Asset Valuation “Adjustments” coming … (TWTW – Apr 18-22, 2022)

Asset Valuation “Adjustments” coming …

Well … according to the IMF last Wednesday, further asset valuation adjustments were still to come … => Click HERE!

As we then experienced real time Thursday in particular … markets did … proceed to do just that, as the US FED’s Jerome Powell played the hawkish card, suggesting 50 bps may well be in the offing, when the next FOMC comes around (May 3-4, 2022), to which … of course, UBER Hawk James Bullard (who dissented last meeting wanting 50 bps instead of the 25 delivered) retorted: 75 bps might be in order.

Nough said, markets did NOT exactly ride this out, except downward rapidly that day, in what was the worst day for markets in 2 years.


For its part, Bank of America observed “inflation shock worsening”; “rate shock just beginning”; “recession shock coming”. Of course, in terms of the Inflation picture, 8.5% isn’t exactly ‘desirable” for anyone …

Bonds – of course, aren’t enjoying this whole “inflation” episode very much either … and as Bloomberg’s Eric Balchunas observes here, Bond investors, it looks like, have begun heading for the exits …

BTW: markets which had recently looked through the Ukraine war in terms of volatility having receded, did see volatility spike anew on account of the FED’s pronouncements:

As for Canada – we have our own version of Hawkish, with Governor Tiff Macklem pretty much confirming the next hike could be even higher (was he listening to Bullard?) than the 50 bps delivered last week, in answer to what his counterparts in the US had just spoken to in terms of the need to be forceful when dealing with this evolving inflation picture (which is no longer transitory …) => click HERE!


for good measure … suggesting the FED has already FAILED … which … you can bet is something Jerome Powell is VERY INTENT on NOT being the ultimate story of HIS FED …


  • Netflix – course NETFLIX didn’t wait till Thursday to see its stock taken for a massive haircut (Tuesday) on account of losing subscribers:


  • Pershing’s Bill Ackman drew the following conclusions from his foray into the world of being a Netflix investor:

“While Netflix’s business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty,”Β 

=> Click HERE!

  • Tesla – on the positive side of the equation, TSLA delivered strong results last week, Barron’s entitling their piece: TESLA crushes earnings estimates => click HERE!
  • Inflation – as noted, NOT good …
  • Powel – see above πŸ™‚
  • Bullard’s 75 bps πŸ™‚ see above also
  • JPY at 20 years lows
  • “risk gauge” VIX spiking
  • American Airlines: also enjoying a nice pop this past week on reduced losses, and forecast of profitability ahead … course that ended up being drowned in Thursday’s “weakness” / Sell-off
  • Twitter – Musk indicating financing was mostly lined up, and article suggesting a tender offer for shares of the company might be in the offing …

Weekly performance – Sectors; Thematic; Factors


  • Canadian Technology faring meaningfully worse than US Technology …
  • Materials experiencing sharpest pullback in quite some time (fear of slowing economy / recession risk rising …)
  • Financials providing “some” relative reprieve, AFTER having paused for a while, respectively in the US corrected meaningfully …
  • ENERGY – also experiencing a sharp pullback, although the weekly % change doesn’t fully captured it, as the space had moved to new highs between Monday and Thursday, BEFORE then correcting sharply …
  • Staples; REITs; Utes – demonstrating (perhaps) their ultimate safe haven characteristics amongst a brutal sell off week for markets


  • Sharp pullback across the “thematic” space, EXCEPT for better relative performance from Travel (mask mandate being struck down in US helping?)
  • EVEN Clean Energy, which had recently been a relatively better performer taken down this past week
  • No reprieve (TESLA notwithstanding) for ARKK, which nonetheless is seeing inflows of late …


  • Canada (which had been performing strongly of late) also taken down in latest sell-off
  • several factors still managing to deliver Relative performance: see value; fundamental; and Min vol, as well as quality dividends

YTD Performance – Sectors; Thematic; Factors


  • Corrective / transition phase of market continuing to play out
  • Energy and Materials still dominating, even after last week’s sharp sell off
  • improving relative performance from financials could help stabilize Canadian markets (?)


  • markets are said to be forward looking … fact that we are dealing with many challenges including heightened risk of recession / policy mistake = hasn’t been lost on the Thematic space, which has MANY “exposures” deep in correction / bear territory …
  • Question – will there be a rotation at some point, between the relative outperformers (Cyber; 5G, for instance) … and areas which already have corrected much more sharply?


  • Canada now marginally negative YTD
  • 5 ways to outperform of late (they aren’t growth; and they aren’t ESG Advanced …)
  • are these 5 ways credible as far as continuing to deliver outperformance in the context of a broader market repositioning?

Enjoy your week-end πŸ™‚