Morning Minutes

Canada Bank Earnings Season Starts Off Strong; Gold Regains $1,900/oz



Earnings for the April quarter for Canadian banks are off to a great start today with Bank of Montreal reporting significantly better than expected earnings per share ($3.13 vs street $2.75). Results were helped by Canadian banking and capital markets bouncing back from last year. US banking was up over a year ago but steady with its previous quarter suggesting that recovery momentum in the US may be moderating. Reflecting improving business conditions and credit quality, management slashed the loan loss provision for the quarter to $60M, down from $156M in the previous quarter and $1.1B in the same quarter a year ago.

There has been some interesting action in currency markets overnight. In recent weeks, the Canadian Dollar has been climbing against the US Dollar and other major currencies after the Bank of Canada turned hawkish and started to slow asset purchases. Overnight, the New Zealand Dollar has soared, gaining over 1% against the US Dollar after the Reserve Bank of New Zealand indicated it plans to maintain its dovish monetary stimulus programs until its inflation and employment targets are reached (a similar stance to the Fed). Some central banks like the RBNZ indicating a willingness to live with higher inflation in the short term has put a tailwind behind gold, a traditional inflation hedge, which is up 0.5% this morning and has regained the $1,900/oz level for the first time since January. Cryptocurrencies are bouncing back today with Bitcoin up 6.8% and Ethereum up 12.1%, but Bitcoin remains stuck below $40,000.  

Stock markets are mixed today following yesterday’s slightly negative finish in the US. US index futures are up 0.2% to 0.5% while in Europe, the Dax and the FTSE are down 0.2% and 0.4% respectively. In corporate news, several US retailers beat street expectations including Dick’s Sporting Goods* ($3.41 vs street $1.12, up 8.1% premarket), Abercrombie & Fitch ($0.67 vs street -$0.38, up 5.6% premarket), and Urban Outfitters ($0.54 vs street $0.17, up 10.2% premarket). Nordstrom, on the other hand, reported a worse than expected loss (-$1.05 vs street -$0.57, down 6.2% premarket).

*Shares of Dick’s Sporting Goods are held in some portfolios managed by SIA Wealth Management.

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Colin Cieszynski, Chief Market Strategist

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

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