Here are five things you need to know this morning:
Only a day away: All my trader notes this morning are referencing tomorrow’s inflation print in the U.S. as the big catalyst for the markets. Which is another way of saying that not much is happening today on the macro front. Futures are flat, bonds are flat, gold is flat, the U.S. dollar is flat. There is a touch of anxiety about how January is shaping up, considering the old adage: “As goes January, so goes the year.” According to David Lutz at Jones Trading, when the S&P 500 trades red over the first five trading days, the average gain for the year is just 0.3 per cent. Tech has been a pain point, even as Nvidia continues toward fresh all-time highs. It has left its other “magnificent seven” counterparts in the dust so far in 2024.
Bitcoin ETFs are dead, long live Bitcoin ETFs: The wait for the possible approval of a spot Bitcoin ETF in the U.S. saw a chaotic 15 minutes yesterday. A post on ‘X,’ formerly Twitter, went out from the U.S. Securities and Exchange Commission’s account saying it had been approved, but SEC Chair Gary Gensler later tweeted that the SEC account was compromised and the SEC has “not approved the listing.” I would love to know what happened behind the scenes. The SEC later explained that someone hacked into their account using a phone number associated with it. Bitcoin prices whipped around and are now hovering at the US$45,000 mark. I will leave it to the Twitterati to make all the jokes, but today is the deadline for approval. ETF providers are continuing to slash their prices in a race to the bottom for fees and a rush for amassing assets as quickly as possible.
Ahead of earnings: Goldman Sachs and Citi have been downgraded ahead of U.S. bank earning season, which kicks off on Friday. BMO is moving to the sidelines on Goldman, citing the recent run-up in shares and concerns about their ability to deliver on revenue. The analyst is also cautious about Citi, which has had a very sharp rally from the October lows. Citi shares tend to underperform when there are broader concerns about the banks. Yesterday, I spoke with RBC analyst Gerard Cassidy, who takes the other side of the trade. He thinks investors should overweight the banks, including Citi. Check it out on BNNBloomberg.ca. Citi reports results on Friday.
Railroaded: CN Rail has caught another downgrade, its second this week. CIBC is downgrading shares of CN two days after TD also downgraded the stock. This seems to be primarily a valuation calling, with the CIBC analyst noting the stock is trading around its historical valuation and above the peer group.
50 shades of beige: Aritzia is set to report earnings after the bell and the stakes are high. The once high-flying darling of the fashion world had tough year. It is expected to post its first quarterly drop in sales in three years. Investors have front-run the slowdown with shares down nearly 50 per cent over the last year. It will be interesting to see if the stock trades on the micro or the macro. On the micro front, investors may take comfort if something comes better than expected either on sales or on margins. But on the macro, there is a larger question about the brand’s relevance. This quarter could go a long way to answering that question for investors.