Futures red, Air Canada results, Magna falls, Moderna to hit 2020 low, Coinbase & GameStop news
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The latest episode of In the Money with Amber Kanwar is now live on YouTube. Tech was a star performer last year, but it is lagging to start 2025. What happens next? Find out where Ross Gerber of Gerber Kawasaki is finding the best deals and why this former Elon Musk fan boy has been selling Tesla.
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Teflon: Would you be surprised to learn that in the face of higher inflation and the threat of more tariffs the markets are less than 1% away from all-time highs? Well, believe it buster. Markets shrugged off yesterday’s hotter than expected producer inflation because the components that feed into the Fed’s preferred measure of inflation cooled. Similarly on tariffs, while Trump continued to pay lip service to more tariffs they weren’t implemented yesterday and that was enough for a relief rally. This morning futures are celebrating Valentines by turning red. We just got a read of retail sales in America that showed weaker than expected spending by consumers. US retail sales fell 0.9% vs the expected decline of just 0.2%. The drop in the control group was the biggest since March 2023. Bonds rallied and futures came off their lows. BMO’s Jennifer Lee says the report is a “headscratcher.” “ The consumer has a strong job market supporting it, and steady wage/benefit growth,” wrote Lee about the report. “…While this is disconcerting, I wouldn’t take this as THE sign that the US consumer is on the decline…. don’t underestimate the consumer. But again, a bad start to the year and throws some downside risk into the mix, before tariffs and trade wars really heat up.”
Wanderlust: I’ll watch for how investors greet earnings from Air Canada after the company beat profit expectations and reaffirmed its full year financial outlook. Total sales increased more than 4% which was better than expected. “We expect (Air Canada’s) results to be well-received, particularly given the recent weakness in the shares on macro pressures and potential fears for a guidance cut,” wrote ATB’s Chris Murray. Shares of Air Canada have lagged US peers and analysts who recommend the stock point out it trades at a steep discount relative to its own history and peers. RBC’s James McGarragle is one of the few analysts with a hold on the stock (14 buys, 3 holds) and isn’t convinced that low valuation is enough. “…We believe sentiment will be driven by impacts on travel due to tariff uncertainty,” he wrote in a note to clients. Interestingly, the company is reducing its capacity and they are getting questions about that on the call right now. National Bank’s Cameron Doerksen asked if this was because of fears that travel demand would fall on tariff concerns. The company responded they don’t see that now, but they are being proactive in reducing capacity should that happen.
Spare parts: Shares of Magna are falling 4% in the pre-market after earnings beat expectations but the company delivered a “shockingly light” outlook for 2025 sales. The auto-part maker is in the eye of the storm when it comes to tariffs. Magna warned that sales will be $38.6 billion – $40.2 billion which is $3 billion lighter than expected in a forecast that Evercore’s Chris McNally calls “very rough” and implies a “shocking” 10% drop in sales at the low-end. The outlook for 2026 implies margin growth but McNally questions how credible that outlook is. Magna typically gives a three-year outlook and this year only provided a two-year forecast highlighting the uncertainty stemming from tariffs. As mentioned, the company managed to beat profit expectations and boosted its dividend 2%, but clearly the disappointing outlook for 2025 is the main driver of the stock this morning.
Say ah: Moderna is plunging 5% in the pre-market and poised to open at the lowest level since the pandemic. The covid vaccine maker posted a signifanctly wider loss than expected as vaccine sales plunged from last year. It has also come under pressure as vaccine critic Robert F. Kennedy Jr. was sworn in as US Department of Health and Human services. The stock is “such a mess” wrote Mizuho’s Jared Holz. Moderna is down 93% from the pandemic peak. It says it is focusing on slashing costs and getting a new slate of products out this year.
HODLers: Coinbase shares are down 2% in the pre-market even as quarterly results blew past expectations. Profit sailed past expectations as revenue spiked 88% from the last quarter driven by the big crypto gains after the election of Donald Trump. “It’s the dawn of a new era for crypto. Crypto’s voice was heard loud and clear in the US elections, and the era of regulation via enforcement that crippled our industry in the US is on its way out,” touted Coinbase CEO Brian Armstrong. The outlook for the upcoming quarter was also well above expectations. So why is the stock lower? It is up 85% over the past year and Keybanc notes that spending plans for the upcoming quarter were a little higher than expected. In other crypto news, shares of GameStop are up 7% in the pre-market because CNBC is reporting it might start investing in bitcoin. The meme stock is down 16% so far this year and sales are projected to fall again this year.
