Morning Minutes

Canadian Earnings Season Starts Strong; US Inflation Pressures Rise




CIBC kicked off Canadian earnings season with a bang, reporting EPS well above expectations ($1.94 vs street $1.72). Capital markets was the primary driver of the strong results along with moderate growth in traditional banking and a smaller loan loss provision, the last of which may be seen by investors as a positive indicator on the health of the Canadian economy. The rest of the major banks report results between Tuesday and Thursday of next week.

In the US this morning, index futures are down 0.7% to 1.0%, giving back all of yesterday’s 0.3%-0.7% US index gains and falling further. US Core PCE inflation increased instead of decreasing like investors had hoped (4.7% vs street 4.3% and previous 4.4%). Considering that several Fed leaders had already started to talk hawkish on interest rates recently, comments from FOMC members Mester and Jefferson at 10:15 am EST today in response to this increase in inflation pressure from the Fed’s favorite measure may attract some attention from traders today. More economic reports are on the way as well with US new home sales and University of Michigan Consumer Sentiment due at 10:00 am EST.

Overseas trading has been mixed overnight with the Nikkei rising 1.34%, the Hang Seng falling 1.7%, the FTSE gaining 0.1% and the Dax dropping 0.6%. The US Dollar is on the rise again gaining 0.2%-0.4% the Loonie, Euro and Pound plus Gold. Commodity action is split with energy contracts in the green, including gains of 0.8% for WTI Crude Oil and Natural Gas. Metals, however, are in the red with Copper down 0.7%, Silver down 1.3% and Platinum down 1.8%.  

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Colin Cieszynski, Chief Market Strategist

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

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