Morning Minutes

Mixed Markets Greet a Busy Day For Central Bank Speeches and Earnings

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US Index futures are flat (Dow Futures) to lower (NASDAQ futures down 1.5%), continuing their momentum from yesterday which saw the Dow finish flat, but the NASDAQ drop 2.5%. Overseas action has also been variable. The Dax is down 1.0%, but the FTSE is flat and over in Asia, Hong Kong climbed 1.0% and Tokyo gained 0.4%. In commodity trading, platinum, down 1.4% and natural gas, down 1.7% are under pressure for a second straight day. The other major metals are flat while WTI crude oil is up 0.5%. Cryptocurrencies are getting hammered again today with Bitcoin losing over 10% of its value and falling back under $50,000.

It’s another light day for economic news but Fed Chair Powell’s semiannual testimony to Congress starts at 10:00 am EST, may attract some attention. With the US 10-year treasury note yield on the rise and currently trading near 1.35%, traders may be particularly interested in the central bank leader’s comments on the outlook for US economic conditions and his interest rate outlook. Similarly, Canadian investors may look to Bank of Canada Governor Macklem’s speech at 12:30 EST today for insights into where economic conditions and monetary policy may be heading as more provinces start to reopen.  

The last big week for earnings this quarter really kicks into gear this morning with a number of results out from Canadian banks and US Retailers. Highlights include:

Canadian bank earnings week is off to a very strong start. Bank of Montreal crushed EPS expectations ($3.06 vs street $2.15) boosted by a 67% increase in profits from its US division from a year ago, and 5% growth in Canadian banking earnings, plus a reduction in its loan loss provisions to $156M from $432M. Bank of Nova Scotia also handily beat street expectations on EPS ($1.88 vs street $1.57), boosted by 46% growth from its Global Banking and Markets division, plus 37% growth from its Wealth Management business.

US retail earnings have also been coming in better than expected. Home Depot beat the street on earnings ($2.65 vs street $2.62) as same store sales growth exceeded expectations (24.5% vs street 19.2%). Meanwhile, Macys reported stronger than expected EPS ($0.80 vs street $0.12) and a smaller than feared drop in same store sales (-17.1% vs street -21.3%).

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Colin Cieszynski, Chief Market Strategist

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

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