5 things you need to know to start your trading day
I’ve got nothing clever to say today. And my notoriously demanding producer says that’s okay. Since I live for her approval, I will take the win and get on with today’s business
Here are five things you need to know this morning:
The bend and snap: Markets bent yesterday under the weight of higher interest rates, but this morning are looking to snap a bit higher. While the U.S. 10-year yield hovers around 16-year highs, let’s survey the damage. The TSX is at a three-month low, down five per cent from its most recent peak and on pace for a second month in a row of declines. The S&P 500 is at a 3.5 month low, down nearly seven per cent from its most recent peak and also on pace for its second month of declines. That hasn’t happened since exactly this time last year. Tech stocks have been the source of the selling pressure, but not the only pain point. NASDAQ is one per cent away from correction territory (a pullback of 10 per cent or more from recent peak) and is trading at a four-month low. We will unpack how much further equities have to fall and where the opportunities lie.
Bulk balk: Shares of Costco are under pressure even as the bulk retailer beat profit expectations. Total comparable sales were a little light, but in Canada, comparable sales excluding case rose 7.4 per cent versus the nearly five per cent growth estimate, making it one of the best markets for Costco this quarter. Nevertheless, Canada can’t save the stock as investors appear dismayed the company didn’t hike membership fees or issue a special dividend. Costco tends to increase membership fees every five to six years and the last time they did it was 2017, so investors are growing impatient. There might also be some concern about how the company will weather waning inflation and a slowdown in consumers, but it’s worth noting it has US$13.7 billion on its balance sheet in cash. That is the most it’s ever had, so lots of room for that special dividend. Shares have outperformed this year, so investors may be looking for excuses to sell.
Not a Target anymore: Target announced it will be closing nine stores due to theft and crime. “We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance,” the retailer said. Pretty wild that it has come to this. The stores set to close are mainly on the West Coast and one is in New York. Target has been complaining about theft for a while, with the cost racking up to more than $1 billion. Canadian retailers have been quieter about this, but no doubt this is something we will dig into here at BNN. Shares of Target hit a more than three-year low yesterday and have now erased all the pandemic-driven gains.
Money manager watch: We will watch shares of AGF Management at the open. The money manager reported higher profit from last year and growth in assets under management. However, the growth in AUM was a touch lighter than expected. A down market has been a tough environment for money managers, with AGF trading at a four-month low. Don’t miss chief executive officer and chief investment officer of AGF on The Close with Jacqueline Hansen this afternoon.
When they go low, we get high: Marijuana stocks exposed to the U.S. markets are once again popping. Today the U.S. Senate Banking committee is set to vote on the SAFER Banking act to allow cannabis businesses access to financial institutions. Yesterday, I spoke with the CEO of Trulieve, which operates in the United States and she said the vote could have both practical and symbolic benefits. On the practical side, she noted they are still a cash business and that one of her stores was recently targeted for theft because of the large amounts of cash they are forced to keep on premises. The Senate Banking committee session begins at 9:30 a.m. EDT this morning.
Blackstone became the first private equity firm to reach US$1T in assets under management. The company is now expanding into Canada, as it is now officially opening its first office in Toronto. We’ll talk about the company’s growing Canadian real estate portfolio with Blackstone President and COO, Jonathan Gray, on Bloomberg Markets at 1:10 p.m. EDT.