Here are five things you need to know this morning:
Trade interrupted: The United Kingdom is hitting the brakes on trade talks with Canada after Ottawa decided not to extend temporary measures put in place after Brexit. The next round of talks was scheduled to take place next month. The temporary measures included a special quota for U.K. cheese imports and “country-of-origin” rules that helped British manufacturers.
Hitting pause: Futures are flat this morning as the macro and micro wrestle for centre stage. On the macro, we got the U.S. Federal Reserve’s favourite gauge of inflation (PCE) coming right in line with expectations for the most part. Core inflation cooled to the slowest pace since the spring of 2021. This propped up futures. On the micro, we have a bunch of earnings that are weighing on the tape like Intel and Visa (more below). And for seasonal investing believers, the January effect is all of a sudden in your favour. Thanks to trading this week, returns for the month are now positive.
Intel on Intel: Shares of Intel are plunging, down nearly 10 per cent in pre-market. The semi-conductor giant warned that sales and profit for this quarter are going to fall short of expectations. Intel said sales for the first quarter will be between US$12.2 and 13.2 billion and profit will be $0.13 per share. This is well below the $14.2 billion and $0.34 per share consensus estimates. While demand seems to be recovering for the PC market, it is weakening in data centres. Intel shares are getting clipped after hovering around a two-year high. Needham is not recommending investors buy the dips, downgrading the stock this morning and saying recent gains leave the stock’s risk profile unattractive.
Charge it: Shares of credit card companies Visa and American Express are trading in different directions this morning. Visa was under pressure pre-market, even as they grew profit eight per cent and beat expectations. However, the company seemed to hint that January transaction volumes would be softer because of weather. Investors seem to be using this as an excuse to take profits on a stock that closed at an all-time high yesterday. American Express is trading higher in the pre-market despite missing on both sales and profit. Investors instead are focused on the forecast for growth, which was better than expected.
Mom jeans: Shares of Levi Strauss are under pressure after warning sales and profit for the year would fall short of analyst expectations. To compensate, they are cutting about 10 to 15 per cent of their global corporate jobs. The jeans maker has been in the midst of a restructuring that includes ditching its Denizen brand, which is one of their lower-end brands. Levi is trying to be more upscale as they try to recapture momentum they had during the mom jeans craze that took them to all-time highs in 2021. Since then the stock, like the craze, have faded. Shares are down nearly 50 per cent from that peak.