Morning Minutes

Falling Inflation and Debt Reduction in Focus




After shrugging off a soft start yesterday to finish with gains of 0.75%-1.00%, US markets have paused overnight and US index futures are trading essentially flat this morning, along w ith the Dax.

The biggest index mover this morning has been the FTSE which is up 1.5%, while the British Pound has dropped 1.0%. The UK has been struggling with even higher inflation than in North America but this morning, UK inflation numbers finally showed some significant improvement, particularly Consumer Prices (7.9% vs street 8.2% and previous 8.7%), which may start to take some of the pressure off of the Bank of England to remain hawkish.

Speaking of inflation and interest rates, used car dealer Carvana is up 24.8% in US premarket trading this morning after the company agreed to a debt restructuring deal that will reduce its overall debt by $1.2B. Considering the rapid ascent of interest rates over this last year, this appears intriguing and has me wondering if this is a one-off situation, or potentially the start of a trend toward de-leveraging at the corporate level, time will tell…

Carvana also reported a smaller than feared loss for the quarter along with better than expected sales. This morning’s earnings headliner, Goldman Sachs, posted softer than expected results ($3.08 vs street $3.16). The energy service sector showed promise with Halliburton and Baker Hughes beating expectations. Earnings season for non-financial companies kicks into gear this afternoon with results due from Netflix*, Tesla* and IBM.     

US housing starts (1.43M vs street 1.48M) were slightly disappointing, in contrast to Canadian housing starts which crushed expectations (281K vs street 220K and previous 200K) yesterday.

*Shares of Netflix and Tesla are held in 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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