People walk by Lululemon on Robson St in Vancouver, B.C.Isabella Falsetti/The Globe and Mail
Previewing the week ahead sounds straightforward, until an all-caps social media post turns your market outlook into yesterday’s news. (Thanks, President Trump!) Luckily, as a parent of three little kids, I’ve learned to let go of plans, timelines and the dream of enjoying anything for longer than five minutes.
Here are five things happening in the next week:
First trading week of June: Spring is in full bloom, but that doesn’t always show up in the markets. June is typically a bad month for stocks. On average, the S&P 500 Index has risen just 0.2 per cent in June compared to 0.8 per cent in the other 11 months of the year, according to data compiled by Bloomberg that spans the past three decades. The Toronto Stock Exchange has only been positive in June 42 per cent of the time over the past 20 years, according to data from stockcharts.com. In fact, June is the worst month for positive returns. Having said this, the handover from May has been atypically strong. The S&P/TSX Composite Index rallied more than 5 per cent in May – the best showing since November 2024. The S&P 500 notched a 6 per cent gain – the best since November 2023. So much for sell in May.
Bank of Canada rate decision: The central bank will announce its trendsetting interest rate decision on Wednesday. As of late Friday, consensus among economists had the bank cutting its policy rate to 2.5 per cent from 2.75 per cent. However, last week’s strong gross domestic product figures cast some doubt on that probability. Canada’s GDP expanded at an annualized rate of 2.2 per cent in the first quarter, well above the 1.7 per cent expected. The estimate for April, when the tariffs hit, was also surprisingly strong, with a 0.1 per cent increase. While some details weren’t as robust – housing was weak and personal consumption cooled – traders pared back their bets of a rate cut after the print. The figures were also enough for Bank of Montreal chief economist Doug Porter to abandon his call for a rate cut. “The key point here is that the GDP figures are sending no obvious distress signals so far in 2025,” Mr. Porter wrote in a note to clients. With core inflation higher and economic growth relatively robust, this potentially pushes out the timeline for another rate cut until July.
Jobs on Friday: We will get a read of job growth in Canada and the United States for May on Friday. In Canada, economists expect the economy shed 10,000 jobs while the unemployment rate ticked up to 7 per cent. That would be the highest since the COVID-19 pandemic began in 2020 and the highest since October, 2016, if you exclude the pandemic. Anemic job growth is one factor keeping hope of a rate cut by the Bank of Canada next week alive. Look for pressure in tariff-hit areas. Last month’s figures showed that unemployment in Windsor, Ont., shot up north of 10 per cent. In the U.S., economists expect 130,000 jobs were added while the unemployment rate held steady at 4.2 per cent. There will be lots of noise with the impact of DOGE’s government worker cuts muddling the numbers. Here too, I will be watching for the impact of government policy, particularly in the travel and hospitality sector, with tourism to the U.S. down and government travel lower due to fewer government employees.
Lululemon earnings: Few retailers have been able to escape the tariff woes in their quarterly results. Gap Inc. warned last week that tariffs will cost it up to US$300-million this year while sales at its athletic apparel brand, Athleta, fell 8 per cent in the first quarter. Against this backdrop, Lululemon Athletica Inc. will report results on Thursday after the market close. Sales and profit are expected to grow at the slowest pace since the pandemic began. Investors may also be bracing for a cut to company forecasts. The stock has been beaten up, down 18 per cent so far in 2025. However, it has climbed since Mr. Trump’s Liberation Day, leading Morgan Stanley analyst Alex Straton to think there is potential for Lululemon to rally after the results.
Saputo earnings: The company’s earnings may not carry the same weight as Nvidia Corp. for the broad market, but after a terrible four-year run for Saputo Inc.’s stock, it is showing signs of life. The shares are up about 16 per cent from the January lows (outperforming Nvidia over that time – just saying). Saputo has been languishing on the back of several issues: It swallowed a bunch of huge acquisitions before the pandemic that left the balance sheet vulnerable when COVID-19 arrived. Then, the pandemic shifted demand away from restaurants at a time when labour got expensive. Finally, Saputo has been struggling in its U.S. business. But today, there are signs the cream is rising to the top. RBC Capital Markets’ Irene Nattel expects the U.S. business to remain “wobbly,” but says the outlook is getting constructive overall. There was also a ton of insider buying in February, when the stock bottomed. Kudos to Evan Mancer, who runs a $5-billion fund at Cardinal Capital, who told In the Money with Amber Kanwar back in February it was time for a fresh look at Saputo. “I think they are fully in recovery mode,” he said. “I think it’s time to buy…we’ve had two, in our opinion anyways, good quarters and I think the U.S. is back on track."
In the Money with Amber Kanwar brings you actionable insights from top portfolio managers to help you make profitable investing decisions. New shows out Tuesday and Thursday mornings. Catch them all at www.inthemoneypod.com