Tech is dominating our agenda today, with a slew of earnings from the industry’s biggest names, including Canadian darling Shopify. The company’s revenue and gross merchandise volume more than doubled in the first quarter, but it is also warning of slower growth ahead and cautioning that adjusted operating profit will drop this year amid a plan to “reinvest back into our business as aggressively as we can.” With shares in a bear market (down 21.5 per cent in New York as of yesterday from the Feb. 16 high), we’ll get plenty of actionable insight from analysts today. We’re also expecting to catch up with Shopify President Harley Finkelstein this afternoon.
Elsewhere, we’re seeing Alphabet shares climb in pre-market trading after an ad-fueled revenue boom in the first quarter. Conversely, the reaction to Microsoft’s performance in a bit of a head-scratcher as shares slump despite double-digit growth in the company’s three major divisions and a smashing profit beat. Worth pointing out Microsoft has rallied almost 18 per cent since the start of the year.
FED DAY
U.S. Federal Reserve Chair Jerome Powell has made it abundantly clear his central bank will be comfortable watching inflation run a little hot before attempting to rein it in. We expect more of that messaging when he addresses reporters this afternoon. Problem for Powell is there’s skepticism in the market, as was made clear on The Open yesterday when the US$136-billion bond king, Jeff Gundlach, blasted the Fed for pretending to think it knows where inflation is heading. If you missed any of that interview, check it out here.
BIDEN UNVEILS US$1.8T AID PACKAGE
The U.S. president is attempting to re-balance his nation’s economy with what he’s calling The American Families Plan: $1.8 trillion in investments and tax credits to build up the middle class with measures including free preschool, free community college and a national paid leave program. As expected, Biden is tightening tax rules on wealthy Americans to help pay for that spending — with a package of reforms that are expected to generate US$1.5 trillion over a decade.
OTHER NOTABLE STORIES
- Brookfield took some jabs at takeover target Inter Pipeline this morning, accusing the company of “a lack of urgency” and saying a special committee of directors “seeks to impose unreasonable conditions” on a due diligence process.
- Teck Resources reaped the reward of booming commodity prices in its latest quarter as the miner’s adjusted profit surged 247 per cent year-over-year.
- It was a familiar pandemic theme for Starbucks in its latest quarter as same-store sales rose (15 per cent globally) thanks to significant growth in the average so-called “ticket” (19 per cent) while the number of transactions fell 4 per cent. In other words, fewer customers but the committed ones were spending more. Even so, there’s hope on the horizon at the management level, with CEO Kevin Johnson saying an “inevitable great human reconnection” is at hand in the United States and is bound to “propagate in every market around the world.”
- BlackBerry President Tom Eacobacci is taking on the duties of chief operating officer in another sign that he appears to be next in line behind Executive Chair and CEO John Chen. In the release announcing the promotion, BlackBerry said Eacobacci will help Chen with corporate business plans and strategy.
NOTABLE RELEASES/EVENTS
- Notable data: Canadian retail sales
- Notable earnings: Shopify, Teck Resources, CGI, Real Matters, Allied Properties REIT, Lundin Mining, Vermilion Energy, Yamana Gold, Alamos Gold, Apple, Facebook, Boeing, Ford, Ovintiv
- 9 a.m. ET: Parliamentary Budget Officer releases report “Canada Infrastructure Bank Spending Outlook”
- 9 a.m.: Financial Accountability Office of Ontario releases report on pandemic’s impact on insolvencies
- 11:45 a.m.: Ontario Attorney General Bonnie Lysyk holds news conference on pandemic readiness and response in long-term care
- 2 p.m.: U.S. Federal Reserve releases interest rate decision (plus 1430 news conference)
- 9 p.m.: U.S. President Joe Biden addresses joint session of Congress
- OPEC+ ministerial meeting
- International Energy Agency releases report “Global Electric Vehicle Outlook 2021”