Futures lower, election watch, Darden miss, Power corp hikes dividend, notable calls
I’m late. Let’s dive right in!
We’ve got a brand new episode of In the Money with Amber Kanwar. I spoke with James Cook of Matco Financial about how investors should think about the underperformance of the US markets. He says don’t count the US out just yet, but there are easy ways to dip your toes into global markets for Canadian investors. Listen on Apple, Spotify or here.
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Future proof: Futures are indicating a lower open this morning after a rally yesterday. The rally was fueled as the Federal Reserve keeping interest rates steady. On the surface, the Fed’s rate decision wasn’t all that positive. They lowered growth projections and increased inflation expectations. But rather than get caught up in the stagflation boogeyman, investors took comfort in Fed Chair Jerome Powell’s assessment that tariff induced inflation would be transitory. What’s that saying? Fool me once…but I digress. It was good enough for markets because of the idea that the Fed would be willing to cut rates if growth falters since they view inflation as a temporary state of affairs. The TSX outperformed and by the way is in the green for 2025 (+1.38%). Speaking of Canada, Prime Minister Mark Carney is reportedly going to call an election this Sunday for April 28 according to The Globe & Mail. This would allow Carney to capitalize on his momentum as polls have him slightly ahead of Conservatives (see chart below via Dave Lutz at Jones Trading). Meanwhile, Steve Bannon said he thinks US President Donald Trump will run again in 2028. What about those pesky term limits? “We’re working on it,” he said. Cool cool cool. After the bell today we will get earnings from Nike, Micron, Fedex and Lennar.
A thousand cuts: Shares of Accenture are trading lower this morning despite reporting a better than feared quarter. The IT services company beat sales and profit expectations and slightly raised their forecast for the year. Still, investors are concerned that a slowdown in IT spending outside of AI and cuts to government spending will weigh on the company. The stock is poised to open at an 8-month low.
Bread basket: Investors are trying to figure out what to do with restaurant chain Darden this morning. The owner of Olive Garden and Longhorn Steakhouse missed sales expectations. However, it appears that investors were prepared for this according to several analysts who say sloppy data could be the result of inclement weather and a strong cold & flu season that kept patrons away from restaurants.
Power pose: Watch shares of Power Corp at the open. The financial services conglomerate (owns IGM Financial and has a big stake in Great-West Lifeco) backed by the Desmarais family missed earnings expectations. However, Doug Young at Desjardins says this excluded the gain on the sale of their stake in Peak Achievements Athletics. The company also boosted its dividend 9%, which was more than Young was expecting.
Notable calls: Alimentation Couche-Tard is getting an upgrade to buy at Veritas after the stock surged 6% on the back of earnings. They are upgrading because the stock has been under pressure and now offers an attractive opportunity, there was a positive turn in same-store sales in all regions, the company should see minimal tariff impact, and confidence that if Couche-Tard does a deal for 7-Eleven owner, they won’t overpay. BRP was cut to sell at Citi on tariff threats with the analyst warning that its production exposure in Mexico is far greater than its earnings power. Citi is also downgrading Constellation Brands, the owner of Corona and Kim Crawford. “We are downgrading Constellation Brands (STZ) to Neutral from Buy as we believe the recent beer topline slowdown could linger with Hispanic consumer weakness, a soft US beer category, as well as looming tariff risk,” wrote Filippo Falorni at Citi. Lastly, shares of Meta are down 20% from the all-time high and Raymond James’ Javed Mirza is warning that this may be the beginning of more weakness. Mirza notes there are four early technical negatives developing including price momentum trending lower, relative strength deteriorating, intermediate-trends faltering, and institutional selling pressure. Too bad I read this after I bought shares.
