Genuinely curious how my kids’ hunger signals work. It seems they are about to collapse from starvation from the moment I start cooking. Begging, pleading for snacks or any scraps I may throw their way. Which makes for very tense cooking conditions. Gordon Ramsey has nothing on these kids. Some moms like to cook with wine, I like to cook with elevated cortisol levels. Of course, the moment the plates hit the table, they are so full they might rupture if they take even one bite. Magic.
In this episode of In the Money with Amber Kanwar we sit down with veteran investor Gordon Reid of Goodreid Investment Counsel who is actively searching for value beyond the usual Magnificent 7 names. Reid explains how he’s managed to outperform by picking strong performers across the other 493 names in the S&P 500—and why he is bullish on US bank stocks. You can listen on Apple, Spotify or here.
Fire hose: Futures are mildly higher on a catalyst heavy day that features US bank earnings, inflation data and a big win for Nvidia. Bank stocks ran up into quarterly results and this morning we aren’t seeing much of a bid in the sector (more on that below). Meanwhile, inflation in the US came in below expectations on a month over month basis for the fifth month in a row. Lower car prices dragged down overall CPI. It is a curious case of the missing tariff inflation. Clearly companies either stocked up on inventories ahead of tariffs or are eating the price increases. With inflation consistently coming in weaker than expected, it will be up to Jerome Powell at the end of July to justify higher rates. Odds of a September rate cut rose after the print.
Canadian inflation: Inflation in Canada rose exactly as expected with headline CPI increasing to 1.9% in June from 1.7%. This marks the first acceleration in inflation since February. Core inflation rose to above 3%. There are signs that tariffs are driving the price increases with passenger cars and furniture becoming more expensive. This combined with blockbuster job growth data from Friday is likely to solidify no rate cut from the Bank of Canada on July 30th.
Bank on it: JPMorgan is flat despite beating profit expectations and posting a surprise increase in profit in their investment banking unit. Analysts were projecting a 14% decline in dealmaking fees – instead the group posted a 7% increase. Trading was also better than expected. Yet the stock isn’t really moving likely because it is trading at a premium and near a record. Citi is also flat despite beating profit expectations by 30% on the back of strength in fixed income trading. All five business lines posted growth. Citi is trading at around the highest level since 2008. The chart below is quite remarkable – a stock that has been basing out for 17 years. You know what the say, the longer the base…the higher in space! Wells Fargo is the ugly step-sister this morning, down 3% in the pre-market after cutting a measure of profit. The difference between what it pays for deposits and makes on loans came in a little worse than expected this quarter. Here too, keep in mind the stock was close to a record high. There were plenty of bright spots: provisions for credit losses were better than feared and this was the first quarter in seven years that they were free from asset growth restrictions. Recall, the Fed lifted the asset cap that was put in place because the company was accused of creating fake accounts for clients.
Jensen charm: Shares of Nvidia are soaring 4% to a fresh record after announcing plans to ship some AI chips to China after securing assurances from the US that the shipments would be approved. This comes after Nvidia CEO Jensen Huang met with US President Donald Trump last week. “This is a monster win for the Godfather of AI Jensen and Nvidia and follows a key meeting between Jensen and President Trump last week in the White House,” wrote Dane Ives of Wedbush, “Its also a major bullish tailwind for the tech sector as the green light for Nvidia will propel Street estimates to go up meaningfully over the coming years with China back in the fold.”
Touch the sky: Watch shares of PrairieSky this morning after the energy royalty company beat expectations on nearly all metrics. Funds from operations were higher, revenue beat expectations and production was also better. “In our view, PrairieSky’s defensive royalty model has carved a path for sustained shareholder returns with upside through countercyclical M&A and share buybacks,” wrote Raymond James’ Luke Davis.
