hand, oilfield service giant Halliburton reminded investors that a lot of damage has already been done as it announced a $2.1B impairment charge. Although adjusted EPS was not as bad as feared ($0.05 vs -$0.11) revenues were still down 57% from a year ago.

Earnings season continues to ramp up this week headlined in the US by IBM tonight, Microsoft* plus Tesla on Wednesday and* on Thursday. Canadian earnings season gets underway this week headlined by Canadian National on Tuesday, Canadian Pacific, Rogers, Loblaw, and Suncor Energy Wednesday followed by Husky Energy, Cenovus and Teck Resources on Thursday.

The coming week is pretty light for economic news. Canadian retail sales are due on Tuesday with the main event being Friday’s flash PMI reports, the first look as July economic conditions in the US, UK and Germany. Investors may look to the flash numbers for signs of whether the initial reopening bounce has continued into the summer, if the rebound has slowed after an initial release of pent-up demand, if the recent rise in US cases has had any impact and any indications of what some of the longer-term implications of the COVID crisis may be.

*Shares of and Microsoft are held in some portfolios managed by SIA Wealth Management.

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.