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
Last week before summer and we have a problem: the kids are all sleeping past 8am. It’s something I’ve been manifesting since I had children and now all of a sudden I realize what an issue this will be starting next week. I’m living in a Murphy’s law situation of my own making: finally get kids who can sleep in just as you need them to get up early.
Here are five things to know today
1.
US jobs grow more than expected – the market falls
Good economic news is bad news for the market this morning. The US added a blowout 162,000 jobs in August, well above the 55,000 expected while the previous month’s job loss of 23,000 jobs was revised to 21,000 gain. The reaction was pretty swift: futures fell, bond yields rose. Yesterday the markets were lulled into a fantasy of a potential rate pause after Fed Governor Christopher Waller said if inflation cools next week he would be inclined to keep rates on hold. Higher than expected job growth in August has the market betting that inflation isn’t going to cool. The market is now pricing in x% of a rate hike. The final test will be the inflation data which is due out next Friday. The odds of a rate hike September 18th strengthened after the print.
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2.
Canada unexpectedly sheds 41,700 jobs in August
The Canadian jobs picture eroded after solid gains in the prior three months. Canada shed 41,700 jobs, primarily in the services sector, against an expected 15,000 job gain. The unemployment rate held steady at 6.4%. The bulk of the job losses were full-time while private sector and public sector shed jobs in roughly equal measure. Thanks to the diverging job pictures between Canada and the US – it is no longer true that we’ve created more jobs than the US over the last three months. The odds of a rate hike by December weakened slightly following the print.
“…Today’s print seems to tally with other evidence (exports, monthly GDP) that the economy is slowing again in Q3 following a strong second quarter and, with heightened uncertainty regarding US trade, we continue to think that the Bank of Canada will remain on hold even after policymakers expressed greater concern over the inflation outlook earlier this week,” wrote CIBC’s Andrew Grantham.
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3.
Lululemon plunges 20% on drop in sales and profit warning
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downward dog · snapshot of disappointing lululemon results Comparable sales: -10% Q3 outlook: $0.93 – $0.98 EPS vs $2.41 expected Full year profit: $8.62-8.87 EPS vs previous outlook of $10.95-$11.15 |
Expectations were already quite low for the athletic apparel maker – the stock was trading around an 8-year low. But results were even worse than expected. Sales dropped 10% compared to the expected 4% decline and the profit and sales forecast were slashed. The upcoming quarter is particularly challenged with the profit forecast half what was expected. It’s an ugly backdrop for new CEO, Heidi O’Neill, who doesn’t start until next week. “We know there is significant work ahead of us,” said the interim CEO on the call.
The company is also in a truce with its founder Chip Wilson who in the past openly criticized the company’s missteps. As part of the truce he isn’t allowed to issue negative comments for the next 18 months and will have regular meetings with O’Neill. “We don’t believe a pullback represents a good buying opportunity,” wrote Mauricio Serna of UBS, “The main reason is we see big EPS downside over the (next 12 months) and also see little upside risk.” Lululemon isn’t the only basket case in apparel: Nike, ON Holdings and recently Dick’s Sporting Goods have all struggled and are languishing at 52-week lows and more.
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4.
Credit rating agencies fall
The head of the US Federal Housing Finance Agency, Bill Pulte, is taking aim at credit rating agencies calling out Equifax, Experian, TransUnion by name while also attempting to bust up Fair Isaac’s monopoly on credit scores. “Equifax, Experian, and TransUnion have been overcharging Americans for far too long. This will end soon,” Pulte said in a post on X. At the same time, Pule is directing Fannie Mae and Freddie Mac to use another vendor for credit scores other than Fair Isaac’s “FICO” score – accusing them of raising prices 1,800% since 2020.
If Pulte’s name is familiar it is because he is part of the Pulte dynasty of homebuilders. He is the grandson of William J. Pulte who is the founder of the Pulte Group – one of the largest homebuilders in America.
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credit rating agencies pre-market Fair Isaac: -14% Equifax: -12% Experian: -4% TransUnion: -11% |
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5.
Adobe falls on selection of new CEO
Shares are down 4% after the company announced internal candidate Anil Chakravarthy would be come the new CEO and current head of creative, David Wadhwani would be leaving. Adobe has been marred in SaaSpocalypse fears as its own AI offerings fail to stem a decline in sales growth. Why use photoshop when you can just get ChatGPT or Grok to whip up an image for you? Shares are down 17% over the past year. Earlier this year, long-time CEO Shantanu Narayen said he would cede his position and remain as Chair prompting the CEO search. Analysts note that Wadhwani would have seemed like the obvious choice given he was responsible for 2/3 of the company’s revenues. “More departures and org changes are likely,” wrote Brent Thill of Jefferies. Adobe reports results next Thursday.
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