Well folks, we hope you all enjoyed the holiday long weekend, but after long ado, the TSX is opening once again for its three last sessions of the year and while the American session yesterday ended with equities marginally lower, indexes are posturing for an up-day in the premarket. Additionally, we recently had the opportunity to interview Zayn Kalyan, the CEO of Infinity Stone Ventures ($GEMS) - he gave us a really insightful look into the future of the battery metals space within Canada and in case you missed it, be sure to check that special report out here.
Markets in Review
While the Dow, S&P and Nasdaq are up just 32, 32 and 24 bps in the premarket the TSX60 is trading at a very decisive level - compared to its US counterparts which will finish the year in the double-digit red, the commodity-heavy index is only down 8.51% YTD. It’s also trading at a cheaper valuation of 17x earnings whereas the US’ S&P is currently around 20x. While many investment banks had pinned Canadian equities at outperforming global benchmarks over 2022, it does seem as though they were correct at this point. Moreover, on a technical basis, TSX is right at a key support level with its 200 and 50-day moving averages extremely close to one another and even if just trading up within its defined range, a golden cross is definitely on the table for this market over the next month.
Next, briefly looking at Canadian yields, while the short end of the curve is markedly higher than the long end, a mix between the lower liquidity and defined Canadian interest rate agenda which differs from that of the US Fed are the largest contributors. Yields on the Canadian 10 Year sit around 4.5% vs the 4.75% on US Treasuries.
Short: Cheetah Mobile Inc. (CMCM-NYSE) | Timeline: 2 days
Cheetah Mobile Inc. (CMCM), which operates as an internet company in the People's Republic of China, the United States, Japan, and internationally, reported financial results for the first half of 2022. The company, unfortunately, reported a decrease in revenue by 22.6% YoY, as well as a decrease in gross profit by 22.2%, as the company has struggled mainly due to macroeconomic headwinds such as the Covid-19 resurgence in the first half of 2022. (Full Story) Turning to the chart, it is apparent that CMCM has lost a substantial amount of investor sentiment through 2022, falling from highs of around $7 from the beginning of the year. That said, as the price has approached the upper resistance of this steep downward price channel, traders should expect a reversal back down its lower level, especially with the company’s most recent negative press release.
Renewed Asia Pacific Aggression Earlier this week North Korea breached the 38th parallel by sending a wave of five drones into South Korea. None of the drones were shot down, however, in response, South Korea fired warning shots at the border crossing and used recon drones of their own to surveil North Korean military installations. This is only the most recent in a series of aggressive actions launched by the hermit kingdom after a year of missile tests aimed at South Korea and Japan. However, this event marks the first time North Korean drones were detected over the border in over five years. Concurrently, since Christmas, the Chinese air force has sent over 80 warplanes and 6 navy ships towards Taiwan after being ‘disappointed’ by military provisions for Taiwan within the recently passed US omnibus spending bill. In response, Taiwan has announced an extension of the island’s mandatory military service, from four months to one year beginning in 2024, while the US military has claimed they will have a “transformative” year in the region. Winter Storm Woes Chaos has continued to unfold across North America as commercial airline cancellations have rocked the continent through the holiday weekend and beyond. Throughout the week Southwest has cancelled thousands of flights due to the inability to service and staff their aircraft. Moreover, the airline has cancelled 60% of Wednesday’s, and 20% of Thursday’s trips. The company’s stock reflected the troubles, both reputational and financial, facing the airline - falling over 6% by the cessation of post-market trading Tuesday night. Meanwhile, many passengers travelling with Sunwing who had their flights cancelled previously have been stranded for up to 5 days in Mexico without any sign of reprieve or a solution on the horizon
Japan, US arranging summit meeting in Washington on Jan 13
The United States and Japan have begun making arrangements for a summit meeting between President Joe Biden and Prime Minister Fumio Kishida in Washington on Jan. 13, the Yomiuri daily reported on Wednesday.(Full Story)
Moscow's ultimatum: Ukraine fulfils its proposals or Russian army will decide
Russian Foreign Minister Sergei Lavrov gave Ukraine an ultimatum on Monday to fulfil Moscow's proposals, including surrendering territory Russia controls, or its army would decide the issue, a day after President Vladimir Putin said he was open to talks. (Full Story)
U.S. Supreme Court keeps pandemic-era border restrictions in place for now
The U.S. Supreme Court on Tuesday left in place for now a pandemic-era policy allowing U.S. officials to rapidly expel migrants caught at the U.S.-Mexico border.(Full Story)
FTX's Sam Bankman-Fried Borrowed From Alameda to Buy Robinhood Shares
Former FTX chief Sam Bankman-Fried borrowed hundreds of millions of dollars from Alameda Research to purchase his stake in trading app Robinhood Markets (HOOD), according to court documents. (Full Story)
Chart of the Day: US New Number of Bankruptcy Filings
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