Morning Minutes

Retailer Earnings and Fed Minutes In Focus




It seems like some investors have gone into US holiday mode early this week. US index futures have been drifting downward through the morning with the three main contracts currently down 0.2%-0.3%. Over in Europe, the Dax is flat, but the FTSE is down 0.5% and Milan is down 1.0%. Commodities are also drifting today with US Crude Oil down 0.6% and Copper down 0.2%.

Investors have been responding, both positively and negatively, to the latest round of earnings reports from US retailers. Home improvement giant Lowes is down 3.7% premarket after management cut sales and earnings guidance after revenues fell 13% from a year ago. Best Buy is also down in premarket action, falling 4.4% after management announced it expects an even deeper decline in same store sales (-6.0% to -7.5% vs previous -4.5% to -6.0%) and cut EPS guidance blaming dropping demand for consumer electronics and customers focused mainly on finding deals. On the other hand, Dicks Sporting Goods is up 8.2% premarket after beating the street on earnings. Other US retailers reporting results today include Nordstrom and Abercrombie. Soft guidance adds to the potential importance of the upcoming Black Friday and Cyber Monday sales events, some of which are already underway.

Today’s main earnings event is after the close today when Nvidia*, one of the so-called “Magnificent Seven” stocks that have accounted for much of the US index gains this year, reports results in what could be a bellweather event for investor sentiment heading into the US holiday weekend.  

Treasury yields are steady this morning with the US 10-year Treasury Note yield near 4.40% and the German 10-year Bund yield near 2.6%. We could see some action in bond markets this afternoon with minutes from the last FOMC meeting due at 2:00 pm EST. US existing home sales are due at 10:00 am.

Echoing a downward trend in consumer prices seen from the US and UK last week, Inflation pressure through Canadian consumer prices (3.1% vs street 3.2% and previous 3.8%) softened considerably last month. Canadian new house prices bounced back considerably (3.1% vs previous -1.0%). Investors may learn more about what impact this may have on the Bank of Canada when Governor Macklem speaks tomorrow.

*Shares of Nvidia 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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