Futures down, Federal election, Netflix pops, Bank downgrades, Parkland dispute
Panic set in when I couldn’t find my son anywhere in the house. After a few minutes of searching, I found him taking a nap on the laundry room floor. When your diet is 95% chocolate, the sugar rush turns pretty swiftly into a sugar crash.
From tariffs to RFK Jr, there are no shortage of headwinds for the healthcare sector right now. This isn’t the time to chase some of the beaten up names lower says Rob Moffat of Middlefield. In our latest episode of In the Money with Amber Kanwar he talks about playing defense in healthcare, which names he is avoiding, and the select few he is holding. Tune in! Watch here
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Sugar crash: Futures are wilting this morning as tech stocks are under pressure and the US dollar his a fresh 3-year low. Traders are chalking the currency weakness up to renewed concerns about central bank independence after US President Donald Trump openly said he could fire Fed Chair Jerome Powell. This comes after Powell’s speech last week made it pretty clear he is watching how tariffs affect inflation right now vs how they affect growth and thus not inclined to cut rates. Gold is having a field day, hitting another record high. US dollar weakness and gold strength has meant the Canadian dollar is actually at a 6-month high relative to the greenback and the TSX has been outperforming the S&P 500 in large part due to gold stocks.
Home stretch: This is the final week before the Federal election in exactly one week. Elections Canada says there was record turnout for the first day of early voting. Two million Canadians cast their ballot on the first day of voting, before the Liberals officially released their election platform. It includes $130 billion in new spending and larger deficits than currently projected. There would be a 1% tax cut on the lowest income tax bracket and there is a promise to find $28 billion in cuts, although details were not revealed. Canadians are still waiting for a fully costed platform from the Conservatives but Pierre Poilievre said this would be coming “soon.” Right now the polling suggests a Liberal government with a majority still very much a possibility.
Netflix and chill: Shares of Netflix are popping 2% against a difficult tape after reporting better than expected results Thursday after the close. The streamer reported higher sales growth than expected and its forecast growth in the next quarter was also above consensus. Impressively, Netflix also put up record operating margin. Netflix isn’t part of the Magnificent 7, but its stock has been nothing but. Netflix is up 75% over the past year while the “Mag7” is only up about 19%. “We think investors have turned to (Netflix) as a recession-resilient haven amid macro uncertainty,” wrote Evercore’s Mark Mahaney, “and Q1 results and commentary reinforced the view that (Netflix) is well positioned to weather a tariff-driven macro slowdown.”
Notable calls: CIBC and National Bank have been downgraded at Jefferies by John Aiken. In a broad note about Canadian financials, Aiken says while historically this sector has been well insulated from downturns, domestic elections and tariff negotiations cloud the outlook. “We downgrade (CIBC) and (National Bank) to Hold from Buy as greater domestic exposures will likely lead to higher relative provisioning,” wrote Aiken. Amazon is being downgraded at Raymond James and getting a street-low price target $195/share (still above the current share price). The downgrade is from Strong Buy to Outperform, so that tracks. Still, the analyst warns of headwinds from tariffs. “Based on an uneven macro/tariff and steepening investment intensity,” wrote Raymond James’ Josh Beck, “(we) walk away with a bias that the Street is underestimating EBIT pressures in 2025-26 and thus downgrade from Strong Buy to Outperform.” Salesforce is catching a downgrade from Gil Luria at DA Davidson. Luria says the company has neglected its core business to pursue a “premature” AI opportunity.
Proxy battle: Parkland has responded to Simpson Oil’s presentation calling for a new board. “The hand-picked Simpson dissident slate lacks independence, expertise, and
credibility,” said Executive Chair Michael Jennings. (Recall, we interviewed one of the dissident nominees. You can find that interview here). Simpson Oil had been calling for a CEO change and last week they got it. Ironically, Scotia thinks that with Parkland doing some of the things Simpson Oil has been asking for, it may actually persuade investors to stick with Parkland’s strategy. “…We know several shareholders that will likely shift to support the incumbent board’s strategic review, rather than waiting for a new board to undertake the same process,” wrote Scotia’s Ben Isaacson in a note to clients on Wednesday.
