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Msg  70143 of 70702  at  7/28/2021 9:48:07 AM  by


The Launch Pad

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The Launch Pad
July 28, 2021
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Investor sentiment is mixed as investors continue to grapple with rising risks of a slowing economy, even as more and more companies beat analyst’s earning expectations. While strong earnings have boosted confidence in corporate recovery (Boeing has just posted profits for the first time in almost two years), investors aren’t entirely bullish. McDonalds, Apple, and Microsoft are the latest companies to post big earnings, but despite stellar numbers, investors remain cautious. Apple released their earnings after yesterday’s close, but despite record growth, news of potential supply shortages and slower growth overshadowed all positive news and the stock fell afterhours.

Chinese stocks including those listed abroad have been in turmoil as the Asian nation attempts to implement far-reaching reforms in several sectors including education and technology. Concern over the regulatory crackdown helped contribute to a downbeat day for U.S. equities on Tuesday, with the S&P 500 finishing half a percent lower yesterday.

But the dip buying army was armed and waiting. There was a tremendous amount of flow moving into both broad and tech specific ETFs, with SPY adding $3.55 billion in fresh flow and QQQ receiving $474 million, bringing its 4 day total to more than $3.2 billion. Three Chinese American Depositary Receipts (ADRs) -- electric-vehicle makers NIO Inc. and XPeng Inc. and e-commerce giant Alibaba Group Holding -- were among the most-purchased companies according to companies that track retail order flow.

Despite the massive flows yesterday U.S. futures are muted this morning and stocks are mixed, as investors weigh earnings from technology heavyweights while factoring China’s selloff. Investors remain worried about the threat to global growth from the delta variant and the potential for tighter policy within China.

As the Fed continues their meeting today, investors are awaiting their thoughts on monetary policy. Inflation remains front of mind for investors and while economists seem to agree that the recent inflation is simply transitory, if it does persist, the economic recovery we have been enjoying could be threatened.

As proof that the CDC is getting concerned about the spread of the Delta variant. Americans fully vaccinated against COVID-19 are now instructed to wearing masks in indoor public places in regions where the coronavirus and especially the Delta variant are spreading rapidly, U.S. authorities said on Tuesday. The changes mark a reversal of the CDC's announcement in May that prompted millions of vaccinated Americans to shed their face coverings.

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Company news

Pfizer increased their projected sales for the COVID-19 vaccine by $7.5 million. Previously the estimate was $26 Billion but was lifted to $33.5 million in their latest filing. Brookfield Infrastructure Partners LP has come out on top of the hostile takeover attempt of Inter Pipeline Ltd. The friendly deal with Pembina Pipeline Corp is no longer an option as shareholders are told to accept the Brookfield sweetened offer. Alphabet blew estimates out of the way this quarter as revenue from advertising grew substantially. EPS reported is $27.26/share when analysts estimates were around $19.35/share. In a surprising turn of events, Boeing reported a profit for the first time in two years. $0.40/share for the quarter is a strong sign that the company is emerging from the pandemic, especially when a loss of $0.81 was expected. Shopify beat revenue expectations for Q2 handedly as the pandemic continues to push consumers to online shopping. Revenue rose 57% for the quarter from a year earlier to $1.12 billion, topping analysts estimates of $1.05 billion.


Oil prices showing strength this morning as the latest inventory report from the American Petroleum Institute showed a larger than expected crude draw. At the time of writing, NYM WTI crude futures are up +0.46% to US$71.99/bbl. ICE Brent Crude futures are up +0.27% to US$74.68/bbl. API reported a crude inventory decline of 4.7 million barrels showing signs the demand still remains. We will wait for the report later today by EIA to confirm or deny the crude draw. A rising number of coronavirus cases still remains a concern but bullish activity is overshadowing this morning. In other commodity news spot gold is down -0.14% to US$1,797/oz. Nothing different, gold continues to hold steady as we await the federal reserves policy decision due later in the day.

Fixed income and economics

Loonie are acting surprisingly resilient and still higher on the session at time of writing after a miss on CPI data this morning. StatsCan is reporting that headline inflation rose by +0.3% on a non-seasonally adjusted basis during the month of June. That’s below the +0.4% forecast, slower than the +0.5% pace in May, and marks the lowest pace of price acceleration since December when we actually saw deflation of -0.2%. Annualized CPI also slumped, rising by just +3.1% compared to +3.6% in May and shedding all talk of low-base effects. Within the details we see a -1.8% decline in the cost of clothing/footwear to lead the laggards while food (+0.1%), gasoline (+1.6%) and recreation/education (+0.3%) prices all declined by more than half the prior pace. Regionally, the cost of living slowed to +0.4% and +0.3% in Ontario and Quebec respectively to bring down the national average, while B.C. rebounded from a -0.1% deflationary print in May to post a +0.5% uptick. All in, it’s a definitely softer report than expected and will certainly force the Bank of Canada to take the gas pedal off slightly on hawkish rhetoric at least for the next week until updated employment figures come out.

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