August 1, 2019

Markets fell on Thursday after Trump escalated his trade war with China announcing new 10% tariffs on most remaining Chinese goods starting September 1. This will be for most of the goods that he has not already imposed tariffs on.

Stocks that fell on this news included: FedEx – down 4.2%, Linamar – down 4.25%, and Apple – down 2.2%.

Canadian Western Bank was down 3.6%. This may have been related to lower oil prices. Banking has remained very profitable but the market apparently fears loan losses.

TFI International was down 3.3%.

In better news, CRH Medical was up 12% in Toronto, although only 5% in the U.S.

After the close, Melcor released Q2 earnings. As expected, revenues and earnings were weak. But they did manage to report a profit and funds from operations per share were higher than last year although down versus 2017. Annoyingly, they cut the dividend by 1 cent to 12 cents per quarter. They have had a history of adjusting the dividend down in lean years. Melcor noted that its investment properties business continues to grow as does its property development division. They expressed confidence that they can deal with the weaker lot sales but they also indicated that residential building lot sales in Canada will remain weak until higher job growth returns to Alberta. It seems to me that the stock price has already more than reflected this scenario.

Desrosiers automotive reported vehicle sales for July. They were down 1.0% which is actually not bad considering that Q1 was down 4.1% and Q2 was down 6.4%. Fiat Chrysler was up 19% which is the first increase after at least a year of significant declines for that brand. This report is good news for AutoCanada given its heavy concentration of Fiat Chrysler dealers. Perhaps it will be able to report that Q3 is starting off well. But I expect its Q2 report to contain more bad news.