McCreath: It's not too late, investors should be tilting portfolios towards cyclicals
The S&P/TSX Composite Index closed at an all-time high yesterday after three straight days of gains. Commodity heavyweights Barrick Gold and Suncor Energy topped the leaders’ board on a day when the three major U.S. indices closed in the red. Sidebar on Suncor: it wasn’t getting a ton of love in the latest 13F season as filings yesterday show Warren Buffett’s Berkshire Hathaway and Saudi Arabia’s sovereign wealth fund exited the stock in the latest quarter.
LUMBER BEAR MARKET
All of a sudden, wood has fallen out of favour. Lumber futures have fallen in six straight sessions, and as of the end of trading in Chicago yesterday were down 20.6 per cent from the May 7 closing peak of US$1,670.50. Just a matter of gravity kicking in after an astonishing run higher? We’ll chase answers and insight on the outlook. If you missed it last week, Andrew Bell had some great front-line perspective on Commodities about what until recently had been a scorching hot market.
IEA CALLS FOR NO NEW OIL & GAS DEVELOPMENT
The International Energy Agency today mapped out an aggressive roadmap – including no new oil and gas field developments - to achieve net-zero global emissions by 2050 in a bid to limit global warming to 1.5 degrees Celsius. We’ll explore where that leaves workers in the sectors that are falling out of favour, and the investment thesis for the greener sectors that are key to the IEA’s outlook.
Walmart, Home Depot and Macy’s are all in rally mode after impressing investors with their latest results as America’s vaccine rollout and stimulus cheques propel consumer spending. Walmart raised its forecasts after trouncing first-quarter estimates and with CEO Doug McMillon saying he expects “continued pent-up demand throughout 2021.” Worth pointing out Walmart acknowledged COVID-related restrictions hampered sales in Canada. The chief executive of Home Depot, meanwhile, saluted “unprecedented demand” for home-reno projects while reporting a 32.7 per cent surge in first-quarter sales. And even Macy’s is getting in on the action, with same-store sales surging 62.5 per cent in the first quarter.
BEZOS EYES BOND AND ROCKY
Amazon.com Inc. is reportedly in talks to purchase Metro-Goldwyn-Mayer in a move that would bolster the tech giant’s entertainment arsenal by adding James Bond, among other franchises. “Chatter that Amazon (and other tech giants) have been sniffing around MGM has circulated for some time. But sources indicated that Amazon’s interest in acquiring the studio has taken on a new tenor beyond the usual rumor mill,” according to Variety, which said a deal could be worth approximately US$9 billion.
OTHER NOTABLE STORIES
- Lots of geopolitical risk hitting Canadian resource companies in the last 24 hours. Kyrgyzstan seized control of Centerra Gold’s Kumtor mine (leading to the resignation of a Kyrgyz-appointed director from the company’s board last night). Meanwhile, protests in Colombia have forced Parex Resources to abandon its production forecasts and prompted Gran Tierra Energy to shut in some production.
- A homegrown CanadianCOVID-19 vaccine candidate has demonstrated encouraging results in the long road to approval. Medicago’s vaccine yielded an antibody response 10-times above the level observed in individuals who are recovering from COVID, according to Phase 2 results released this morning that haven’t yet been peer reviewed.
- Notable data: U.S. building permits and housing starts
- Notable earnings: High Liner Foods, Walmart, Home Depot, Macy's
- 8:30 a.m. ET: Centerra Gold holds conference call on recent developments in Kyrgyzstan
- 9:15 a.m.: U.S. Treasury Secretary Janet Yellen addresses U.S. Chamber of Commerce Global Forum
- 11 a.m.: CN Rail Chief Operating Officer Rob Reilly addresses RBC conference
- 11:45 a.m.: Prime Minister Justin Trudeau addresses Canadians on COVID-19 situation alongside Innovation, Science and Industry Minister François-Philippe Champagne, Procurement Minister Anita Anand, Health Minister Patty Hajdu, Chief Public Health Officer Dr. Theresa Tam, Deputy Chief Public Health Officer Dr. Howard Njoo
- 1 p.m.: Teck Resources CEO Don Lindsay addresses Bank of America conference
- 1 p.m.: Google CEO Sundar Pichai delivers keynote at Google I/O
- 1:30 p.m.: Innovation, Science and Industry Minister François-Philippe Champagne announces “significant investment to strengthen Canadian biomanufacturing sector”
- 1:40 p.m.: U.S. President Joe Biden delivers remarks at Ford Rouge Electric Vehicle Center in Dearborn, MI
- 5 p.m.: Quebec Premier François Legault announces provincial reopening plan
- International Energy Agency releases roadmap to net-zero emissions by 2050