Here are five things you need to know this morning:
Out with a bang: If you missed the U.S. Federal Reserve interest rate announcement yesterday or the ensuing press conference, today’s market action tells you everything you need to know. The Dow Jones Industrial Average closed at an all-time high, thanks in part to Apple, which also closed at a record. The S&P 500 is less than two per cent from an all-time high. The TSX put in its strongest one-day gain in 1.5 months and is less than seven per cent from all-time highs. I’m not done yet. The bond market is also having a grand old time. The U.S. 10-year yield is now sporting a 3.9 per cent (sub-four!) yield. Crude is up. Gold is up. Bitcoin is up. The animal spirits are throwing themselves a party after the U.S. central leaned into market rate cut narrative rather than push back against it. Not only do the Fed projections suggest three rate cuts to come in 2024, but they are also thinking about thinking about rate cuts. Investors’ prayers have been answered. The first rate cut is now fully priced in come March (there was only a 43 per cent chance prior to yesterday). If yesterday’s Fed announcement was the shot, today’s economic data is the chaser. Retail sales advanced way more than expected in the U.S. for November. Turns out the holiday shopping season kicked off with a bang. Jobless claims fell to their lowest level since mid-October. Everything is awesome. And I’m totally not even thinking about why we need all these rate cuts, because everything is awesome – you got that?
Not so awesome: I’ll watch shares of grocery store owner Empire. The owner of Sobeys, Freshco and Farm Boy missed profit and sales expectations this morning. Comparable sales grew a tepid two per cent, a little below expectations. While the company maintained its dividend, it signalled it plans to buy back $400 million worth of stock. CEO Michael Medline said that higher interest rates and overall economic uncertainty are impacting customer purchasing behaviours.
Put that in your pipe: Shares of Pembina Pipeline are down more than five per cent in the pre-market after announcing it would buy Enbridge’s interest in three natural gas pipeline ventures. The deal was announced yesterday after the close and is valued at about $3.1 billion. Pembina is funding the deal through additional stock priced at $42.85 per share, a seven per cent discount to yesterday’s close. We will watch for the market’s appetite to sop up the additional equity to fund the deal.
Biggest deal ever: We will watch shares of TMX group after it sprung for an index provider in its biggest deal ever. TMX group will pay $848 million to buy the rest of VettaFi it doesn’t already own. VettaFit develops indices that ETFs track. I’ll watch the stock reaction with interest. Shares hit an all-time high yesterday and yet not a single analyst rates the stock a buy. That is incredibly rare. Even stocks like BlackBerry and Carvana have at least one buy rating.
Draw a picture of faster growth: Shares of Adobe are under pressure in the pre-market after a tepid outlook on 2024 sales. Adobe has been one of those hot generative AI plays because you can command it to draw whatever you want. This could be a case of Adobe being conservative in its forecast and not wanting to overpromise. Executives on the conference call were peppered about the outlook and the CEO said there is nothing they see on the horizon that would tell us they aren’t poised to have another great year.
Notable guest: Scotiabank gave investors clarity on its growth plans at its highly anticipated investor day yesterday. For more on what’s ahead, tune in for our interview with Scott Thomson, president and CEO of Scotiabank, at 1 p.m. ET this afternoon.