Morning Minutes

Markets Retreat Amid More Disappointing Earnings and Corporate News




Stock markets took a sharp turn downward starting about midday yesterday, sending North American markets to sharp losses including drops of 0.9% for the Dow and 1.3% for the NASDAQ. Downward momentum has continued through overseas trading overnight and into this morning with the Dax down 2.1%, the FTSE falling 1.1% and the Nikkei falling 0.9%.

Canadian retail sales for November grew less than expected (0.7% vs street 1.2%) while new house price inflation plateaued at a high level (11.6% vs previous 11.7%) another sign of stagflation in the North American economy.

Commodities and cryptocurrencies are also getting hammered today. Bitcoin is down 10.0% while Ethereum is down 12.75% as capital continues to flee risk markets. Meanwhile, WTI crude oil is down 1.4% and copper is down 1.25% with investors becoming increasingly concerned about the negative impact of the Omicron Wave on the world economy. On the other hand, natural gas is up 3.0% this morning with another deep freeze in consuming regions boosting home heating demand. Capital continues to rotate into defensive havens including the Japanese Yen and the US Dollar. A dip in the US 10-year treasury note yield toward 1.75% suggests investors may be moving capital back into US bonds as well.

Investors main focus today remains on disappointing corporate earnings and related developments with two stocks in the spotlight. Netlix is down 19.6% in premarket action after the streaming service reported disappointing results after market close last night. Although earnings per share beat expectations ($1.33 vs street $0.82) investors focused more on its subscriber growth guidance which appears to suggest a sharp slowdown (2.5M forecast for Q122 street 6.93M). In comparison Netflix added 3.98M subscribers in Q121 and 8.2M in Q421.

Peloton also remains in focus this morning, bouncing 5.6% in premarket trading after plunging 23.9% yesterday. The exercise equipment producer crashed yesterday after halting production on some models in order to clear out excess inventory. Overnight, management preannounced results indicating that it expects revenues for last quarter to arrive within their previous forecast range and losses to be less than expected (-$250M to -$260M vs previous guidance -$325M to -$350M).  

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A replay of the SIA Wealth Market Outlook Webinar with Colin Cieszynski – Chief Market Strategist, Paul Vendrinsky and Kyle Wilson – Portfolio Managers, answering questions related to market/sector index composition and performance plus an update on SIA Wealth managed portfolios is now available.

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Colin Cieszynski, Chief Market Strategist

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

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