Here are five things you need to know this morning:
Worst is first: December is off to a rocky start for U.S. stocks. The S&P 500 saw its worst start to a week since February. But the TSX has enjoyed a nearly one per cent gain. While tech has been pressured, other parts of the market are perking up. The small cap index Russel 2000 managed to rise for a fourth session in a row. Investors are picking away at the laggards in 2023. Stocks like Dye & Durham, Nuvei and Jamieson Wellness are among the worst performing stocks this year, but since the October lows, they are among the best-performing stocks on the TSX with gains between 50 and 60 per cent. Today we will get more insight into the inflation picture in the U.S. with the release of the ISM services index and job openings numbers at 10 a.m. ET.
If I had a million dollars: Toronto home prices dropped for a fourth consecutive month. Home prices fell 2.2 per cent in November compared to the month before, according to the Toronto Regional Real Estate Board. The average home in Toronto now goes for $1,082,179. While sales increased for the first time since May, they are still running 30 per cent below the 10-year average. Data from Vancouver showed an even steeper drop in home sales, plunging 14 per cent from the prior month. The pinch from rising interest rates and other inflationary pressures is clearly starting to show up. There is a Bank of Canada rate decision tomorrow.
Notable Call: I’ll watch shares of Royal Bank after getting upgraded by Mike Rizvanovic at KBW following fourth-quarter earnings. The upgrade is predicated on an improved outlook for City National, a higher degree of confidence in RBC’s proposed HSBC acquisition going through without an additional equity raise, and the bank’s better outlook on net interest margins compared with its peers. It’s interesting to see an upgrade out of bank earning season when going into bank earning season there was nothing but downgrades. Also worth noting that since the banks reported, all the bank stocks except TD are trading higher (including Scotia).
It’s called fashion sweetie, look it up: The owner of DKNY and Karl Lagerfeld is surging in the pre-market after boosting its outlook for profit. Most of this appears to come from cost cutting as it trimmed its sales outlook. Meanwhile, shoe retailer Designer Brands is wrong-footed this morning. The owner of Keds and DSW stores is plunging in the pre-market after slashing its sales and profit forecast. Sales in the U.S. and Canada fell short of expectations. They are blaming unseasonably warm temperatures for tempering customer demand. Reminds me the old adage: “Ask a retailer about sales and you’ll get a report about the weather.”
Animal spirits: Shares of Robinhood are trading up after the online brokerage said November crypto trading volumes were up 75 per cent from October. This as bitcoin hit a high of US$42,000 yesterday and is holding on to its gains this morning.
Notable Guests:
- At 10:10 a.m. eastern, we will have an exclusive interview with Guy Cormier, president and CEO of Desjardins Group. Expect a deep dive into the state of Canada’s economy. Cormier will give his take on housing affordability across Canada, the company’s plan to cut costs against a tough macro backdrop and top concerns Desjardins is hearing from Canadians as rates remain elevated.
- Shares of Livent and Albermarle are under pressure in the pre-market after catching a downgrade from Piper Sandler. Today’s Hot Picks segment on lithium takes the other side of that trade. Lukasz Tomicki, founder and managing partner of LRT Capital Management, will tell us why he thinks those stocks are a buy.
- At 11:20 a.m. ET we will speak with Tilray Brands CEO Irwin Simon about how the cannabis company can drive growth after getting further into the alcohol market and what role international expansion might play in its future plans.
- On the eve of another decision from the Bank of Canada, former RBC chief executive Gord Nixon will join BNN Bloomberg at 1 p.m. ET to discuss the economy and the road ahead for interest rates.