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People talk about the volatility and the carry trade. From a bigger perspective, the US economy is slowing down. Pretty clear that the consumer's having a difficult time, though corporate earnings were actually pretty good. It's about people's expectations on all these things. When you look at the numbers, if companies beat on expectations and gave reasonable guidance going forward, you're seeing these stocks do quite well.
The US unemployment numbers going up set people off. The US economy is the last economy to go into slower growth, maybe a recession. You've seen it globally, but not in the US. Biden did a huge fiscal plan coming out of Covid that really propelled the US growth numbers.
The Fed will probably ease in September, maybe November and December as well.
The problem with corporate earnings is that they can manage them very well over the quarter. So beating expectations doesn't mean much when you dropped expectations for the quarter. When you look at what was expected for earnings vs. what they met, earnings were better overall and margins were kept up.
Generally, margins are still pretty good. Yes, the consumer is wavering. Credit card delinquencies have gone up a lot. The savings rate in the US has collapsed from 8-9% to closer to 3%, so people don't have as much money in the bank. So in certain parts of the economy, the consumer isn't going to be able to feed growth there.
People forget that the stock market falls 5-10% every year.
Stock market has a lot of things to worry about. One is that inflation is not where it's supposed to be. There's a risk that it may pop up, so we have to be very careful. The second thing is that there are a lot of geopolitical issues. Plus, we're going into what he thinks will be a very divisive election in the US.
There's going to be lots more volatility in the stock market. But volatility can be your friend, as in chaos there's opportunity. If you're a long-term investor, look at great companies and see if you can buy them at great valuations at these times.
Burger King was lower but Tim's did OK. Burger King's spending a lot of $$ to revamp stores, but seeing good returns from stores already renovated with foot traffic up about 4.3%. Great brands that they improve on. Decent dividend. Worthwhile owning here.
Core business is doing very, very well. Beat expectations, cashflow's doing better. Metrics are getting better, and these will drive the stock over the next several years. Covid growth wasn't "real". Higher interest rates hurt. Sold assets not related to core operations.
There's a lot of opportunity in Canada. But he worries about what happens if the commodity complex starts to do really poorly and oil doesn't go up. Lower rates will help a larger part of the index such as utilities and banks, which have had a hard time over the last 2 years. Dividend-paying stocks should do better in a lower-rate environment.
If you look at the June numbers, sales were down and volumes were down in a lot of places around the world. So spirits are doing very poorly, and it's a higher-priced product. Margin compression. Expectations of 5-7% growth for the second half is over-optimistic.
Needs to restructure into fewer brands. Big issue is that it's not growing as fast as it used to, nor does it have pricing power anymore. Management shakeup has hurt. Stock's fallen a lot, so you could try a value play if you're prepared to hold for a long time.
Management's executed incredibly well over the years, whether on acquisitions or on projects. Will suffer a bit with the price of oil; if oil can get higher, stock will do well. He's attracted by its paying down debt, reducing capex, and buying back shares.
Don't have to go outside Canada to invest in oil & gas. We have a great O&G industry, and this is a great name to own.
HSBC acquisition seemed to go really well. More of a global bank from an investment management point of view, less from domestic retail. Stick with it. You can own more than 1 Canadian bank; at certain times you may just want to own less or more of one or the other.
Great business. Executed well. Too big to make acquisitions anymore. Can grow nicely on retail, credit card, investment banking, and brokerage sides.
Despite economic slowdown, banking industry not facing a crisis. Lots of capital to buy back shares or increase dividend. It's not 2008 or 2020 again. Loan losses have gone up, but they've reserved a lot. Plus, US banks can cut costs a lot faster than Canadian banks.
The lapse in compliance is fixable. Lots of capital. The overhang on the stock is how big is the cheque for the fine going to be? Once that cheque's written, it should be fine. Will force them to be a better bank. Being prevented from acquiring means they can put $$ to use on strengthening what they have.
