August 22, 2019

In Thursday’s markets the S&P 500 was about unchanged and Toronto was down 0.3%

Toll Brothers was up 2.0% presumably because the analyst comments were somewhat positive today after they digested the Q3 earnings report and conference call.

With RBC and CIBC having now reported Q3 earnings, I understand both did well on their core Canadian personal and commercial banking. But Steve Eisman (of The Big Short) expects Canadian banks to have to increase their loan loss provisions soon. Given his track record, his comemnts carry weight.

He also mentioned today that he is short Canadian Tire. He thinks Canadian Tire will face bigger losses on its credit card operations. He also thinks that Amazon is hurting and will hurt their business. Again, given his track record and stature his views count and he may be right. On the other hand, Canadian Tire has been very well managed for many years and continues to post good results and to express optimism.

Statistics Canada reported June wholesale trade figures which were better than expected, with a rebound versus a weak May. This chips away at expectations of a Bank of Canada interest rate cut and probably contributed to the government of Canada five year bond yield rising to 1.33% today. That’s a far cry below the nearly 2.50% that it briefly reached last Fall but a nice rebound from 1.20% a few days ago. The table shows that wholesale trade is up 2.3% versus June of 2018.