Market Commentary
April 28, 2023
Making Cents of the Markets
Listen now to the most recent Making Cents of the Markets on CKNW. As earnings season is in full swing, Lori talked about the companies that beat, and the ones that missed, and gave an update on markets as investors await new economic data next week.
Lori shared her top tips on preserving the longevity of your wealth and the importance of open communication with your family when planning for future generations!
Click here to listen.
Beyond the Markets
The sun is shining in Vancouver and the Richmond Night Market is back! The season kicks off on April 28th every weekend until October 9th. Enjoy epic eats from many different cuisines and live entertainment throughout the season!
Click here to find out more.
Be in the Know
“Laughter is the tonic, the relief, the surcease from pain.” – Charlie Chaplin
Technology Laughs All The Way To The Bank
Major market indexes grew again this week, as big-named tech companies reported strong earnings. Amazon, FB, and Microsoft all beat expectations (we’ll discuss those more below).
Tech-land’s good news helped offset the bad news from First Republic Bank. The $30 billion it received in rescue money a few weeks ago from the largest U.S. banks seems to be too little to save them. But the broader U.S. regional banking sector managed to hold unscathed this week. Few of them lent money the way First Republic did, which for example gave Mark Zuckerberg a $6 million mortgage for 1.05%.
Florida Man Sued by a Mouse
Disney is suing Florida Gov. Ron DeSantis and other officials. “This government action was patently retaliatory, patently anti-business, and patently unconstitutional,” accuses the lawsuit.
A number of Republicans have criticized his moves as a personal vendetta. New Jersey’s former governor and fellow Republican Chris Christie said “I don’t think Ron DeSantis is conservative, based on actions towards Disney. Where are we headed here now that, if you express disagreement in this country, the government is now going to punish you?”
Governor DeSantis is not out of the running to challenge Trump for the nomination but his polling against the former President has turned down after escalating his vendetta against Disney.
DeSantis’ controversial moves are pointing to another Trump/Biden head-to-head. Such a matchup gives everyone a little something to cringe at. Seventy percent of Democrats don’t think Biden should have run again, in part because he will be 81 on the day of the election. And Trump? Well, never has a presidential candidate been the subject of a criminal charge, with more possibly on the way.
There Is Nothing Soft About Microsoft
The English have blocked Microsoft’s dream of consolidating the gaming giant Activision. UK regulators “have concerns…about the anticompetitive effects of this deal.” The UK knows a thing or two about anti-competitiveness, an unintended consequence of their lamentable decision to ‘Brexit’. It’s why the UK suffers from a jaw-dropping 10% inflation rate, far above the EU’s 6.9%.
In the UK’s defense, the FTC has sued to block the deal with another hearing set for August, though the burden to prove such a deal would hurt competition and will be a high bar for the government to prove.
Fortunately, on the same day as the UK announcement, Microsoft posted stronger earnings and revenues than analysts expected. Growth has slowed, but not as much as feared.
It’s also true that Microsoft remains the leading cloud-gaming player in the world with a 60-70% market share as it is.
Our Strategy
One Person’s Trash is Another’s Treasure
Over a third of our Legacy stocks have reported earnings this season with 80% beating expectations.
The most outstanding example was Meta Platforms (formerly Facebook), which earned not 21 cents per share as expected, but 31 cents. The stock popped over 15%, relieved that advertising revenues have been on the mend while cost cuts have benefited the bottom line. This is a theme we are seeing across the board.
Our Microsoft had a similarly impressive quarter, with the stock jumping about 8% after revenues rose 7% and earnings grew 9%. Cloud computing growth cooled to 27% but it was both expected and still an awesome rate of expansion. As important, the company issued positive guidance looking forward, in part due to growing revenues from its OpenAI/ChatGPT initiatives.
Waste Connections keeps taking out the trash, as earnings per share rose 12%. Collecting garbage is recession-proof. Better yet, the company still expects growth this year.
Also, recession-proof is our TC Energy (formerly TransCanada Pipelines). Revenues rose over 12% year-over-year while profits jumped from $1.12 cents per share a year ago to $1.21 in the quarter ending March. This improvement occurred despite oil’s $20 drop from a year ago, illustrating that TC Energy earns money mostly based on throughput volumes and not the price of the hydrocarbons pumped through its pipelines. As we often say, they don’t build pipelines like they used to. The more difficult it is to permit new lines, the more valuable existing ones become.
Visual of the Week
The Spinc Glendalough – Wicklow, Ireland
Taken by our team member Hollie-Louise who recently visited her hometown in Ireland!
DISCLAIMER: Investing in equities is not guaranteed, values change frequently, and past performance is not necessarily an indicator of future performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges.
The comments and opinions expressed in this newsletter are solely the work of Pinkowski Wealth Management, not an official publication of Canaccord Genuity Corp., and may differ from the opinion of Canaccord Genuity Corp’s. Research Department. Accordingly, they should not be considered as representative of Canaccord Genuity Corp’s. beliefs, opinions or recommendations. All information is given as of the date appearing in this newsletter, is for general information only, does not constitute legal or tax advice, and the author Pinkowski Wealth Management does not assume any obligation to update it or to advise on further developments related. Investing in equities is not guaranteed, values change frequently, and past performance is not necessarily an indicator of future performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges. All information included herein has been compiled from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or Canaccord Genuity Corp. assume any liability.
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