In the Money: 5 Things to Know

US economy contracts, Caterpillar pops, Super Micro crashes, Loblaw beats, Gildan optimistic

My eldest is learning the agony that comes with being a Leafs fan. It’s the kind of generational trauma I wish my husband wouldn’t pass on. When he told her they lost last night she exclaimed, “I’m never talking to them again!” After staying up past my bedtime to watch them lose 0-4, I feel the same.

How does one of Bay Street’s top fund managers consistently deliver 15% annualized returns while navigating controversy and volatility? In this episode of In the Money with Amber Kanwar, Moez Kassam, Chief Investment Officer & Founder of Anson Funds, shares the secrets behind his success and reveals an investment in a beaten up real estate stock for the first time. Watch on YouTube now. You can catch the audio version on Apple, Spotify or here.

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Breather: Futures are lower after economic growth in the US contracted for the first time since 2022. US GDP for Q1 dropped 0.3% thanks to a pre-tariff surge in imports and softer consumer spending. Elevated inventory kept the print from a worse showing. At the same time, prices rose by the highest since late 2022. This combination of slower growth and higher prices is known as stagflation and one of the most difficult things for central bankers to combat. It is an inauspicious way to market US President Donald Trump’s first 100 days. At a rally he took the opportunity to lambaste Federal Reserve Chair Jerome Powell for “not really doing a good job.” Powell has been more inclined to worry about rising inflation than slowing growth, where it is clear Trump would prefer a focus on the latter. This is the last trading day of April and one investors are likely happy to see in the rear-view. This month we saw both a correction of nearly 20% on the S&P 500 and a rally of more than 11% from the lows. It is also an insanely busy day for earnings. There are 16 companies reporting on the TSX this morning including Loblaw and CGI Group. There are 50 companies reporting on the S&P 500 including Meta & Microsoft tonight. Key for the AI trade will be their forecast on spending and whether it will still be high post-DeepSeek.

Butterfly effect: Shares of Caterpillar are rallying in the pre-market despite earnings missing expectations as it offers two different financial forecasts. The construction and mining equipment maker issued a financial forecast under two different scenarios: before tariffs and after tariffs. Without tariffs, Caterpillar expects sales to be flat (which is actually better than what they previously thought). With tariffs, and assuming an economic slowdown, Caterpillar warns sales will fall slightly (but that is where consensus was anyway). Hence the rally. Both forecasts are an improvement from the current quarter which showed a 10% drop in sales and a 24% drop in profit (both worse than feared). Keep in mind the stock is down 25% from its peak last year and recently hit a 15-month low.

After hours show: Earnings from after-hours reporters are broadly negative. Shares of Super Micro are tanking nearly 18% in the pre-market after warning quarterly results are going to be well below expectations. The high-performance data server maker said that customers delayed their platform decisions until next quarter. Shares of Nvidia and Dell are down in sympathy. Starbucks also put up disappointing results with sales falling for a fifth quarter in a row. While the magnitude of the decline was the smallest in five quarters, the 1% drop was still worse than expected. Starbucks is in the midst of a turnaround under CEO Brian Niccol who came from Chipotle. Goldman Sachs is downgrading Starbucks today saying that the North American sales recovery is a longer road than expected. The parent company of Snapchat is plunging 14% after declining to provide a sales forecast, citing macroeconomic uncertainty. Advertisers have been pulling back in this environment, they warned, particularly Chinese-based retailers. The lack of forecast is creating anxiety for some analysts. “SNAP’s mgmt has previously been willing to offer (quarter-to-date) revenue growth commentary amid quite volatile macro environments (e.g., early-to-mid ’20, early ’22)—so, is it worse this time around?” asked Evercore’s Mark Mahaney. He thinks the ad slowdown may be more than just Chinese based retailers pulling back.

Add to cart: Loblaw reported better than expected profit and hiked its dividend 10%. Sales at Canada’s largest grocer were better than expected on both the food (+2.2% vs 1.95% expected) and drug side (+3.8% vs 3.3% expected). The company maintained its forecast for high-single digit earnings growth. Loblaw has been a star stock and closed at an all-time high yesterday. Grocery stocks in general have done very well as consumer retrench from dining out of the home and flock to discount brands within the grocery stores. Investors will be keen to learn how tariffs are affecting this trend. “We expect the stock’s reaction to depend on commentary from the call,” wrote Scotia’s John Zamparo, “We expect management will provide colour on QTD performance, which we view as more relevant given tariff developments.”

Plain as day: Shares of Gildan Activewear are down slightly in the pre-market despite better than expected results. The plain t-shirt maker showed strength in its activewear category and maintained its financial forecast. The latter should be a relief to investors who have been worried about how tariffs might affect the manufacturer. The stock has dropped 22% from it’s February peak. Gildan says they have factored in 10% reciprocal tariffs and slowing demand but still see sales growth in the next quarter even with those headwinds. Analysts also believe tariffs won’t actually weigh on results that much and could actually be a competitive advantage. “Gildan's competitive advantage could increase given the company's supply chain structure. Gildan sources its cotton in the U.S. and also spins it into yarn in the U.S., increasing the tariff-free domestic content of its products relative to its competitors, most of them Asian based,” wrote Stifel’s Martin Landry. Recall, Moez Kassam of Anson Funds had Gildan as one of his top investment ideas right now. You can read why here.