Earnings Season Heats Up

Earnings Season is upon us as companies begin to report their latest quarterly earnings. This will largely be seen as continued good news for the markets who have bounced back significantly from the low point of February/March and have lifted to record levels in recent weeks. The “Magnificent Seven” are in the spotlight this week, with Alphabet (Google) and Tesla both set to report their latest earnings. These companies are expected to drive over half of the S&P 500’s projected earnings growth of 5.6%. This, despite continued uncertainty around tariffs and Federal Reserve Chair Jerome Powell’s precarious position as head of the Fed. The US continues to negotiate with countries, looking to finalize trade deals prior to the August 1st deadline. Canada continues with negotiations but is preparing for counter measures as Prime Minister Carney meets with the Provincial Premiers at their annual summer gathering. President Trump is also pushing for 15%-20% tariffs on European Union imports and the EU is preparing retaliatory measures. We expect to have a heightened level of market volatility on August 1st, with most countries trying to find a suitable working situation with the US by the deadline. It is certainly a tricky balancing act for many countries, as well as the US, who does not want to spike inflation with the expected rising prices of goods due to increased tariffs. In the meantime, Canada’s economy continues to show a surprising resilience, supported by strong consumer spending and a rebound in energy exports. This will further make the decision for the Bank of Canada easier, with the expectation that they will hold interest rates steady at its next meeting.

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