Futures wilt, Canadian jobs weaker, TSX IPO drought ends, Pinterest drops
I bet my husband I wouldn’t cry more than four times today. At 7:02am I realized I am going to lose that bet after seeing long-time writer Terry Cain who caught me taking a selfie in front of the building. My last few minutes on air will be at 10:45am. If you hate embarrassing displays of emotion, it won’t be for you.
No: Futures are a little lower one day after the Federal Reserve delivered a 25 basis point rate cut. Jerome Powell, Chairman of the Federal Reserve, didn’t send any direct signals about the December meeting but the market is pricing in about 70% chance of another cut. He was also asked point blank if he would resign if Donald Trump asked him. To which he simply replied “No.” Twice. He definitely bristled at the question but his answer may have just been a practical one. Legally, firing a Fed member is not permissible to preserve the separation of church and state as it were. But also with all the uncertainty in the air, I imagine suggesting a change at the helm of the Fed would have created a bout of volatility. This morning, we get consumer confidence and inflation expectations at 10am. Overall, this has been a great week for the stock market and the bond market. Yes, you read that right. The bond market. Even with the big sell-off after Trump was elected, the US 10-year is poised to put in its best weekly performance since September.
Help wanted: Canada added fewer jobs than expected in the month of October. Canada added just 14,500 new jobs compared to the expectation o 27,200 and below the healthy 46,700 created in September. The unemployment rate held steady at 6.5%. The bulk of job gains were in the full -time category. The details paint a picture of continued weakness. The participation rate fell to 64.8% (those eligible for work that are working), which is the lowest since 1997 excluding Covid. The Canadian dollar weakened on the back of the print.
Techlandia: Expedia beat profit expectations and boosted its sales forecast but its rally in the pre-market is waning. While the company is forecasting a resilient holiday travel season, not everyone is convinced. Deutsche Bank downgraded Expedia because the analyst is worried about tepid consumer growth. Airbnb also touted a better outlook but the stock is down 7% in pre-market because higher spending on things like marketing is expected to weigh on margins. Pinterest is down nearly 13% right now after quarterly results stoked fears of decelerating growth. Yes, sales growth was 17% higher but that is slower than 20% the last quarter and the forecast suggests deceleration. DraftKings is down 7% after the sports betting platform cut its sales forecast and put in a wider loss than expected. Part of the reason, they said, was because it had losses on NFL games that favoured customer bets. Go sports!
Dynomite: Clothing retailer Dynamite has filed to go public on the TSX. I’ll admit the little girl in me is excited as that was a forbidden store when I was growing up. It also marks the end of an IPO drought in Canada with the last major IPO more than a year ago. It boasts sales of around $900 million and which is more than double what Aritzia had when it went public.
Earnings file: Shares of Telus may pop this morning, especially after the week BCE had. Not only did profit beat expectations as sales rose more than expected, but it also boosted its dividend by 7%. Keep in mind, it already has a dividend yield of 7.5%. Jamieson Wellness, the vitamin company, could also gain at the open after sales increased 15% in Canada and 82% in China. Stifel is pounding the table on the stock this morning noting it trades at 11.5x forward EBITDA whereas other vitamin companies are trading at 20x and Kenvue is trading at 13x. Shares of Canopy Growth are down in the pre-market after sales fell 9% and it posted another loss. The sales decline is because they have exited businesses. If you adjust for that, sales growth is 3%. The company is still promising that adjusted EBITDA will be positive in the coming quarters.
