Here are five things you need to know this morning:
Bank of Canada day: The Bank of Canada is making its first interest rate decision of the year today. It’s expected to hold rates for the fourth meeting in a row, after raising them to five per cent in July 2023. Right now, the market isn’t really pricing in rate cuts until June, but as always, we will parse the commentary to see how Tiff Macklem guides the market. We will get updated GDP and inflation projections along with the rate decision (now at 9:45 a.m. ET with a press conference beginning at 10:30 a.m.)
Pep rally: Futures have some pep in their step with the S&P 500 closing higher for the fourth session in a row and notching another record high. The NASDAQ 100 joined in on the record-high fun. The TSX put in a good showing, now in the green for the year. Today’s tape is once again dominated by earnings. The strength in futures is interesting because aside from Netflix (more on that below), most stocks are in the red post earnings. Big declines pre-market for DuPont, Kimberly-Clark, Texas Instruments and AT&T.
Netflix and no chill: Netflix is poised to open at a two-year high following a set of results that Raymond James says even the most “ardent bear” will have trouble finding weakness in. Netflix added way more subscribers than expected in the fourth quarter. More than 13 million new subscribers joined the streamer, better than the nearly nine million expected. This is despite fears that the ad-tiered model and crackdown on password sharing would cannibalize growth. Netflix now stands at a total of more than 260 million subscribers, well ahead of cash rich rivals like Disney and Apple. Speaking of cash, Netflix is spitting it out like crazy. The company says they expect to generate US$6 billion in free cash flow in 2024.
Ride the rails: We will watch shares of CN Rail this morning. The railway reported better-than-expected earnings last night on the back of stronger revenue. They also projected they can grow profits by 10 per cent this year even with macro challenges. Most of this was expected and analysts are expressing some concern that CN is expecting to deliver profit growth by shipping more goods (versus cost cutting) and they are worried the demand isn’t there. Veritas downgraded the stock following earnings because they are worried about the demand picture. “Volume guidance likely relies on a soft landing scenario accompanied by a strong second-half. While we remain hopeful, we think most would agree that both remain open questions,” the analyst said in a note to clients.
Bad fruit: Shares of BlackBerry are plunging in the pre-market by more than 10 per cent. The embattled tech company is hoping to shore up its balance sheet by offering a convertible note through a private offering. The coupon and the conversion price are yet to be determined, but clearly investors are worried about the kind of dilution and interest rate expense they could be exposed to. RBC says they believe the coupon is likely to be higher than the coupon on its existing convertible debentures.
This is a corrected story. A previous version said Wednesday would be the fifth consecutive interest rate hold from the Bank of Canada. It is the fourth consecutive hold.