Condolences to anyone trying to put on an event that happens to fall on the same night as a Toronto Blue Jays game. I’ve already been warned that we have a hard stop on Halloween if it goes to Game 6 in the World Series.
It is a catalyst-heavy week. Canada and the United States have interest rate decisions, earnings ramp up in earnest on the Toronto Stock Exchange with 52 companies reporting, and the parade continues with 172 companies on the S&P 500 also reporting results. Here are the most interesting things to watch:
Addition by subtraction: The Bank of Canada and the U.S. Federal Reserve are both expected to cut rates Wednesday. For the Bank of Canada, that would be despite the fact that we had a huge surge in employment in October and headline inflation is at the highest level since February. The big question is whether the central bank will look through that. The market is currently betting that it will, however the Bank of Canada has been known to defy market odds before. “Even though economic data has not been as one-sided as it was heading into the September policy decision … we believe the last three months of data in aggregate have been soft enough to warrant another cut,” said a note from the team at TD Global Rates, FX and Commodity Strategy. They believe this will be end of the easing cycle for the Bank of Canada with rates settling at 2.25 per cent. As for the Federal Reserve, it’s the beginning of their easing journey with rates much higher at 4 to 4.25 per cent. The market is pricing in a near 100-per-cent chance of a rate cut. Last week’s relatively tame Consumer Price Index report sealed the deal and led to a surge in equity markets.
MAGMA: Meta META-Q, Apple AAPL-Q, Google (Alphabet) GOOGL-Q, Microsoft MSFT-Q and Amazon AMZN-Q all report this week, representing US$15-trillion in market value. These five companies are 25 per cent of the S&P 500’s total value right now. This shows their earnings don’t just matter for investors in those stocks, but all investors in U.S. equities. Each company has a nuanced story, but crucial to the AI trade will be spending announcements on infrastructure. Many have already made commitments for the year, but watch for any increases to those plans as supply remains a considerable constraint.
Apple investors are expecting a 6-per-cent increase in iPhone sales but the real question will be about the upcoming quarter, which will reflect the holiday shopping season. Evercore analyst Amit Daryanani says the stock could pop on better-than-expected earnings. “Our positive bias is driven by iPhone data points that suggest this may be more than the average iPhone refresh cycle,” he wrote in a note to clients.
Amazon shares are listless as investors worry that its Amazon Web Services (AWS) cloud platform is slowing. This perhaps explains why the stock rose after a major outage last week, reminding everyone how prolific the tech giant is. Cloud growth will be key at Alphabet as well, with analysts expecting 29-per-cent growth from last year, compared with just 17-per-cent growth from Amazon (although Amazon is far larger with US$32-billion in AWS sales expected this quarter vs. US$14.7-billion for Google’s Cloud). Speaking of cloud, that will also be the focus of earnings from Microsoft, with growth expected to be 25 per cent, similar to the previous quarter. Meta has been a strong performer this year and is already using AI to help strengthen its ad platform. Watch for its spending forecast for 2026 that right now analysts peg at US$142-billion.
Venti: Starbucks SBUX-Q will give a glimpse into its turnaround efforts when it reports Wednesday. The stock has been an underperformer as investors await signs that sales are picking up. They may have to keep waiting, as analysts expect that sales will fall slightly. Chief executive officer Brian Niccol has been in the job for more than a year after being poached from Chipotle. While the sales slide has narrowed, it would still be the seventh quarter in a row of slumping sales. “Signs of [sales] recovery are crucial for near-term share price performance,” wrote Stifel analyst Chris O’Cull in a note to clients.
Chugging along: Canadian Pacific Kansas City CP-T and Canadian National Railway CNR-T both report this week. CP Rail reports Wednesday after the close and all eyes will be on its ability to buck the global slowdown in shipments. A strong fall harvest and growth in intermodal transportation could be mitigating factors, said Chris Murray, managing director of institutional research with ATB Capital, in a preview note to clients. CN Rail, on the other hand, has had a tougher time with lower shipping volumes, Mr. Murray said. “While valuations are nearing trough levels and, in our view, better reflect the near-term outlook, the uncertainty surrounding macro conditions and several key freight types keep us neutral on CN.” CN reports results on Friday.
Finish line: The vote on Cenovus’s CVE-T deal to buy MEG Energy MEG-T is set for Thursday after being delayed last week to allow more time for investors to vote their proxy. Cenovus said it had 63 per cent of the votes, but not the 66 and two-thirds required to close the deal. On my podcast this week, Ryan Bushell, CEO and portfolio manager of Newhaven Asset Management, said the mail strike may have affected the collection of votes. “I think they will get it across the line,” he said. Cenovus reports results on Friday, so either way, we will hear from the company.
In the Money with Amber Kanwar is Canada’s top investing podcast. New episodes out Tuesday and Thursday. Subscribe now! www.inthemoneypod.com