On Wednesday, the S&P 500 was down 0.7% while Toronto managed a 0.1% gain.
There is a lot of earnings news for the market to digest.
After the close, Costco reported April same-store sales. For the first time in a very long time they were down. But excluding gasoline and foreign exchange fluctuations they were down only 0.5%. On that basis Canadian same-store sales were down 5%. The decline is due to social distancing and the closure of much of its optical, haring aid and photo services. The reason for lower sales in Canada versus the U.S. was likely due to the more wide-spread support of stay-at-home policies in Canada. As April progressed, Costco began limiting the number of people allowed into its stores at once.
In the U.S., Costco is now requiring all customers to wear face masks.
Costco same-store sales in May could decline due to the reluctance of many to wear a mask which is not required at competitor stores.
The market took this news in stride as the stock was down only 0.6% in after-hours trading.
The Melcor REIT fell back to $3.53 today. That’s a big discount to book value but the REIT will be facing higher vacancies and no-doubt write-downs on some of its properties. It has not yet announced what percentage of rent due that it collected on May 1. A lot of tenants may not have paid given their lack of revenues and given the added confusion on the federal rent subsidy that would see many tenants eligible to pay 25% of rent if the REIT agreed to a 25% rent reduction with the government picking up 50%. It is certainly possible that Alberta has developed far too much retail space. Even now, many projects remain under construction in the Edmonton area. The bottom line is that the Melcor REIT looks attractive but remains a speculative investment.
On Friday, both the U.S. and Canada will report epic job loss / unemployment figures. In theory, that bad news is already reflected in the market.