Canada election surprise majority and US earnings drive trading action

Canada’s election results ended up being surprisingly decisive with the Liberals roaring back from a third place finish to win a majority government, regaining power for the first time since 2006 and majority power since 2004. There was some initial uncertainty to the initial results but overnight, CAD has been steadily strengthening as traders recognize that the differences between the Liberals and Conservatives on major policy issues related to the economy and finance are limited. A majority win provides stability giving the winners a clear mandate to govern for the next several years. Perhaps most importantly for trading, the leftward-leaning NDP, who had promised to walk away from the TPP trade deal, were soundly rejected, losing over half their seats and being denied the swing vote they could have held in a minority Parliament. Positive sentiment toward the loonie could spill over to Canadian stocks this morning, with strong earnings from railroad Canadian Pacific helping the cause. The heavily weighted resource sectors, however, may not be able to provide much assistance with gold and crude oil flat today. South of the border, earnings could also have a big impact on trading in selected stocks particularly on a day where flat indices indicating a lack of major broad forces driving market direction. IBM and Harley-Davidson could be punished for their guidance cuts, but some of the negativity could be offset by a strong temporary employment signal from Amazon and positive results from financials. Corporate News Canadian Pacific $2.69 vs street $2.68 IBM $3.34 vs street $3.31, sales $19.2B vs street $19.6B. slashes full year guidance to $14.75-$15.75 from $15.75-$16.50 SanDisk reported to be up for sale and apparently in talks to potentially be acquired by Western Digital Amazon.com plans to hire about 100K seasonal workers to fill holiday orders this year, up from 80K last year and 70K in 2013 Yum! Brands to spin off its China fast food business into a separate publicly traded company Harley-Dvdsn $0.69 vs street $0.78, cuts full year sales guidance to 265-271K motorcycles from 276-281K Travelers $2,93 vs street $2.27, revenues $6.79B vs street $6.12B Bk of NY Mellon $0.74 vs street $0.71 Fifth Third $0.45 vs street $0.40 Economic News Significant announcements released overnight include: Canada federal election Liberals (majority) 184 up from 34 Conservatives 99 down from 166 NDP (similar to Labour elsewhere) 44 down from 103 Bloc Québecois 10 up from 4 Green 1 unchanged US housing starts 1,206 vs street 1,142K US building permits 1,103 vs street 1,170K Germany producer prices (2.1%) vs street (1.8%) Upcoming significant announcements include: 9:00 am EDT FOMC Dudley speaking 11:00 am EDT FOMC Yellen speaking CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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