Steve Eisman made his name betting against the housing market before the Global Financial Crisis—a trade immortalized in The Big Short. So when he sees risk building in the market, investors pay attention. But this time, Eisman isn’t predicting another crash. In fact, he’s net long.
Looking to invest in high-quality companies without high fees? The HAMILTON CHAMPIONS™ suite of ETFs offers exposure to diversified portfolios of equity champions across tech, financials, utilities, and dividend strategies, all with a low 0.19% management fee, designed to help you stay invested with confidence for the long term. For more information on the HAMILTON CHAMPIONS™ suite, visit: www.hamiltonetfs.com/hamilton-
FROM AMBER’S DESK
I bet you are thinking, “I miss when she just talked about her kids” in the opening. Well I’ve banked a whole week of shenanigans that I will unleash…RIGHT AFTER YOU VOTE FOR US IN THE SIGNAL AWARDS. DO IT FOR THE KIDS! (We still have a 10-point gap between us and first place!) Vote HERE and HERE!
Here are five things to know today
1.
Stocks rally, huge Canadian job losses
Stocks are in rally mode as oil and bond yields retreat, creating a bid under precious metals like gold this morning. Mercifully, earning season begins in earnest next week with the US banks kicking things off on Tuesday.
Canada unexpectedly shed nearly 70,000 jobs in September vs economist expectations for nearly 10,000 new jobs created. The unemployment rate ticked up to 6.5% from 6.4%. The job losses were in both full-time and part-time jobs. An important observation is that the bulk of the job losses were in the public sector. Nearly 70,000 jobs were lost in the public sector while the private sector increased employment by 24,100 jobs. After an era of tremendous public sector hiring, Prime Minister Mark Carney warned that he would be pulling back on government jobs. That the private sector increased could bring some relief that corporate Canada is ready to pick up the baton. Tariff pain was evident, however, with the manufacturing sector also shedding jobs.
2.
SpaceX +4% on push to become “major mobile carrier”
The space exploration company announced it purchased low-band spectrum to fill in the gaps from its satellite network and “provide complete phone coverage in America.” The announcement is sending shares of AT&T, Verizon, and T-Mobile lower in pre-market while tower companies like Crown Castle, American Tower and SBA Communications rally. “…The window in which incumbents can treat Starlink Mobile as a science project is narrowing,” wrote Kutgun Maral of Evercore. Low-band spectrum is the kind of frequency that travels farther and through more obstacles (think rural areas and basements). The industry has long been critical of SpaceX’s ambitions, but acquiring low-band spectrum pushes back against their key argument that SpaceX doesn’t offer full coverage. If SpaceX were to bid for mid-band spectrum at the next auction, their participation could drive up prices for the incumbents whether they win the bid or not.
The bottom line is that this creates more competition and potentially higher costs for incumbents. Watch for how Canadian telcos react: BCE and Rogers are lower in the pre-market.
|
mobile carriers pre-market AT&T: -7% Verizon: -6% T-Mobile: -6.5% |
3.
Aritzia blows past profit and sales expectations, boosts outlook
The retailer is down 30% since the peak in June so let’s see if a lights-out quarter restores the faith. Here are the highlights: adjusted profit doubled from last year, comparable sales were up 34.5% (consensus 29%), digital sales surged 68%, and gross margins were also much better. The bottom line was flattered by tariff refunds, but even when you strip that out profit growth was robust. US sales were a key source of strength increasing 60%. Aritzia says sales for the year will grow between 29-32% which is better than their previous forecast calling for 21-28% growth.
“ATZ delivered another exceptional quarter in ways in which investors should want to see,” writes Irene Nattel of RBC. The company is hosting an investor day on October 27 which could serve as a catalyst for re-rating, argues Nattel. She notes the company achieved its revenue target one year ahead of schedule and margins are tracking above expectations despite tariff headwinds.
4.
Delta Air Lines -3% after cutting profit outlook on high fuel prices
The price of fuel was $500 million higher than the airline forecasted back in July, causing the airline to cut its profit forecast for the year. The CEO, Ed Bastian, warned that Delta would be forced to raise prices if fuel prices remain high in an interview with CNBC this morning. Yet the stock has been resilient, up 19% so far this year as high travel demand and increased prices help to keep the airline in the black. Which is no small feat considering Delta absorbed a $6 billion increase in fuel costs this year. It also owns a refinery which has partly helped to offset the increase in jet fuel prices. The airline skews more toward premium travel, the part of the economy that is more willing to absorb higher fares. Revenue was a record for this quarter and Delta said “demand remains strong” in its results calling for 20% revenue growth next quarter. Peers like American Airlines, United Airlines, and Southwest are under pressure in the pre-market. Air Canada could be down this morning as well in sympathy.
5.
MTY Food abandons strategic review, increases dividend + buybacks
The fast-food chain operator initiated a strategic review last November amidst struggling sales and the stock hitting a five year low. This morning MTY says it has ended its review, which did not result in a sale in the company, and instead will resume buybacks and increase its quarterly dividend to $0.50/share from $0.37/share. The company has been working to close stores and warned that further portfolio brand optimizations were ahead while implicitly shelving new acquisitions.
The stock is lower than it was during the strategic review, hitting a fresh 6-year low yesterday. Revenue continues to slide, down 7% from last year and comparable same-store sales are down nearly 2%. “While mergers and acquisitions are part of MTY’s DNA, the Board of Directors believes the best opportunity available today is MTY itself,” said the release, “Few acquisition targets offer the value and quality that MTY does, so for the moment, the Company will focus on returning capital directly to shareholders by buying back MTY’s own shares for cancellation and paying an increased dividend.”
Don’t miss the next episode! Time to get your questions in! Click here to submit a question!
