Earnings Angst - Your Money April 22nd 2022

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Stocks went on sale big time this week with investors rushing to the sidelines on masse courtesy of earnings miss from Netflix and prognostications from Federal Reserve Presidents all but promising a ½% increase in interest rates on May 4th.  Not only that but a couple of them all but committed to more ½ point increases through the summer…or least that is how the AI program traders read the tea leaves, prompting a negative outlook for stocks. When you factor in the ongoing tragedy in Ukraine and the mounting Covid cases cutting supply lines and exports from China, only the brave of heart stepped in to hold stocks over the weekend.

But before you join the elephants trying to squeeze through the proverbial keyhole, good old value stocks outperformed this week. IBM finished up 10%, pays a 4.75% dividend and trades at 14 times earnings. Kimberly Clark bucked the trend as well. They reported better than expected numbers and guided higher for 2022. Stock jumped 8% today even though the S&P dropped 2.77% and KMB still yields 3.35%. Gotta love diapers, Depends and flushable wipes.

We may be on pins and needles next week given the long list of blue chip bell weathers starting with Coke on Monday, MSFT and Google on Tuesday, Meta aka Facebook on Wednesday, Amazon and Apple on Thursday. The one beacon of light might be Chevron and Exxon on Friday. With crude oil still sitting at over $100 per barrel, even if they miss, there is a strong probability one or both will raise their outlook for 2022.

Now in Canada, the numbers looked ugly today, but for the short week, things were not that bad. Trans Alta, Mullen, Hydro one and Magna finished up 2%, Russel Metals up 6% Morguard rallied 7% and Interfor won top spot up 8%. In terms of sectors, look to consumer discretionary, real estate, financials (banks really do well in a rising interest rate environment) and utilities posted positive weekly returns.

Unfortunately, commodities overall did not have a great week with bullion and crude oil finishing lower on profit taking…or presumed profit taking. Who really knows when the futures traders are in the game. Take natural gas for example. Two weeks ago, gas was at $5.72 and on Monday this week it hit $8.00. Today it closed at $6.75. Can you say yoyo?

Anyway, April is proving to be interesting.

Happy trading and Stay Safe.

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Steve Bokor

Steve Bokor

Portfolio Manager