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Noah Zivitz

Managing Editor, BNN Bloomberg

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Global markets are rallying this morning on no obvious single specific catalyst, and the newest global fund manager survey from Bank of America offers plenty of reasons to be cautious. The survey (conducted from May 6-12) of 331 participants with US$986 billion in assets under management reveals what BofA describes as “extremely bearish” sentiment, with cash levels at the highest since 9/11, the biggest bet against tech since mid-2006, and equity underweighting at the highest since early in the pandemic, according to the report. Through all the turmoil of the last few weeks, we’ve asked many investing professionals if the market has bottomed; everyone I heard said we still haven’t seen a full capitulation. And that’s echoed in the BofA survey, which indicates the ultimate lows haven’t been reached. So what’s an average investor to do? We’ll gather insight, starting with Karl Berger from Cidel Asset Management at 8:00 a.m.

WHAT THE BIGGEST NAMES IN INVESTING ARE UP TO

Some nuggets that stood out to me in the flurry of 13F filings from the biggest names in investing yesterday: Daniel Loeb’s Third Point added a stake in Suncor Energy in the latest reporting period. Warren Buffett’s Berkshire Hathaway sold its longstanding stake in Wells Fargo, and built a stake in Citigroup. And, based on the wonderful HDS function on the terminal, there was a ton of movement on Shopify. Kumutha will be rounding up sentiment today on the former Canadian tech darling.  

TWITTER TAKEOVER DRAMA ‘FEELS LIKE COLD FEET’

Those were the words of Wedbush Securities Senior Analyst Dan Ives when we spoke with him yesterday afternoon as Elon Musk sparred with (and slung a poop emoji at) Twitter Chief Executive Parag Agrawal over spam/bot accounts. Early this morning, again – in a tweet, Musk said his US$54.20 per share takeover of the Twitter “cannot move forward” until Agrawal publicly proves spam/bot accounts represent less than five per cent of all accounts on the platform. Back to Ives, he said he thinks Musk is “looking for a scapegoat way to get out of the deal.” Twitter said this morning it is committed to getting the deal done at the agreed price “as promptly as practicable.”

THE OTHER SIDE OF THE HOUSING STORY

We know home sales are slowing as rising interest rates compound already-dismal affordability in many markets. How about the rental side? We’ve got some fresh data, courtesy of Canadian Apartment Properties Real Estate Investment Trust (not to mention some anecdotal insight from at least one member of our team). In short: rents are rising. CAPREIT said rents were up 10.2 per cent on turnovers in its Canadian portfolio during the latest quarter, while overall occupancy inched up to 98 per cent (on the downside for the company, operating expenses surged almost 16 per cent year-over-year). CAPREIT Chief Executive Mark Kenney joins us at 3:30 p.m.

MIXED EARNINGS FROM RETAIL GIANTS

Walmart CEO Doug McMillon said in a release this morning his company’s bottom-line performance in the first quarter was “unexpected and reflect the unusual environment.” That bottom line shows net income sank 24.8 per cent year-over-year, while adjusted earnings per share landed way below the average estimate. The “unusual environment” appears to be a reference to inflation, which McMillon said pinched margins and drove up expenses. Meanwhile, Home Depot shares rose almost three per cent in pre-market trading after the retailer reported a surprise gain (2.2 per cent) in same-store sales for its first quarter. It also raised its full-year forecast for earnings per share.

THE GHOST OF KXL IN WASHINGTON

We can only assume there will be some coulda/woulda/shoulda talk about Keystone XL at the U.S. Senate Committee on Energy and Natural Resources hearing today, where U.S. lawmakers will probe the potential of partnership with Canada on energy and materials. Alberta Jason Kenney will be there. Natural Resources Minister Jonathan Wilkinson will also participate. We’ll keep tabs on it.

OTHER NOTABLE STORIES

  • Enthusiast Gaming shares jumped in late trading yesterday after the Canadian gaming and media roll-up reported a 57 per cent surge in first-quarter revenue. CEO Adrian Montgomery said in an interview with us mere minutes after the results were released he sees Enthusiast as a “one-stop solution for companies that want to reach this coveted and elusive gamer generation.” The results won some praise on Bay Street, with RBC Capital markets Analyst Drew McReynolds saying they reflect “an inflection point that showcases … early earnings potential….” Now the question is when that will be reflected in a stock price that has crumbled (like much of the tech space, to be fair) over the last year.
  • Justin Bieber is back for an encore with Tim Hortons. The coffee and doughnut chain this morning announced a Bieber-branded cold brew coffee launching next month, as well as in-store merch and a return of the Timbits that launched the pairing. Paige will chat with Tim Hortons’ chief marketing officer shortly after 9:00 a.m. Maybe today, or another day, we’ll finally learn the financial terms of the company’s hookup with Bieber.

NOTABLE RELEASES/EVENTS

  • Notable data: Canadian international securities transactions, U.S. retail sales
  • Notable earnings: Walmart, Home Depot
  • 845: Prime Minister Justin Trudeau and Newfoundland and Labrador Premier Andrew Furey hold media avail in St. John’s
  • 900: Parliamentary Budget Officer releases report “A stochastic debt sustainability analysis of Budget 2022”
  • 1000: Alberta Premier Jason Kenney, Natural Resources Minister Jonathan Wilkinson address U.S. Senate Committee on Energy & Natural Resources hearing on U.S.-Canada energy and minerals partnership
  • 1000: Canadian National Railway CEO Tracy Robinson and CFO Ghislain Houle address Bank of America conference
  • 1400: U.S. Federal Reserve Chairman Jerome Powell speaks at Wall Street Journal conference
  • 1450: Canadian Pacific Railway CFO Nadeem Velani addresses RBC Capital markets conference