Earnings to the rescue? (TWTW – Apr 25-29, 2022)

Earnings to the rescue?

Of course we aren’t talking here about Google’s, which missed and saw its share price taken down, although modestly, when contrasting the drop with the earlier drops experienced by say Netflix.

BUT – Microsoft earnings and outlook obviously provided some tonic for the market on Wednesday, and after a brutal Tuesday, stocks rebounded, with some of the sectors hit hard of late leading the rebound (Materials; Energy).

JUST IN – Chevron has made (CVX) its way into the top 5 holdings at Berkshire Hathaway recently, after an over $20 Billion investment by Warren Buffett, => something the CNBC talking heads were reporting on from the yearly Omaha AGM …

Cenovis – On the Energy front – CVE’s earnings and results were noteworthy, and saw the stock jump accordingly – up slightly over 10% on the day. The dividend – tripled, speaks to the company’s confidence in the outlook from a cash flow generation perspective, even after it deals with deleveraging the balance sheet.

Twitter – Boy that all fell into place rather quickly … But then … some are raising questions as to why if deal approved and effectively friendly, why it is we are trading the stock at such a discount to the $54.20 offer? Some are suggesting that this may well be because – just like Elon didn’t end up taking $TSLA private (when he said he had the financing for it at what was it? $420 a few years back / pre split … he then … didn’t …). That said, Elon sold a chunk of TESLA this past week … presumably to pay for something … namely the part not financed by banks which now include both RBC and CIBC …

GE – Company came under pressure as it highlighted supply chain issues and rising costs as challenges ahead

Shopify – is by now some 75% cheaper than it was at its November 2021 peak … (no bull market in this name nowadays …

Bank of Canada “Rebuke” of Pierre Poilievre … regarding the inflation discussion, respectively the CRYPTO comments made by BoC Governor Tiff Macklem, who is becoming – apparently -more hawkish by the day. CANADA – it looks like we’re in for several 50 bps hikes, possibly. Friday’s GDP print only reinforces that notion / risk …

Other:

Bond Market – a pretty harsh sell off in 2022, leading some to forecast a significant reversal rally …

GDP “read” – US: Canada: Q1 in the US turned negative 1.4% versus Canada’s Q1 expected GDP forecast to come in at 5.4%, after a strong February reading => Click HERE!

Suncor – Activist at the door: the Arrival on the scene for Suncor of Elliott Management, urging the company to return to its earlier stripes of best operator in the Industry and looking for 5 board seats as well as highlighting initiatives the company should pursue to surface value (still significantly higher than we are ending the week), caused the stock to pop noticeably Thursday => Click HERE!

Combine CVE’s results with the Activist news at SU, and what you get, in my books, is a recognition that the value to be found in Canadian Energy stocks – something @Ninepoint ‘s @EricNuttall has been very vocal about for some time … is gaining greater traction and being noticed… More gains ahead?

Technology: the FANGMA ETF          versus … XEG: the iShares S&P/TSX Capped Canadian Energy ETF

Facebook – Relief rally was the name of the game in terms of DAU number allowing for a sharp bounce from levels reached recently including on concerns the co would have bad results …

Amazon – Reported results which disappointed, with one analyst essentially stating that the company’s results were a clear read through of the state of consumers in the US … THAT – portends to weakness ahead = both for AMZN as well as for the US economy overall. AND again, that is before we even see all the hikes the FED’s have in mind …

Apple – impressive results; even more impressive share buy back … USD 90 … Billion … stock Friday in a rough day for Tech / Nasdaq: – 3.66% or maginally better than QQQ at -4.5% on the day

Teladoc – oh my … that stock got killed after results … -45%, in passing seeing $ARKK basically lose close to $500M on the name after that sharp (sharp doesn’t even begin to describe how shareholders must feel …) decline. Ouch!

Colgate Palmolive – For a stock you’d expect to see holding up well as a defensive play, CL got hit hard after reporting earnings that suggested the company is experiencing rising logistics costs it can’t pass on, and forecasting this challenge to remain a problem several quarters out …

USD – at a 20 years high … YEN at a 20 years … LOW, with Japanese government policies suggesting they aren’t about to raise rates … in sharp contrast with other key central banks’ outlook … = JPY likely to face further pressure downward …

April overall – a pretty bad month … as illustrated by a 13.6% decline in April alone for the NASDAQ, which was the worst hit during the month …

BUT – it’s apparently all good … according to Ian Shepherdson, Chief economist at Pantheon Macroeconomics, who commented that: “this is noise; not signal. The economy is not falling into recession”. HOW will this comment age?

Anyways:

Weekly Performance – Sectors / Thematic / Factors:

Noteworthy:

  • Energy hit hard late last week and early this week came back strongly after CVE Q results and SU news (see above). Oil – strengthening was … presumably also supportive
  • Technology – a positive weekly performance, BUT THAT’s after last week’s miserable showing …
  • Weaker Financials; weaker REITS; weaker Utes … pressure all around … Recession risk rising?

Noteworthy:

  • ARK continuing to sustain sizeable losses – TDOC being a feature this past week … and YET … Eric Balchunas notes that flows have been positive in  recent weeks … (double down? issuance of units to short? due to ARKK’s usage as a high beta / disruption / innovation trading tool – are some of the reasons Erich cited … which one is it? I am sure I am not the only one that would be interested to know…
  • Gaming – the lone Theme in modestly positive territory this past week – in the context of a rather painful week for tech in particular
  • Travel holding up reasonably well; Alongside 5 G, and Clean Tech – the latter presumably continuing to benefit from the notion that clean will experience a renewed push in the context of the energy crisis unfolding …

 

  • YTD Performance (distr. NOT taken into account) – Sectors / Thematic / Factors:

  • Canadian Tech in deep bear territory / US Tech not far from down 20%
  • Energy / Materials continuing to lead, with otherwise only Utes and Staples in the black
  • Financials – which will dominate? steepening yield curve / improving NIM on rising rates? OR … recession … obviously significant implications for the broader market overall …

  • Across the board “pain”, the notable exception possibly being travel … which … presumably relates to the notion COVID-19 is behind us here (although the news out of Shanghai as far as how China is dealing with a surge in cases is … disturbing to say the least … and expected to have further depressing effects on supply chains at a minimum …

  • Canada now also in the red to the end of April, with several factors still outperforming the mainstream benchmark – notably Value and Fundamental in particular
  • Growth and ESG – notably underperforming …
  • NASDAQ … the times they are a changing … April was as noted above … BRUTAL. Valid question: should investors focus on trying to peg a bottom for tech, or should they focus on ensuring they have their quotas filled as far as energy and materials? Thoughts? Anyone? thx

Have a great week-end 🙂