Wednesday was another positive day in the markets apparently based on hopes for or signs of (modestly) lower inflation.
This positivity could increase or reverse course tomorrow as the U.S. December inflation report is due out tomorrow. (Let’s all cross our fingers?)
Wednesday, the S&P 500 was up 1.3% and Toronto was up 0.6%.
Toll Brothers was up 2.9% and has been holding up rather well in the face of declining home sales.
Amazon was up 5.8%. I have not analysed it recently but just based on it being such a powerhouse and based on its recent declines I would suspect that buying some shares would not be a bad move. The same may apply to Meta (Facebook) but it’s probably more speculative.
Rate reset preferred shares were mostly up another modest amount. The 5 year Canada bond yield has been falling the last few weeks. That means that the rate resets (which can be up to five years in the future) could be projected to reset to somewhat lower levels than might have been expected a few weeks ago. But, the lower 5 year bond rate means that the existing and yields (generally high) become more attractive.
My next update will likely be for Alimentation Couche-Tard. I am interested to look at its gasoline margins which have been higher than normal for some time (will they go back down to normal?) I also want to look at its debt structure since it historically used a lot of short term debt – but it has paid down a lot of debt. It’s very tough to guess what impact the switch to electric vehicles will have on their gas stations. I “see” a lot of neighbourhood gas stations ultimately closing (Commuter EVs charge at home) but the big highway stops will be busier than ever. But Couche-Tard makes a lot of money on convenience stores and the 2020 pandemic showed that people kept going to those stores and spending apace even when they were not stopping for fuel nearly as often. And Couche-Tard is extremely well managed and so it certainly cannot be counted out.