Countdown to Catastrophe? What the Yield Curve Means for Stock Bull Markets - Yahoo Canada Finance

Freshii plunges after same-store sales fall again in second quarter - BNNBloomberg.ca

Freshii Inc. (FRII.TO) shares plunged Wednesday morning after the healthy fast-food chain posted another quarter of weak sales, adding to a string of disappointing results that has shattered investor confidence.

Same-store sales at Freshii fell four per cent in the quarter that ended June 30. Meanwhile, system-wide sales totalled US$49.6 million, up from US$46.3 million a year ago, boosted by an increase in the number of stores. And it posted a modest profit of US$433,000, or one cent per share, compared with earnings of $298,000 a year ago.

It wasn’t always a struggle for the company that’s best known for its salads, rice-and-tofu bowls, and smoothies. Freshii hit Bay Street with big growth ambitions when it went public in January 2017. After listing at $11.50, shares peaked at $14.90 on March 1, 2017. Since then, the stock has lost more than 80 per cent of its value.

“I’m sick of salads – I’m not the only one,” Barry Schwartz, chief investment officer and portfolio manager at Baskin Wealth Management, told BNN Bloomberg’s Paige Ellis Wednesday.

“They need to bring fresh management with new ideas, maybe start some type of loyalty program,” Schwartz said. “Food is extremely competitive: something goes hot and fashionable then it comes out.”

The restaurant chain announced Tuesday it was beefing up its management and governance teams, as former Yum! Brands executive Oliver Rodbard was appointed as Freshii’s vice president of operations, and former Coca-Cola official Bill Schultz was added to the company’s board of directors.

With files from The Canadian Press

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August 14, 2019 at 10:25PM

This Is 1 Growth Stock You Need to Buy Before Its Earnings - The Motley Fool Canada

One of Canada’s top retail brands Canada Goose (TSX:GOOS)(NYSE:GOOS) will be announcing its fiscal first quarter of 2020 (year ending in March) results on August 14, 2019. So, what can we expect from the luxury retail leader in the first-quarter?

Analysts expect Canada Goose to post revenue of $54.74 million in the first quarter, a rise of 22.5% year-over-year. Its earnings per share (or EPS) are however expected to fall by 50% to -$0.24.

In the first quarter of 2019, Canada Goose reported sales of $44.7 million and earnings of -$0.16. So, will Canada Goose be able to meet these estimates? Going by recent history, it sure can.

Canada Goose has managed to beat analyst earnings estimates in each of the last four quarters. It reported EPS of $0.09 in the fourth quarter of 2019, 80% higher than estimates of $0.05.

The company beat estimates of $0.81 in the third quarter of 2019 by 18.5% with reported EPS of $0.96. Canada Goose beat earnings estimates of $0.26 in the second quarter of 2019 by 76.9% with EPS of $0.46.

It reported earnings of -$0.16 in the first quarter of 2019, 23.8% higher than estimates of -$0.21.

What will drive Canada Goose sales in the first quarter of 2020?

Canada Goose has focused on key strategies to drive sales higher in 2020 and beyond. The company’s primary focus is on growing international sales and gaining global penetration. Canada Goose products are already sold in 49 countries.

The products are available across 12 national e-commerce platforms and 11 directly operated retail stores.

Canada Goose’s global expansion drove sales in 2019. It grew sales by 36.3% in the United States during 2019 while sales from Rest of the World rose by a significant 60.5%.

Canada Goose management is overly optimistic about the growth potential in Greater China which it considers to be the largest luxury market in the world.

The company wants to strengthen brand affinity among current and potential customers. This will help bring back loyal customers resulting in repeat purchases. It aims to enhance the wholesale network and ensure the product reaches the target audiences.

This growth has led to a surge in capital expenditure. Canada Goose increased its manufacturing employee base by 1,000 in 2019. It has opened manufacturing facilities in Montreal and Winnipeg. While Canada Goose sales rose 40.6% in 2019, its capital expenditure rose by 16%.

How did Canada Goose stock perform since the last earnings?

Canada Goose reported its fourth-quarter (fiscal 2019) earnings on May 29. The stock has since declined over 12% to its current price of $58.4 per share. The recent trade war escalation between the United States and China also drove the stock price lower by 4.7% since the start of August 2019. Canada Goose stock is still trading 39% below its 52-week high.

Does this pullback provide an opportunity for potential investors? Canada Goose expects its sales to rise at a compound annual growth rate of 20% between 2020 and 2022. Revenue is estimated to reach $1.4 billion in fiscal 2022.

Its estimated earnings growth is far higher at 25% between 2020 and 2022. The stock is trading at a forward PE multiple of 27 which is not too expensive for a high growth stock.

Canada Goose shares have returned 154% since its initial public offer in March 2017. This stock is undervalued and expected to move higher in the second half of this year.

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August 13, 2019 at 09:59AM

German GDP, China Data, Yield Curve Inversion Spook Markets - Market Realist

German GDP fell in the second quarter. Poor German economic data has ignited recession fears. The Chinese economic data released earlier today also stoked fears of a slowdown. Additionally, the yield curve inversion is worrying the markets.

German GDP falls

Today, Germany released its second-quarter GDP data. German GDP contracted 0.1% in the quarter. CNN reported that Carsten Brzeski, chief economist at ING, said, “Today’s GDP report definitely marks the end of a golden decade for the German economy.” The fall in German GDP hasn’t totally come out of the blue. We’ve seen a flurry of poor data points from Europe in general and Germany in particular.

PMIs

Germany’s manufacturing PMI has been flashing red for quite some time now. Germany’s manufacturing PMI plunged to a seven-year low last month. Phil Smith, principal economist at IHS Markit, said in the PMI release, “After displaying a broadly sideways tendency throughout the second quarter, the PMI tumbled in July to signal a level of weakness in the Germany manufacturing sector not seen for seven years.” German investor confidence also fell last month. If July conditions persist, German GDP could contract in the third quarter as well. Technically, a GDP contraction for two consecutive quarters means a recession.

Calls for stimulus

Economists have called for a stimulus after the fall in German GDP. The ECB (European Central Bank) has already signaled that it’s open to further stimulus and easing. However, US President Donald Trump saw the ECB’s dovish stance as a tactic to weaken the euro. A weaker euro makes the region’s exports competitive. Germany might also consider fiscal stimulus to stop the slowdown.

German GDP: decoding the slowdown

Growth has stalled pretty much globally, and Brexit uncertainty has intensified Europe’s and Germany’s woes. To add to Germany’s troubles, industrial activity has stalled across the world. Manufacturing accounts for almost one-fifth of German GDP. The US-China trade war has particularly hit the manufacturing sector and corporate investments. Lower corporate investments mean lower demand for German capital equipment. Weak imports from China also seem to be affecting Germany. Chinese imports have fallen YoY (year-over-year) in six out of the last seven months.

Falling car sales

Falling car sales aren’t helping German GDP either. Vehicle sales have been particularly weak in China and have fallen YoY for 13 consecutive months. Falling Chinese car sales have negatively affected Germany’s Volkswagen. Meanwhile, President Trump has threatened Europe and Japan with automotive tariffs.

China’s data has also been weak

Today, China released several data points, including data on its retail sales and industrial production. All the data points were worse than expected. Weak Chinese data and the fall in German GDP are taking a toll on the markets today. The yield curve inversion is further providing fodder to the bears.

US markets opened sharply lower today. The iShares MSCI Germany Index Fund ETF (EWG) is also deep in the red. The Vanguard FTSE Europe Index ETF (VGK) was down almost 2.0% in early trading, while the S&P 500 (SPY) was down roughly 1.5%.

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August 14, 2019 at 10:09PM

Dow tumbles 500 points after bond market flashes a recession warning - CNN

Here's what happened: The 10-year Treasury bond yield fell below 1.6% Wednesday morning, dropping just below the yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.

US stocks fell as investors sold stock in companies and moved it into bonds. The Dow (INDU) was about 1.8% lower. The broader S&P 500 (SPX) was down 1.8% and the Nasdaq (COMP) sank 2% Wednesday.

CNN Business' Fear and Greed Index signaled investors were fearful. The VIX (VIX) volatility index spiked 20%.

Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets, despite the latest truce. Industrial production in China grew at the weakest rate in 17 years.

As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.05%, the lowest rate on record.

Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.

Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.

Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.

That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started two full years after the December 2005 yield-curve inversion.

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https://www.cnn.com/2019/08/14/investing/dow-stock-market-today/index.html

2019-08-14 14:58:00Z
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Dow tumbles 400 points after bond market flashes a recession warning - CNN

Here's what happened: The 10-year Treasury bond yield fell near 1.6% Wednesday morning, dropping just below the yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.

US stocks fell as investors sold stock in companies and moved it into bonds. The Dow (INDU) was about 1.5% lower. The broader S&P 500 (SPX) was down 1.4% and the Nasdaq (COMP) sank 1.6% Wednesday morning.

CNN Business' Fear and Greed Index signaled investors were fearful. The VIX (VIX) volatility index spiked 17%.

Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets, despite the latest truce. Industrial production in China grew at the weakest rate in 17 years.

As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.05%, the lowest rate on record.

Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.

Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.

Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.

That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started two full years after the December 2005 yield-curve inversion.

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https://www.cnn.com/2019/08/14/investing/dow-stock-market-today/index.html

2019-08-14 13:39:00Z
52780352289861

Dow set to tumble after bond market flashes a recession warning - CNN

Here's what happened: The 10-year Treasury bond yield fell to 1.627% Wednesday morning, below the 1.632% yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.

US stock futures fell as investors sold stock in companies and moved it into bonds. The Dow (INDU) was set to open about 1.4% lower. The broader S&P 500 (SPX) futures were down 1.4% and Nasdaq (COMP) futures sank 1.6% Wednesday morning.

CNN Business' Fear and Greed Index signaled investors were fearful. The VIX (VIX) volatility index spiked 10%.

Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets, despite the latest truce. Industrial production in China grew at the weakest rate in 17 years.

As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.06%, the lowest rate on record.

Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.

Here's what this all means: Normally, long-term bonds pay out more than short-term bonds because investors demand to be paid more to tie up their money for a long time. But that key "yield curve" inverted on Wednesday. That means investors are nervous about the near-term prospects for the US economy. Bonds and yields trade in opposite directions, so yields sink when investors buy bonds.

Part of the yield curve has been inverted for several months. In March, the yield on the 3-month Treasury bill rose above the rate on the 10-year Treasury note for the first time since 2007. But Wednesday marked the first time in over a decade that the "main" yield curve — the 2-year / 10-year ratio — had inverted.

That spooked Wall Street, because an inversion of the 2/10 curve has preceded every recession in modern history. That doesn't mean a recession is imminent, however: The Great Recession started two full years after the December 2005 yield-curve inversion.

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https://www.cnn.com/2019/08/14/investing/dow-stock-market-today/index.html

2019-08-14 12:45:00Z
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