Tech stocks attempt recovery, tariff talk, GM turnaround, Metro beats
I missed my sleep window last night and paid a dear price, I didn’t fall asleep until 3am. So be gentle with me today. To my husband, I apologize in advance for all the things I might say today.
A new episode of In the Money with Amber Kanwar is out right now and it is all about DeepSeek. What is it and what should you do with your tech stocks now? This episode with Ivana Delevska of Spear Invest is packed with actionable insights. Listen on Apple, Spotify, or here. It will be on YouTube later today.
$1 trillion problem: DeepSeek put US tech stocks into deep you-know-what. Nvidia shed nearly $600 billion in market value, the biggest one-day loss for a company in history. The fear of a cheaper, better AI model from China cost the S&P 500 more than $1 trillion in value. Of course, more than half of that came from a single stock. In fact, under the hood the S&P 500 had a pretty good day. Despite a nearly 2% sell-off in the S&P 500, the majority of stocks in the index actually finished higher. Frances Horodelski, who was on the podcast last week, said “rotation is the lifeblood of the markets.” We saw that in full force yesterday. Even though Canada isn’t a hotbed for the AI trade, the TSX fell. Unlike the S&P 500, more stocks were down than up. Interesting to see where we saw outperformance in tech, shares of Apple finished higher. This morning, futures are indicating a very tentative recovery with Nvidia up 3% in the pre-market. On today’s podcast, Ivana makes the case for buying.
Tariff man: DeepSeek may have overshadowed the tariff rancor in the last 24 hours, but it is front and centre again today. The Canadian dollar is dropping for a second day in a row after US President Donald Trump said he favours across-the-board tariffs that are much higher than the 2.5% global rate proposed by his incoming Treasury Secretary Scott Bessent. He went on to list sectors he wanted to target including copper and aluminum. He also suggested he was in favour of tariffs on automobiles from Canada and Mexico. Remember, he has threatened both his neighbors with 25% tariffs starting February 1st (two days away).
Vroom Vroom: General Motors is taking a $5 billion dollar charge on its struggling business in China and the automaker swung to a loss in the quarter. It’s decision to abandon its robotaxi ambitions was a another $500 million hit to the bottom line. Investors saw this coming, however, with the company pre-announcing the charge a month ago and the stock is flat in the pre-market. On the positive side, the automaker is saying 2025 will be a better year with profits expected to grow from 2024. Despite these challenges, investors like the restructuring efforts at General Motors and the stock has outperformed in an otherwise bleak auto market.
Price check: Watch shares of Metro this morning after the grocer beat profit expectations but missed on sales growth. Food sales grew 1%, which was half of what consensus was expecting. Meanwhile, pharmacy and prescription drugs did much better than expected (thank you cold & flu season). RBC’s Irene Nattel isn’t fussed about the miss on food sales and says this is due to calendar shift. When you adjust for the calendar, food sales actually ran a little bit above inflation (+2.4%). Importantly, says Nattel, the company reiterated its target of growing profit 8-10%. Nattel says strong results from Metro bode well for Loblaw and Empire (owns Sobey’s, Farm Boy). “MRU results reinforce our ‘stronger for longer’ investment thesis on the food retail segment, as cash-strapped consumers moderate food away from home, and focus on value in everyday household purchases,” Nattel wrote in a note to clients this morning.
Notable calls: Lundin Mining is getting a lukewarm rating from Morgan Stanley this morning. The shop resumed coverage with a hold, down from an overweight back in the summer before it was restricted from talking about the stock. The analyst says Lundin’s improving growth story is offset by spending uncertainties. Victoria’s Secret is popping 1% in the pre-market after Barclays upgraded the stock saying it could rally 40% from here on a strong turnaround led by new CEO Hillary Super. Lastly, AMD is getting downgrade at at Melius, but the analyst says its not because of DeepSeek. Rather the analyst is worried about intensifying competition from Nvidia.
