Amber Kanwar's Weekly Setup: Big tests are coming for the markets
This is not the week to call in sick with huge catalysts on deck. Here are the five things to watch:
Magnificent week: With the S&P 500 sitting atop a record high, the resilience of the Magnificent 7 (also at a record) will be the next test for the markets. Four of the seven companies report this week, including Meta Platforms Inc. META-Q, Microsoft Corp. MSFT-Q, Apple Inc. AAPL-Q and Amazon.com Inc. AMZN-Q They represent a combined US$14-trillion in value.
The big question for all of them will be how much each company is spending on AI. Although for Apple, it will be more like, 'Have you heard of AI?' Apple is the second-worst-performing Mag7 after Tesla Inc. TSLA-Q, down about 14 per cent so far in 2025. The reason Apple is in the dog house is because it lacks a clear AI strategy, according to Needham senior analyst Laura Martin. She said 'calls to replace Tim Cook as Apple CEO are getting louder every quarter that Apple doesn't lay out a comprehensive GenAI strategy.' After Alphabet Inc. GOOGL-Q surprised investors with a US$85-billion spending plan, there is a good chance the others follow suit.
Is it any wonder that Nvidia Corp. NVDA-Q is back at a record high and the best-performing Magnificent 7 in 2025?
Decisions, decisions: If mega-cap earnings weren't enough, the Bank of Canada and U.S. Federal Reserve are delivering interest-rate announcements on Wednesday. The BoC is expected to keep rates on hold at 2.75 per cent for a third time in a row. Core inflation, which is hanging around 3 per cent, and the oddly robust jobs data from earlier this month make it an easy bet that the BoC will hold.
It is also an easy bet that the Federal Reserve won't cut this month, although U.S. President Donald Trump may think otherwise after meeting with Fed Chair Jerome Powell this week on a tour of the central bank's renovations. Mr. Trump said Mr. Powell congratulated him on a strong economy, which he took to mean that rate cuts are coming. Watch for dissenters on the decision; those are the ones auditioning for Mr. Powell's job when his term expires next year.
Hold your breath: In the past three months, UnitedHealth Group Inc. UNH-N has slashed its profit forecast, announced that its CEO is leaving, then suspended its profit forecast altogether and endured a 50-per-cent drop in the value of its shares. And just last week, it confirmed that it is the subject of a Department of Justice investigation into its Medicare practices. Talk about a season to forget. The embattled health insurer is set to report quarterly results Tuesday morning as its stock languishes at the lowest level in five years. However, that now means it sports a low-teens multiple.
Before you let that lure you in, like yours truly, value investor Michael McCloskey, founder and president of GreensKeeper Asset Management, said on my podcast this week that this has the markings of a value trap. 'When you see the suggestion that maybe they're playing games with Medicare, it's the cockroach theory,' he said. 'I might be totally wrong, but when I see that, I tend to stay away.'
Flying close to the sun: Bombardier Inc. BBD-B-T reports this week and talk about a comeback story. The stock is up 1,400 per cent over the past five years compared with just 100 per cent for the TSX over that time. It went from a universally unloved stock with high debt levels to a Bay Street favourite with a new investment-grade debt rating. Its transformation into a business-jet company has paid off big time.
But some analysts say the setup from here gets harder. TD Cowen analyst Tim James downgraded the stock last week on the runup and says it has a bad habit of falling on earnings days regardless of the results. '[The] recent share-price strength may heighten Q2 hurdle for driving further short-term upside,' said Mr. James in a note downgrading the stock from buy to hold.
Hot commodity: MEG Energy Corp. MEG-T reports results Thursday after the close. The energy producer is subject to a hostile bid from Strathcona but reports last week suggest Cenovus is preparing a rival bid. The company will likely be tight lipped about what it can say, but analysts and investors may pry to see where the companies are in the process and how many other bidders have kicked the tires.
In the Money with Amber Kanwar brings you actionable insights from top portfolio managers and business leaders. New episodes out Tuesdays and Thursdays. Subscribe now! www.inthemoneypod.com
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