Richard Abboud dropped out of university to pursue entrepreneurship. Today, he’s the Founder & CEO of Forum Asset Management, a $4 billion asset management business—and one of the country’s most vocal advocates for a more ambitious Canada.
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FROM AMBER’S DESK
We are in no-man’s land this week. School isn’t until next week, but work is very much happening this week. After a month of no TV the kids are back to mainlining screens and there is precious little we can do about it.
Here are five things to know today
1.
Rough start to September
Futures are flat as investors contemplate higher oil prices and higher interest rates. Yesterday the markets were sharply lower with energy the major bright spot on both sides of the border. The tech trade is in focus with earnings dripping out from Dell and HPE which are helping to support the sector this morning. Today we are seeing some cooling off – oil is slightly lower and bonds are flat giving stocks some breathing room.
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2.
Bank of Canada rate decision this morning
The Bank of Canada is expected to keep rates on hold this morning at 9:45amET. Investors will want to hear how the BoC is balancing upside risk of inflation because of higher energy prices with downside risks to growth because of the renewed tariff spat between Canada and the US. Growth has been remarkably resilient in Canada – but that doesn’t factor in the new tariffs by the US and the retaliatory tariffs by Canada set to go into effect next week. Meanwhile, headline inflation has been running above target at 3% as of the last reading in July.
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“All in, new tariffs and the deterioration in the Canada-U.S. trade relationship at minimum scrubs out any upside risk that might have been building in the Canadian growth outlook and could weigh further if the dispute persists. We judge that any upside risk to the inflation outlook from Canada’s retaliation will ultimately be overwhelmed by the softer growth profile. This should leave the Bank of Canada firmly on hold for the remainder of the year.” — Michael Gregory, bmo |
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3.
Dell pops 9% after earnings.
Dell is surging after boosting its sales forecast by $25 billion on demand for its AI servers. This is the fifth quarter in a row that Dell’s forecast has been higher than expected and with their AI server business projected to triple from last year. Profit soared past expectations and came in 44% higher than expected. It wasn’t just AI servers, their traditional PC business was also strong with sales up 20%. While shares of Dell have surged over the past year, they’ve been fairly stagnant over the last few months. All this growth for just 18x earnings…what gives? The market is pricing in the liklihood of growth normalizing argues Raymond James in a note about earnings. But they think the stock can continue to work and are sticking with their buy rating. “…AI is pulling through demand across traditional compute and storage, and the margin expansion this quarter also demonstrates Dell’s ability to execute despite continued supply constraints,” wrote Simon Leopold of Raymond James.
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4.
MongoDB drops 13% in pre-market.
The database software company beat and raised its outlook but that doesn’t appear to be enough for investors on top of a 92% rally from the April lows. MongoDB is a battleground stock – earlier in the year it was run over by SaaSpocolypse fears, but quarterly growth has only accelerated over that time creating a recovery in the stock. However, their forecast implies headline revenue growth will slow from 30% to 20%. The rub in this quarter lies within their Atlas division – the cloud-hosted database business. Instead of having servers on premises to manage databases, companies can opt for cloud versions. Revenue at Atlas grew 29% which is consistent with prior quarters of growth and investors appear disappointed we aren’t getting acceleration.
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” Stepping back, we thought the quarter was strong fundamentally and believe the after-hours sell-off reflects elevated buy-side expectations for Atlas. We would be buyers on the weakness…” – Rishi jaluria, rbc |
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5.
Couche-Tard beats top and bottom line expectations
Couche-Tard’s profit and sales came in higher than expected however US merchandise sales were lower than expected. Growth in the US has been a key catalyst to the stock, so we will see how investors treat the miss (sales grew 1.7% vs the 2.2% expected). It appears the US market was tough and the company had to resort to higher promotional activity leading to some margin erosion there as well. On the conference call the company called out “a consumer who is increasingly intentional about where they spend.” While nicotine and energy drinks were bright spots, carbonated drinks and sugary snacks continue to struggle. “I certainly think GLP1 drugs are having an impact on those categories,” said CEO Alex Miller on the call. He noted they are changing up the assortment to include more protein and hope that will help to boost sales going forward.
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“We believe that investors will focus on the deceleration of merchandise same-store-sales growth and the health of the U.S. consumer. Comments by management on post-quarter trends may influence the behavior of ATD’s shares…” – martin landry, stifel |
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