To read about the week ahead, don’t miss my weekly column in The Globe and Mail.
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Here are five things to know today:
Case of the Mondays: Stocks are under pressure and oil is surging after peace talks broke down over the weekend between the US and Iran. The US is now blocking the Strait of Hormuz to pressure Iran’s ability to control the channel and receive any benefits from selling oil. Oil is back about $100/bl surging 7.5%. Fertilizer stocks are also higher on supply constraints with Nutrien (+2%), CF Industries (+3%) and Mosaic (+2%) popping. Futures are down, but only about half a percent. Is the market moving past the supply shock? As I noted in my Globe column, the market has been remarkably resilient down less than 3% from a record high on the S&P 500. Energy stocks on both sides of the border are near a correction. Indeed, since the March 30th low, energy is the only sector in the red while tech is the best performing sector in the US. It may come down to earnings, as it often does. Earnings growth is projected to clock in around 16-17% depending on the forecast. If this can hold up, as it did last year during the tariff scare, that may be the only thing that matters.
Titans of Wall Street: Goldman Sachs is kicking off bank earning season and despite a profit beat and record equity trading the stock is under pressure this morning. A miss in its fixed income, currency and commodity trading unit is the culprit of the sell-off. Revenue there unexpectedly fell. However, stock traders carried the day beating their own Wall Street record set last quarter by $1 billion. It appears not enough for investors. At first blush, it seems like an overreaction to a generally solid set of results and the stock could be getting caught up in a soggy tape.
Fast and loose: There is no better pulse in the industrial economy than Fastenal. The nuts and bolts maker in nearly every industrial application reported slightly better earnings than expected but the stock is under pressure margins were slightly under pressure. Under the hood, demand for its goods remained robust. Sales grew 12% – the fastest pace of quarterly growth since Q3 2022. The rub is that costs are increasing faster than prices, hence the gross margin disappointment. The stock had also been rallying into results making it ripe for profit taking in a risk-off market.
One man’s trash: GFL announced they are buying Secure Waste in a $6.4 billion in a cash and stock deal. The deal will expand GFL’s presence in western Canada and in industrial and energy waste. The deal will be financed with 20% cash and 80% stock. GFL’s shares are down 3.5% in the pre-market. The deal represents a 16% premium to Secure Waste shares at $24.75 a piece. GFL and its CEO have been subject to recent controversy after charges were laid in connection with a spate of shootings at the homes of GFL executives. The accused owns a rival construction company to one of GFL’s subsidiaries. Obviously the controversy isn’t preventing GFL from business as usual with Secure Waste its largest deal ever and the second one this month. GFL, which has tripled in size over the last six years says the deal could aid in broader equity index inclusion.
Only a day away: Prime Minister Mark Carney is likely to have a majority government by tomorrow with three by-elections taking place today. After several MPs “crossed the floor” over the past six months, Carney needs only one more to seal the deal. This means Canadians will not head to the polls until 2029 – one year after US President Donald Trump’s term is set to end. “The outcome could lend supportive stability to the Canadian dollar and domestic markets while emboldening the Carney administration to more aggressively pursue fiscal, regulatory, investment and trade policies without having to depend upon the fragmented opposition,” wrote Scotia’s Derek Holt.
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