Energy stocks are down over the past month despite the war in Iran. Tech stocks have come roaring back. But this hedge fund manager says the market has it all wrong. Jason Landau, Group Head, Executive Vice President & Portfolio Manager at Waratah Capital Advisors believes “the left tail in the market is totally mispriced” and says “the best hedge in the market today is being long oil.”
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The youngest took an extra half hour to fall asleep last night. We were chatting about going into SK next year and he burst into tears saying how much he was going to miss his teachers. I wish I could bottle up this level of sweetness and innocence. If only to feed it to him when he is a mouthy teenager.
Here are five things to know today:
Roost: Tech stocks are under major pressure this morning on reports OpenAI failed to meet its own goals for sales and new users. ChatGPT is losing market share to Google’s Gemini and Anthropic’s Claude, reports the Wall Street Journal. Stocks tied to OpenAI are plunging including Softbank which fell 10% in Japanese trading overnight with Oracle (-8%), CoreWeave (-7%), AMD (-6%), and Nvidia (-2%) all lower pre-market. Are we witnessing the Yahoo-ification of ChatGPT? The market seems to be betting that the next Google of AI is…Google. Indeed, stocks linked to Google have trounced those linked to OpenAI according to custom indices created by Bloomberg (see chart below). This comes ahead of mega-cap tech earnings tomorrow: Microsoft, Meta, Amazon, and Alphabet are all out after the bell representing 21% of the S&P 500. Apple is on Thursday. Celestica is getting caught in a nasty tape -13% in the pre-market after revenue only barely beat elevated expectations (it increased 53% from last year and boosted its forecast but not enough for a stock that’s up 43% so far this year). As for the oil trade, it is starting to pick up again with US oil prices hitting $100/bl and Brent (global price for oil) advancing for a 7th day in a row. We talked about this dynamic on the podcast with Jason Landau who said he would rather be long global prices on the risk that Trump halts exports of oil to stem the rise in energy prices which would hurt WTI. Later today we will get the federal government’s spring fiscal and economic update.
High gear: General Motors is popping nearly 2% in the pre-market after boosting its profit outlook on higher truck demand. The automaker’s profit in the current quarter was also well ahead of expectations. This will be a relief to investors worried that tariffs and inflation would drive up costs. Tariff costs weren’t as bad as feared thanks to the Supreme Court’s rejection of US President Donald Trump’s emergency tariffs. The raised forecast is notable especially considering high gas prices and higher input costs for things like aluminum as a result of the war in Iran. General Motors says it sees no changes in consumer car shopping due to gas prices. Colour me surprised. We haven’t driven our gas car in over a month, favouring the electric one instead. Let’s see if the gains hold, the stock was higher in the pre-market and has been slipping as we move toward the open.
Buffering: Spotify is plunging 11% after warning of weaker subscriber growth and profit. Spotify recently increased prices and investors are worried that is turning customers off the service. It wasn’t all bad. Profit in the current quarter was 15% higher than expected and it had slightly more monthly active users than expected.
Honk if you love trucks: TFI International is going to be a bright spot on the TSX up 5% in the pre-market. The trucking and logistics company posted stronger than expected sales and profit while offering a rosier than expected profit outlook. As a result of several bankruptcies in trucking, TFI is scooping up market share and participating in a resilient underlying industrial economy. Bank of America upgraded the stock to buy. Shares bottomed a year ago and are up more than 70% since then. “TFII shares are arguably already pricing in some of the growing optimism in the trucking industry,” wrote National Bank’s Cameron Doerksen, “However, with earnings improvement set to accelerate in the coming quarters, we believe positive momentum for the stock will continue.”
Notable calls: Telus is catching an upgrade at TD Cowen this morning. TD Cowen’s Vince Valentini has been growing incrementally bullish on telcos having upgraded Rogers last week and Quebecor and Cogeco the week before. BCE is still a hold for Valentini. The Telus upgrade is based on price competition easing between the carriers, possible capex reductions (like we saw from Rogers last week), and potential non-core asset sales (“we believe investors would generally welcome a more focused strategy with fewer balls in the air”). The key risk is the potential for a dividend cut. “…We believe the current share price is low enough to protect medium-to-long-term investors, and with a 12-month horizon, we are comfortable with a BUY rating despite our view that the dividend will be lowered by 30%,” said Valentini in the upgrade. Scotia is downgrading shares of goeasy, Propel Holdings and Trisura on the view that small cap financials will remain in the penalty box. The elephant in the room is that many of these stocks have already been eviscerated so that call is a bit late, but Scotia’s Phil Hardie doesn’t see a quick turnaround. “(goeasy) investor sentiment remains unforgiving,” wrote Hardie. Propel is a different beast than goeasy but Hardie says 2026 is unlikely to surface meaningful catalysts. Hardie sees a similar lack of catalysts for Trisura.
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