Morning Minutes

US GDP, Central Bank Decisions and Earnings In the Spotlight




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,, 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).  

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Colin Cieszynski, Chief Market Strategist

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

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