In the Money: 5 Things to Know

Futures hop, Nvidia climbs, American Eagle warns, CAE reports, notable calls

The loss of teeth is picking up in our house. My eldest just lost her 7th tooth and the tooth fairy is having trouble keeping up. At this point she is on a 2-5 day delay. And it is only just dawning on her that this is the 7th of 20 teeth. And really, 7 of 60 when you include the other kids. She’s also starting to realize she has been overpaying for them. Is it wrong to start a kickstarter to fund a stash of discarded teeth? Asking for a friend.

In this episode of In the Money with Amber Kanwar, Dan Niles of Niles Investment Management says a 50% drop in stocks is on the table. He’s no permabear, he has spent a nearly 30-year career investing in tech stocks – his experience is what is making him cautious. With the S&P 500 overvalued at 24x earnings and double-digit earnings growth expectations looking unrealistic, he advises managing market exposure carefully. Rallies of 18-21% (like those during the tech bubble) can mask broader declines, and he expects volatility ahead.

When they go low: Futures are looking to build on yesterday’s gains that erased 2025 losses on the S&P 500. The catalyst, of course, was the 90-day trade war truce between the US and China. From the lows, the S&P 500 has staged an 18% rally. However, Goldman Sachs is warning today that the road from here is a little tougher if economic data continues to deteriorate. There are some signs of that this morning with both Microsoft and Burberry announcing job cuts (although Burberry is surging on the news). Foxconn cut its forecast for the year citing trade uncertainties (although still sees “strong” growth). The TSX, meanwhile, continues to hang in there. It is less than 1% away from its all-time high at the end of January as energy stocks offset the sell-off in gold stocks.

Middle East: While on a trip to Saudi Arabia, US President Donald Trump heralded an alliance between the American tech sector and allies in the middle east. While details of the deals have yet to emerge, Nvidia already announced plans to supply chips to Saudi Arabia’s Humain – the regions AI infrastructure play. AMD, Amazon and Cisco also announced plans to do business with Humain. Shares of Nvidia are up 3% right now on the expanded market opportunity. This is a big deal because up until now the US has been restricting chip sales to Saudi Arabia and the United Arab Emirates on national security grounds. “We see NVDA’s deal with Saudi company HUMAIN as a good start to what will likely be a new country-to-country negotiation approach by the US government. That said, we remain prudent on the duplication of such success with other countries, thus the risk of tighter access to US AI chips for other key countries remains,” wrote Citi’s Atif Malik.

Bald eagle: Shares of American Eagle are plunging 11% in the pre-market after warning sales are going to drop in its upcoming quarter and yanking its financial forecast for the year. The fashion apparel retailer says comparable sales are poised to drop 3% and it is taking a $75 million writedown on spring and summer clothes that aren’t selling. Analysts warn it is an uphill battle for the retailer. “We maintain our Market Perform rating on concerns from execution challenges, macro headwinds, and tariff risks,” wrote Raymond James’ Rick Patel.

CAE: Watch shares of CAE at the open after the maker of flight simulation technology reported better than expected results. Profit was better than expected as the defense part of its business outperformed. The outlook is a bit mixed, says Desjardin’s Benoit Poirier. He notes that the profit outlook in both the civil and defense businesses was weaker than expected. CAE is in the grips of an activist investor, Browning West, who has been agitating for change. “Following Board changes in February, CEO transition appears on track for August 2025,” wrote BMO’s Fadi Chamoun, “We believe a change in governance that can champion a shift to a more capital-allocation-focused strategy (emphasizing risk-adjusted return and a balanced approach to growth and ROIC) has the potential to deliver valuation upside.”

Notable calls: Merck and AbbVie were downgraded to hold at Citi on lack of future drug pipeline. On the flip side, they are upgrading Regeneron to buy saying it offers a compelling re-rating opportunity. Peyto Exploraion could come under pressure after Raymond James downgraded the stock. “While Peyto posted a solid quarter and reiterated the outlook for 2025, we have downgraded the shares to Market Perform given a strong run since we initiated (+18%) just over a month ago,” wrote Raymond James’ Luke Davis, “We continue to believe Peyto will perform well in a volatile macro environment but believe this is well understood and likely priced in.”