I’ve been getting these out earlier so I can take my boy to school in the mornings. It’s his first year of JK and the first time without his older sister at his school. The other day he said no one was plays with him. My sweet boy! I strongly believe that my kids don’t have to be popular and any years spent without friends are good “personality years” sowing the seeds of their future sense of humour. Having said that, I was definitely hiding in the parking lot spying on the playground until I saw him make a friend to play wheelbarrows with.
Value stocks are back and Canadian equities may finally be getting the recognition they deserve. In this episode of In the Money with Amber Kanwar, 40-year market veteran Kim Shannon, founder of Sionna Investment Managers, shares why she believes Canada and value investing are poised to outperform in the next decade, despite the market’s obsession with AI, growth, and U.S. mega caps. Listen on Apple, Spotify, or here.
Hot streak: US futures are higher as the Federal Reserve sits down for their two-day meeting on interest rates. This comes as markets are making records with the S&P 500, NASDAQ and TSX all hitting new highs. This week’s Federal Reserve meeting is interesting for several reasons. First, a rate cut is expected and investors will want to get a sense of how many are planned after that. Second, it will be harder than ever to ignore the not-so-invisible hand of politics reaching into the decision room. President Donald Trump fired Fed member Lisa Cook for allegedly misrepresenting mortgage documents. An appeals court just ruled he can’t fire her while her lawsuit challenging the dismissal proceeds. At the same time, the Senate confirmed Trump’s nominee and economic adviser Stephen Miran (although it was a tough vote, split 47-47 with the Vice President having to break the tie). Which means Cook and Miran are likely to be in the meeting today. Awkward. This morning we got a show of resilience in the US economy, retail sales advanced much more than expected. Retail sales grew 0.6% against the expected 0.2% growth. The beat is even more impressive considering dwindling job growth and rising tariffs. The Bank of Canada also makes its rate decision tomorrow and is widely expected to cut rates as well. This morning we just got a read of inflation that came in cooler than expected. Headline inflation rose 1.9%, which is faster than before but less than the 2% increase expected. Inflation month over month actually fell. This likely supports the central bank’s decision to cut tomorrow especially in light of weaker job growth and high unemployment.
Tick tock: Another source of optimism in the markets is progress when it comes to the negotiations between China and the US. Shares of Oracle are rallying 5% in the pre-market on reports that it will be among a group of companies that would allow TikTok to remain in the US. President Trump says he has a call with China’s Xi Jingping, the first such call since June. Trump said the negotiations between the two countries in Madrid “has gone VERY WELL,” according to a social media post. Oracle might not be an obvious candidate when it comes to acquiring the social media platform. However, the main issue is about user data and Oracle has been hosting US TikTok user data on its servers since 2022.
Double trouble: Dye and Durham said it is going to miss the September 29th deadline to file its financial results because of an OSC inquiry into how the company tests goodwill for impairment and disclosures around purchase accounting. Not a good look for the embattled legal software company. Dye and Durham has applied to the OSC for a temporary management cease-trade order. The news release says they don’t expect this to affect any previously disclosed financial results. Shares of Dye and Durham have been a massive underperformer with the company currently undergoing a “strategic review” after pressure from its top shareholder (who happens to be the founder of the company.)
Holy stock move, Batman: Shares of Webtoon are soaring 40% in the pre-market after Disney revealed a 2% stake in the company and plans to build a digital comics platform with its Marvel and Star Wars IP. Webtoon is a digital comic book platform that is viewed well on smartphones and tablets. Disney is supplying its content library and Webtoon is bringing its technical expertise. Webtoon is huge in South Korea and Japan, Evercore’s Mark Mahaney says 50% of the entire population of Korea is on Webtoon and 20% in markets like Japan. The deal will create a platform with access to 35,000 titles from Marvel, Star Wars, Disney and Pixar all under one subscription. It’s a huge win for the backers of Webtoon, South Korea’s Naver and Japan’s Softbank. “(Webtoon) has already proven it is the category leader in Korea and Japan. Now, with Disney content, we believe it can grow and lead the category in North America and Europe,” wrote Mahaney. His price target is $23/share.
Play time is over: Dave & Busters is plunging 18% in the pre-market after profit fell well short of expectations ($0.40/share vs $0.89/share expected). Sales fell 3% in the quarter, which was slightly worse than feared. The restaurant and arcade company is in the midst of a turnaround with a new CEO only in the seat for the last two months. “The company’s new CEO is focused on improving ops, strengthening value perceptions with clearer messaging… and pursuing a lower cost remodeling program,” wrote Brian Vaccaro of Raymond James. Still, he advises a “wait and see” approach given “continued negative comps, below average margin visibility, and elevated balance sheet leverage.”
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