Author: Consultant

Monday August 5

Canadian markets closed

China, Japan and Euro zone services and composite PMI

(9:45 a.m. ET) U.S. S&P Global Services PMI for July.

(10 a.m. ET) U.S. ISM Services PMI for July.

(2 p.m. ET) U.S. Senior Loan Officer Opinion Survey for July.

Earnings include: Berkshire Hathaway Inc.; CSX Corp.; Green Thumb Industries Inc.

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Tuesday August 6

China trade surplus

Japan real cash earnings and household spending

Euro zone retail sales

(8:30 a.m. ET) Canada’s merchandise trade balance for June.

(8:30 a.m. ET) U.S. goods and services trade balance for June.

(9:30 a.m. ET) Canada’s S&P Global Services PMI for July.

Earnings include: Airbnb Inc.; Amgen Inc.; Caterpillar Inc.; Dream Industrial REIT; Finning International Inc.; Great-West Lifeco Inc.; IA Financial Corp. Inc.; InterRent REIT; Labrador Iron Ore Royalties Corp.; Nuvei Corp.; Pet Valu Holdings Ltd.; Rivian Automobiles Inc.; Suncor Energy Inc.; Uber Technologies Inc.

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Wednesday August 7

Germany industrial production and trade surplus

(1:30 p.m. ET) Bank of Canada’s Summary of Deliberations from July 24 meeting.

(3 p.m. ET) U.S. consumer credit for June.

Earnings include: Canadian Apartment Properties REIT; Crombie REIT; Curaleaf Holdings Inc.; Granite REIT; IGM Financial Inc.; Innergex Renewable Energy Inc. Killam Apartment REIT; Linamar Corp.; Manulife Financial Corp.; Nutrien Ltd.; Pan American Silver Corp.; Shopify Inc.; Stantec Inc.; Stelco Holdings Inc.; Stella-Jones Inc.; Walt Disney Co.; Wheaton Precious Metals Corp.

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Thursday August 8

Japan bank lending

(8:30 a.m. ET) U.S. initial jobless claims from week of Aug. 3. Estimate is 240,000, down 9,000 from the previous week.

(10 a.m. ET) U.S. wholesale trade for June. Estimate is a gain of 0.4 per cent from May.

Earnings include: B2Gold Corp.; Canadian Tire Corp. Ltd.; CCL Industries Inc.; Chartwell Retirement Residences; Eli Lilly and Co.; goeasy Ltd.; Keyera Corp.; Lundin Gold Inc.; Maple Leaf Foods Inc.; Onex Corp.; Pembina Pipeline Corp.; Power Corp. of Canada; Premium Brands Holdings Corp.; Primo Water Corp.; Quebecor Inc.; Restaurant Brands International Inc.; RioCan REIT; Saputo Inc.; SmartCentres REIT

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Friday August 9

China CPI, PPI, aggregate yuan loans and new yuan loans

Germany CPI

(8:30 a.m. ET) Canadian employment for July. The Street is projecting a month-over-month gain of 0.1 per cent, or 29,400 jobs, with the unemployment rate rising 0.1 per cent to 6.5 per cent.

Earnings include: Algoma Steel Group Inc.; Algonquin Power & Utilities Corp.; Constellation Software Inc.; Emera Inc.; MDA Ltd.

• West Texas Intermediate has bounced back after crude inventories fell for the sixth week in a row.
• The oil market is now waiting to see whether Iran will follow through on its threat to strike Israel.

https://www.cnbc.com/2024/08/08/crude-oil-prices-today.html

The number of Americans filing new applications for unemployment benefits fell more than expected last week, calming fears the labour market was unravelling and reinforcing that a gradual softening remains intact.

Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended Aug. 3, the Labor Department said on Thursday, the largest drop in about 11 months. Economists polled by Reuters had forecast 240,000 claims for the latest week.

It was a welcome reversal after last week’s surprise sharp jump in jobless claims, and most likely reflects a fading in the impact from temporary motor vehicle plant shutdowns and Hurricane Beryl. The prior week was revised up slightly to 250,000 from the previously reported 249,000 tally.

U.S. stocks gained following the release, while benchmark Treasury yields rose back above 4 per cent. The U.S. dollar also strengthened against a basket of currencies.

“The talk of an imminent recession seems wide of the mark,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.

Investors in interest rate futures contracts pared bets the Federal Reserve will start cutting borrowing costs next month with a bigger-than-usual 50-basis-point reduction to about a 58 per cent probability from 70 per cent before the release.

Claims have been on a roughly upward trend since June, with part of the rise blamed on volatility related to the motor vehicle plant shutdowns for retooling and disruptions caused by Hurricane Beryl in Texas. Unadjusted claims dropped 13,589 to 203,054 last week.

Claims fell sharply in Michigan and Missouri, states with a heavy presence of motor vehicle assembly plants which saw claims rise the prior week. Auto makers typically idle assembly lines in July to retool for new models.

Over the past few weeks overall claims have been hovering near the high end of the range this year, but layoffs remain generally low. Government data last week showed the layoffs rate in June was the lowest in more than two years. The slowdown in the labour market is being driven by less aggressive hiring as the Fed’s interest rate hikes in 2022 and 2023 dampen demand.

The Fed also closely monitors how jobless rolls compare to the size of the labour force to gauge the health of the jobs market. Growth in the labour force has largely kept pace with the gradual rise of those claiming jobless relief and is about where it was before the coronavirus pandemic.

The U.S. central bank last week kept its benchmark overnight interest rate in the 5.25 per cent-5.50 per cent range, where it has been since last July, but policy-makers signalled their intent to reduce borrowing costs at their next policy meeting in September.

However, the government’s monthly nonfarm payrolls report last Friday showed job gains slowed markedly in July and the unemployment rate rose to 4.3 per cent, alarming markets at that point that the labour market may be deteriorating at a pace that would call for strong action from the Fed.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 6,000 to a seasonally adjusted 1.875 million during the week ending July 27, the claims report showed, continuing an upward trend. That caused some economists to remain wary.

“Investors have to be careful not to read too much into one report like they did recently with the last payroll report,” said Jeffrey Roach, chief economist at LPL Financial. “If the data deteriorates quickly from here, the Fed could take more decisive action in September and cut by a half of a per cent.”

Meanwhile, U.S. wholesale inventories increased in June, the Commerce Department’s Census Bureau reported on Thursday, adding to economic growth in the second quarter. Wholesale inventories rose 0.2 per cent in June as previously estimated. Stocks at wholesalers advanced by 0.5 per cent in May.

Economists polled by Reuters had expected that inventories, a key part of gross domestic product, would rise by an unrevised 0.2 per cent. Inventories edged up 0.1 per cent on a year-on-year basis in June.

The economy grew at a 2.8 per cent pace in the second quarter. That was double the growth pace in the first quarter. Private inventory investment added 0.82 percentage point to GDP growth in the April-June period after being a drag for the two previous quarters, which more than offset a 0.72 percentage point hit from a wider trade gap.

Wholesale motor vehicle inventories rose 0.8 per cent in June. Excluding autos, wholesale inventories advanced 0.1 per cent. This component goes into the calculation of GDP.

Sales at wholesalers fell 0.6 per cent in June after rising 0.3 per cent in May. At June’s sales pace it would take wholesalers 1.37 months to clear shelves, up from 1.35 months in May.

SECOND QUARTER HIGHLIGHTS

• Consolidated comparable sales were down 4.6%. The consumer demand environment remained challenging, compounded by cold and wet weather, contributing to sales declines in all regions outside Atlantic Canada.
  • CTR comparable sales¹ were down 5.6%, compared to growth of 0.1% in Q2 2023. Automotive grew, offset by declines in other divisions.
  • SportChek comparable sales¹ were down 0.9%, helped by strong sales of footwear, while cycling and casual clothing experienced the most marked decline.
  • Mark’s comparable sales¹ were down 0.8%. Outerwear categories grew, while sales of men’s shorts and accessories and industrial wear were down compared to 2023.

https://www.newswire.ca/news-releases/canadian-tire-corporation-reports-second-quarter-2024-results-813902050.html

Restaurant Brands International Inc. reported its second-quarter profit and revenue rose compared with a year ago.

The parent company of Tim Hortons and other restaurants, which keeps its books in U.S. dollars, says its net income totalled US$399 million or 88 cents US per diluted share in its latest quarter.

The result was up from net income of US$351 million or 77 cents US per diluted share a year earlier.

Revenue for the quarter ended June 30 totalled US$2.08 billion, up from US$1.78 billion in the same quarter last year, while consolidated comparable sales rose 1.9 per cent.

On an adjusted basis, the company says it earned 86 cents US per diluted share in its latest quarter, up from an adjusted profit of 85 cents US per diluted share a year ago.

In addition to Tim Hortons, Restaurant Brands owns Burger King, Popeyes and Fire House Subs.

This report by The Canadian Press was first published Aug. 8, 2024.

Telus Corp. says its net income attributable to common shares came in at $228 million in its second quarter, 14 per cent higher compared with the same time last year.

The telecommunications company says earnings per diluted share for the quarter ended June 30 was 15 cents compared with 14 cents a year earlier.

It reported adjusted net income was $366 million, up 34.1 per cent year-over-year from $273 million in the same quarter last year.

Operating revenue and other income for the quarter was $4.97 billion, up 0.6 per cent from the previous year.

Telus says it added 332,000 net new customers, up 13 per cent compared with last year, which included 101,000 mobile phone subscribers and 33,000 internet customers.

Doug French, executive vice-president and chief financial officer, says despite the challenging competitive and macroeconomic environment, the company is executing on its strategic objectives, including significant cost-cutting programs.

This report by The Canadian Press was first published Aug. 2, 2024.

Manulife Financial Corp. says earnings were fairly flat in the second quarter as better market performance was offset by a sizable loss on a sale of debt instruments.

The insurer says net income attributable to shareholders came in at $1.04 billion, compared with $1.03 billion for the same quarter last year.

It says the quarter included a $300 million loss on debt instruments related to its deal to reinsure a $5.8 billion block of Canadian universal life insurance.

Manulife says adjusted earnings, or what it calls core earnings, came in at $1.74 billion, up six per cent from $1.64 billion in the same quarter last year.

The quarter saw a 289-per-cent surge in net income from its Asia division to US$424 million, while its Canada division saw a 65-per-cent drop to $79 million and its U.S. division had a 28-per-cent drop in net income to US$98 million.

The swings were less dramatic on an adjusted basis but still showed the company’s growing focus on growth in Asia with a 40-per-cent increase in core earnings compared with seven-per-cent growth in Canada.

This report by The Canadian Press was first published Aug. 7, 2024.

Nutrien Ltd. (NTR) on Wednesday reported second-quarter profit of $385 million.

The Saskatoon, Saskatchewan-based company said it had profit of 78 cents per share. Earnings, adjusted for asset impairment costs and non-recurring costs, came to $2.34 per share.

The results topped Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $2.13 per share.

The producer of potash and other fertilizers posted revenue of $10.16 billion in the period, falling short of Street forecasts. Four analysts surveyed by Zacks expected $10.89 billion.

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This story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research.

Access a Zacks stock report on NTR at https://www.zacks.com/ap/NTR

Shopify Inc. SHOP-T +17.85%increase reported earnings and guidance Wednesday that doused skepticism about its revenue and profit growth at a time of heightened macroeconomic uncertainty, driving the stock to one of its best single-day performances.

The Ottawa software giant, whose platform powers about 10 per cent of all U.S. e-commerce and is sold in 170 countries, generated US$2.045-billion in revenue in the second quarter ended June 30. That was up 25 per cent year-over-year in its existing operations.

Revenue from both subscriptions to its platform and merchant fees for other services, including payments, surpassed expectations, coming in at US$563-million and US$1.48-billion, respectively. Shopify’s gross profit of US$1.045-billion and US$333-million free cash flow also beat expectations.

Gross merchandise volume (GMV), representing the amount of business flowing through its platform, was US$67.2-billion, up 22 per cent and above consensus analysts expectations of US$65.7-billion.

Shopify’s stock closed up 17.8 per cent on the New York Stock Exchange, its seventh best single-day performance since the company went public in May, 2015.

It was a landmark quarter for the 20-year-old company co-founded by chief executive officer Tobi Lutke as a snowboard e-commerce retailer, as it surpassed US$1-trillion in cumulative GMV. Shopify delivered strong growth in multiple areas as it continued to build out a platform it refers to as a comprehensive unified operating system for merchants to handle all aspects of their commercial operations – online, in store, across borders and in multiple countries.

The share of Shopify’s GMV that went through its fee-generating payments processing service reached 61 per cent, up from 58 per cent a year earlier. Its push into providing point-of-sale systems for “offline” physical retailers had a 27-per-cent year-over-year jump in volumes processed.

Shopify’s merchant count increased by an undisclosed amount as it added brands including Italian eyewear conglomerate Luxottica Group S.p.A. and British football club Newcastle United, driving 32-per-cent GMV expansion in Europe. They joined a platform that powers celebrity and online-native brands including Kylie Cosmetics, Lionel Messi’s Más+ hydration drink business and Gymshark, and e-commerce sales for established brands such as Mattel, Heinz and Staples.

“We are building for the long term and our business model is working,” Shopify president Harley Finkelstein said on a conference call with analysts. He said the results show “that we can achieve a seriously meaningful combination of both growth and profitability” while continuing to invest in the business.

Shopify “continues to perform at a high level when compared to global peers, and we think a positive reaction is warranted,” ATB Capital Markets analyst Martin Toner said in a note. “We believe the Q2 results and guidance should give investors confidence” in a “world-class large cap growth story” he said was undervalued.

Shopify’s stock has experienced a rocky 2024. Before Wednesday the share price was down 30 per cent on the year and 69 per cent from its all-time high in November, 2021, at the peak of a pandemic-fuelled bubble for tech companies.

Shopify’s 19-per-cent stock drop in May was its largest single-day loss after it warned operating expenses would climb from the first quarter by an amount in the low- to mid-single-digit percentage range. Those jitters reflected a number of factors, including a prolonged downturn for technology stocks and macroeconomic concerns.

Investors also want to see high-growth companies strive for better bottom-line performance without sacrificing too much top-line revenue growth. That has proven to be a tricky balance for many companies to pull off, and with Shopify trading at a relatively rich valuation, anything short of expectations has been swiftly punished by investors.

But in Wednesday’s report, Shopify pleasantly surprised investors and analysts by reporting operating expenses did not rise, but actually fell by nearly 8 per cent from the first quarter, to US$804-million, while operating expenses as a share of revenue came in at 39.3 per cent, down from 43.5 per cent. The company achieved that in part by shaving costs off a large conference it held and by delaying the start of a large marketing campaign to the third quarter.

It held its ranks to about 8,300 employees, unchanged for several quarters. Chief financial officer Jeff Hoffmeister forecast the company’s operating expense ratio would creep up to 41 per cent to 42 per cent in the third quarter, but still down from a year earlier.

The CFO told analysts that despite macroeceonic concerns about softening consumer spending, the company wasn’t seeing that in the data from its merchants. “I think we’re simply taking share” away from competitors, he said.

Shopify, Canada’s largest technology company by market capitalization, forecast third-quarter revenues will rise by an amount in the low- to mid-20-per-cent range, compared with an analyst consensus forecast of about 20 per cent. It predicted gross margins would climb by 50 basis points over second-quarter levels, after warning they would dip by 50 basis points last quarter. The gross margin rate actually dipped by just 30 basis points in the second quarter, to 51.1 per cent of revenues.

“Both the results and outlook point to growing operating leverage and in a market that’s asking for efficient capital allocation,” National Bank Financial analyst Richard Tse said in an e-mail.

Shopify posted a net profit of US$171-million, or 13 cents per share, which was weighted down in part by the fluctuating value of its equity holdings in three other companies that sell services to its merchants, Global-E Online Ltd., Affirm Holdings, Inc. and Klaviyo, Inc.

All three of their share prices were lower at the end of the second quarter than three months prior. However, analysts pay closer attention to the company’s adjusted net income, which factors out stock-based compensation, the equity loss on investments and other elements. That came in at US$345-million, or 26 US cents per share, well ahead of the 21 cents analysts had forecast.

With a report from David Milstead