Jan 29, 2020
The Daily Chase: Apple's record profit fuelled by iPhone sales; Fed decision day
By Noah Zivitz
Apple’s flagship product powered the tech giant to record profit and revenue in the first quarter, setting up its stock to be a major market mover today. iPhone sales rose eight per cent in the holiday quarter, accounting for the lion’s share of Apple’s US$91.8-billion haul in the period. Uncertainty tied to the financial impact from the coronavirus prompted Apple to provide a wider-than-usual revenue forecast range, and CEO Tim Cook said on a conference call his team is “monitoring it very closely.”
As earnings season ramps up, we’ll be watching carefully for more management commentary tied to the respiratory illness, which Chinese officials now say has caused 132 deaths and almost 6,000 confirmed cases. We’re also expecting an update from the World Health Organization in a news conference this morning.
STATE OF THE RAIL INDUSTRY
Canadian National Railway pinned the blame for its fourth-quarter downturn (revenue down six per cent, adjusted EPS down 16 per cent, operating ratio up four points) on the eight-day walkout that brought its network to a standstill in November and a weak macro environment. Nonetheless, it’s nudging up its quarterly dividend, launching a new share buyback and managing what’s within its control by setting a lower capex budget for this year and vowing to “rightsize” itself as necessary. CEO JJ Ruest joins Amanda Lang in Bloomberg Markets this afternoon. For its part, Canadian Pacific posted modest growth in fourth-quarter revenue and adjusted earnings that allowed it to outpace the average estimate by analysts.
FED DAY
The U.S. Federal Reserve delivers its first policy decision of 2020 this afternoon, with no change to its target range anticipated. We’ll watch for any dissent amid the turnover in voting members and keep an ear out for any coronavirus commentary during chair Jerome Powell’s news conference.
BELL LET’S TALK DAY
Today's the day our parent company puts the spotlight on mental health with its annual Let's Talk Day that's resulted in a nearly $101-million commitment by Bell since 2011. CTV's Chief Financial Commentator Pattie Lovett-Reid filed a report on the mounting financial stress facing many Canadians and the spillover from what can become an overwhelming preoccupation. Watch for it today on BNN Bloomberg and BNNBloomberg.ca
OTHER NOTABLE STORIES
-Boeing swung to a massive loss in its fourth-quarter and revenue plunged 37 per cent as the plane maker struggled with the 737 Max groundings (which resulted in a US$2.6-billion charge to account for “potential concessions” to customers). CEO David Calhoun said in a press release Boeing has sufficient “financial liquidity” thanks to the breadth of the company’s business lines.
-Shares of Starbucks are slipping in pre-market trading. First-quarter results were broadly in line with estimates, but the company is warning of a potentially “material” hit to its international unit’s performance as a result of the coronavirus.
-L Brands is a stock to watch, with shares jumping in early trading after Dow Jones reported its CEO is evaluating strategic alternatives for Victoria’s Secret and might step aside as chief executive.
-Investors are also sending shares of GE higher in the pre-market after CEO Larry Culp touted his turnaround efforts (notably deleveraging) at the massive industrial conglomerate. Adjusted profit jumped 50 per cent in the fourth quarter and the company is forecasting free cash flow for 2020 above and beyond analysts’ expectations.
NOTABLE RELEASES/EVENTS
-Notable earnings: CP Rail, CGI, Boeing, McDonald's, MasterCard, AT&T, General Electric, Facebook, Microsoft, Tesla, Dow, Mondelez, Archer-Daniels Midland
-8:00 a.m. ET Goldman Sachs investor day in New York
-11:00 a.m. ET: U.S. president Donald Trump holds signing ceremony for new NAFTA at the White House
-12:00 p.m. ET: Broadcasting and Telecommunications Legislative Review Panel releases final report and recommendations on the Broadcasting, Telecommunications and Radiocommunications Acts (background here: https://www.ic.gc.ca/eic/site/110.nsf/eng/home)
-2:00 p.m. ET: U.S. Federal Reserve releases interest rate decision (plus news conference at 2:30 p.m. ET)
-4:30 p.m. ET: Ovintiv holds conference call to discuss Anadarko Basin operations
-OECD begins two-day meeting in Paris on digital taxes
-U.S. Energy Information Administration releases 2020 energy outlook
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.
