In the Money: 5 Things to Know
Futures pop on strong job growth, Nuvista cuts production, activist stake in Trip Advisor, Datadog makes S&P 500, sudden passing of AGF CEO
Forgive the tardiness. I took a spontaneous road trip to a friend’s cottage with Child 3. I’m high on one-child parenting. This means I left behind my husband who is adjusting to his role as head of house. He’s already asked what’s for dinner and if I knew where a book was. I responded by asking what I should feed our son for breakfast and if he has any thoughts on what he should wear today. I think he got the message.
Is it time to rotate back into U.S. equities? Sadiq Adatia, Chief Investment Officer at BMO Global Asset Management, oversees $75 billion in direct assets—and he's making bold moves. In this episode, Sadiq reveals why he’s gone overweight U.S. stocks again, what’s changed in his view on gold, and why Canadian markets might deserve a second look. You can tune in on Apple, Spotify or here.
Greatly exaggerated: The US economy added far more jobs than expected in June (147,000 vs 106,000) prompting traders to scrap bets of July rate cut. There was a lot of anxiety going into the print given the surprise plunge in ADP payrolls earlier this week. The unemployment rate also fell to 4.1% against expectation that it would rise. Stocks rallied, bonds sold off, the US dollar spiked higher, and gold plunged 0.5%. We will see if the stock rally holds because CIBC’s Ali Jaffery points out the details aren’t great under the headline number. “…Today’s report was flattered by strong state and local government hiring” wrote Jaffery, “Private sector hiring was pretty soft and wage growth edged down a notch below expectations.”
Production cut: Watch shares of Nuvista Energy at the open after it slashed its production forecast. The oil & gas developer warned that production would be lower because of delays at two of their third-party processing facilities. On the bright side the company says these delays will only affect production in the coming months and is maintaining plans for a $100 million buyback. “In our view, NuVista’s reliance on third-party processing presents a higher degree of risk relative to operated peers,” wrote Luke Davis at Raymond James who downgraded the stock this morning, “…while we continue to like the business and regard NuVista as a high-quality operator, we think this likely presents an overhang on the stock near-term.”
Activist trip: Shares of Tripadvisor are soaring after activist investor Starboard disclosed a 9% stake in the underperforming travel site. Starboard says they plan to engage with the board and discus how to unlock value. Shares of Tripadvisor have badly underperformed peers over the last five years (see chart below). Colour me interested, you know I love a lagging stock. Although Starboard was less than effective in doing anything about my Pfizer stake.
Ya dawg: Shares of Datadog are surging on news it will be included in the S&P 500, replacing Juniper Networks which is being taken over by Hewlett Packard Enterprises. Shares of Robinhood and Applovin are under a bit of pressure as their hopes for inclusion were dashed. Datadog is a monitoring and analytics software company which is poised to benefit from the AI boom because it provides tools to help monitor large language models. “While the investment community largely expected Robinhood or Applovin to join the index, DDOG was selected over these names as the company’s platform continues to gain momentum within the observability space, especially with AI, front and center,” wrote Dan Ives of Wedbush.
Condolences: Sad news on Bay Street this morning as AGF announced the sudden passing of their CEO and CIO Kevin McCreadie. He was 64. It has been a tough week for losses with the sudden passing of Andrew Moor of EQB just last week. Under both men, their respective companies dominated in difficult conditions. Our thoughts and prayers are with their families.
