Futures shake it off, TD sells stake in Schwab, McDonald’s perks up, Shopify upgraded
I really had no skin in the game but my daughter was rooting for Taylor Swift’s boyfriend in yesterday’s Super Bowl. As for the markets, Ryan Detrick of Carson Group, said that the two times the Chiefs have lost Super Bowls by three touchdowns or more, the S&P 500 has gained 20% that year each time. Unfortunately, that didn’t provide much comfort to my seven year old.
Here we go again: US futures are indicating a rebound from the sell-off on Friday even as US President Donald Trumps is promising another round of tariffs. The US dollar is rallying and gold has hit a fresh record high. The Canadian dollar is falling as tariffs loom once again. Trump spoke to reporters yesterday and said he plans to impose 25% tariffs on all steel and aluminum imports including from major suppliers in Canada and Mexico. American companies that sell steel and aluminum are loving it with shares of Alcoa (+5%), Nucor (+8%), Steel Dynamics (+6%), and US Steel (+5%) all trading higher in the pre-market. Shares of Canada’s Algoma Steel are down 4% as about half of its sales go to the US. However, if we zoom out, the equity markets are showing remarkable resilience. The TSX is less than 2% from an all-time high with gold and tech stocks powering the gains. In the US, every single sector is in the green for 2025 with the exception of tech stocks as Alphabet, Apple and semiconductors have been under pressure. Julian Emmanuel of Evercore ISI is using the 2018 trade war as a blueprint for how 2025 might shake out. Emmanuel recommends overweighing “Trade War Heroes” – stocks that are low volatility and have high buybacks (full list at the end of the newsletter). He recommends avoiding “Trade War Weary” stocks that have high volatility and low buybacks (names like Tesla, Celsius, Intel, IonQ, Coinbase are on that list). This week we have 45 companies reporting on the TSX, 77 companies reporting on the S&P 500, congressional testimony by Jerome Powell tomorrow and Wednesday and US CPI on Wednesday.
It’s not you, it’s me: TD announced it will be selling its 10% stake in Charles Schwab for net proceeds of $14 billion. Shares of TD are up 2.5% in the pre-market while Schwab is down 3%. This of course comes in the wake of TD’s anti-money laundering penalties that resulted in $3.1 billion in fines and an asset cap. TD says it plans to use part of the proceeds to buy 100 million of its shares (5% of the float). TD shares have staged a big recovery since the December lows (+15%) and are living up to that old “worst will be first” saying about last year’s laggards being this year’s winners. It is the best performing big 5 bank so far this year.
Mmm mmm good-enough: Shares of McDonald’s are higher in the pre-market as global comparable sales came in slightly better than feared (+0.4% vs -0.93% expected). The fast-food chain missed profit expectations and the stock initially sold off as this quarter captured the E. coli outbreak in October which was linked to onions. 104 people were infected and one person died. McDonald’s invested $100 million into the business to help franchises recover. While US sales slumped, there was a recovery in international stales, particularly in the the Middle East where the war in Gaza had crimped sales. The stock is basically flat over the past year as the company works through some of the challenges of last year and investors await clearer signs of growth.
Case of the Mondays: Shares of monday.com are ripping higher in the pre-market (+22%) after stronger than expected sales and profit. Investors had been concerned that the software provider of workflow processes has been losing momentum with large customers. However sales growth of 32% in this quarter and a stronger outlook than expected for the next quarter and 2025 are putting some of those fears to rest. “We continue to like Monday long-term and view it as one of the true emerging platform stories in software,” wrote Arjun Bhatia of William Blair.
Add to cart: Shopify is up 3% in the pre-market after catching an upgrade from an analyst at Benchmark ahead of quarterly results. The e-commerce platform is set to report earnings tomorrow morning and Benchmark analyst Mark Zgutowicz says Shopify should have “comfortable upside.” He also thinks AI will be a catalyst this year as the company seeks to launch generative AI and creative tools. The price target of $150/share makes him the second most bullish analyst on the street ($175/share is the street high) and implies 24% upside from here (these are US price target).
Full list of “Trade War Heroes” per Evercore ISI
H&R Block, Inc.,HRB
Choice Hotels International, Inc.,CHH
Murphy USA, Inc.,MUSA
Marathon Petroleum Corporation,MPC
Phillips 66,PSX
Valero Energy Corporation,VLO
Assurant, Inc.,AIZ
Hartford Financial Services Group, Inc.,HIG
MetLife, Inc.,MET
Old Republic International Corporation,ORI
AbbVie, Inc.,ABBV
Cencora, Inc.,COR
Elevance Health, Inc.,ELV
Cigna Group,CI
CVS Health Corporation,CVS
Cardinal Health, Inc.,CAH
Centene Corporation,CNC
Chemed Corporation,CHE
DaVita Inc.,DVA
HCA Healthcare Inc,HCA
IDEXX Laboratories, Inc.,IDXX
McKesson Corporation,MCK
Mettler-Toledo International Inc.,MTD
Molina Healthcare, Inc.,MOH
Henry Schein, Inc.,HSIC
Tenet Healthcare Corporation,THC
UnitedHealth Group Incorporated,UNH
Universal Health Services, Inc. Class B,UHS
AECOM,ACM
Booz Allen Hamilton Holding Corporation,BAH
Expeditors International of Washington, Inc.,EXPD
Lockheed Martin Corporation,LMT
Masco Corporation,MAS
Science Applications International Corp.,SAIC
Apple Inc.,AAPL
Arrow Electronics, Inc.,ARW
GoDaddy, Inc. Class A,GDDY
HP Inc.,HPQ
Insight Enterprises, Inc.,NSIT
TD SYNNEX Corporation,SNX
