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US GDP, Central Bank Decisions and Earnings In the Spotlight

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On a very busy day for news across a number of fronts, US index futures are on the rise again, climbing 0.2% to 0.5% as they bounce back from yesterday’s flat to down 0.75% moves.

A mixed round of earnings reports has come out overnight this morning. Shopify missed expectations on earnings badly ($0.81 vs street $1.23) which management blamed on slowing retailer sales amid growing supply chain problems. Suncor Energy ($0.56 vs street $0.58) missed on earnings but doubled its dividend back to where it was in 2019 and increased its share buyback program.

Ford, on the other hand has been rewarded by investors for crushing expectations ($0.51 vs street $0.27, up 8.1% premarket). Other results of note today include Caterpillar ($2.66 vs street $2.20), and Merck ($1.75 vs street $1.55). Results from Apple, Amazon.com, Starbucks and others are scheduled for after the close tonight.

Central bank meetings have ended in a split decision ahead of next week’s Fed meeting. The Bank of Canada remained in the hawkish camp, shifting its asset purchase program from accumulation to maintenance, and moving up its timetable for an interest rate increase to the middle quarters of 2022 from the second half of that year. On the other hand, the Bank of Japan remained dovish and pedal to the metal on stimulus likely into 2023. The European Central Bank indicated that financial conditions have improved enough to start tapering but confirmed asset purchases at current levels through March.

For investors wondering what stagflation could look like, today’s US GDP report provides a good example. Headline GDP growth from a year ago came in significantly softer than expected (2.0% vs street 2.7%) but the inflation component that the Fed likes to use, PCE prices, ramped up even more than expected (5.3% vs street 4.0%). It will be interesting to see which indicator the Fed listens to more next week, soft GDP or increasing inflation pressures.

Commodity action is very mixed this morning. While copper is up 1.0%, energy contracts are down again with WTI crude oil falling 1.2% and natural gas diving 2.1%. Yesterday’s larger than expected build in DOE US oil inventories (4.2 mmbbls vs street 1.9 mmbbls) has weighed on prices overnight. Weekly EIA US natural gas inventories are due at 10:30 am EDT (street +86 BCF).  

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Colin Cieszynski, Chief Market Strategist
Market Commentary:

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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