At least have a conversation about it … (TWTW – May 10-14, 2021)

At least have a conversation about it …

Monday … A Goldman Sachs report suggested that 5 tech stocks that have surged by $ 5 Trillion (!!!) in value could get hammered as the Biden Administration seeks various tax increases.  Needless to say … as a result, the week didn’t kick off on the right foot … Shiniest ETF arrival on the Canadian market – FANGMA: down 2.95% on the day. (And I had joked over the weekend that maybe a la Horizons, Evolve should have launched an inverse as well 🙂

Meantime on the TSX the same Evolve launched the “Evolve Clean Beta” suite of ETFs => Click HERE! (Smart naming nomenclature imo 😉

Tuesday … Kicked-off with further weakness in markets, although tech, which continued to remain under pressure, rebounded later in the session. Impactful: noted Investor Stanley Druckenmiller of Duquesne Family Office took the FED to task, arguing on CNBC that: “the FED and the U.S. Government risked endangering the U.S. Dollar’s reserve status by injecting too much costly stimulus into an already hot economy”.  Going on to state: “I can’t find any period in history where monetary and fiscal policy were this out of step with the economic circumstances, not one”.  And that “if they want to do all this and risk our reserve currency status, risk and asset bubble blowing up, so be it. But I think we ought to at least have a conversation about it”.  Click HERE if you missed it!

When facts change you have to change, and they have changed – VERY out of steps with economic circumstances … Without the FED … wouldn’t be able to pile on $6T of additional debt just as Boomers embark on accessing Medicare, etc., in greater #s … No way can afford = FED monetize … will have horrible implications for the Dollar. Reserve Currency status will be lost within 15 years as a result … Foreigners who used to flee into USD and Treasuries in periods of stress … last year fled Treasuries … (and have continued to do so since then …)

On the premise that we do indeed have a full-fledge regime change underway in the market – something that has been in motion since early November 2020 (aka immediately following the vaccine news …), I trimmed my QQQ position some this past week … in case you are wondering.  On a side note – I also continue to “play” around a bit with covered calls, as premiums remain outsized … and thus monetizing some vol is attractive so long as one is prepared to otherwise “hold” the bag … so to speak.

Wednesday – Turns out … yesterday’s bounce was to be followed by renewed weakness, again centered around Technology. Apparently … apparently … markets aren’t too thrilled about the notion that inflation is not only on the horizon … but in fact already here! Whether transient or not … markets don’t like it … and thus, volatility is spiking up, and stock valuations under question.  Not every day we see 500 points drop on the Dow … and off 2.5% on the NASDAQ … Wednesday was such a day!

BTW – Tech’s challenge not confined to the US, as illustrated by this MSCI TAIWAN ETF chart:

Coincidentally – I kicked off Wednesday morning by listening to a BMO ETFs podcast featuring PM Alfred Lee, talking about  … Inflation … A decent podcast framing the issue/challenge well. Click HERE to have a listen! (BMO evidently NOT the only company / ETF provider having relevant solutions … BUT in the Podcast, Alfred sticks to BMO ETF solutions – as can be expected). This morning’s 4.2% CPI reading … evidently is causing a bit of indigestion … As always, I enjoyed the ex foods and energy reading at +3% (vs +2.3% expectations …) seeing that of course, we all live in an ex-food and energy (you all have stopped eating and no longer require energy for either transportation or heating/cooling …) right? (LOL …)

Thursday – After an ugly overnight session picking up on the fear of inflation “theme” … Tech and the market picked itself off the mat on Thursday… a mat which Tesla’s Elon Musk threw Bitcoin on, as he decreed that contrary to an earlier decision, Tesla, going forward, would NOT accept the crypto currency as a mode of payment. Talk about a 180 … Bitcoin and related ETFs, in the aftermath of that – evidently took one on the chin!

Bitcoin ETFs:

=> Purpose (first Bitcoin ETF in the World, and the 800 pounds gorilla here as a result – first-mover advantage with a capital F): click HERE!

=> Horizons (playing with the futures market on bitcoin, both on the long side and the inverse side.  Less than CAD 10MM of AUM in each, more $ atm in the inverse one): “long” click HERE! 

=> Horizons: “inverse” Click HERE!

=> Evolve (more AUM than Horizons in Bitcoin, but miles behind Purpose, despite having probably clinched the record of fastest to cut MER ETF after launch … what was it? 3 … 4 days?): Click HERE!

 

Friday – The big corporate news of the day looks to be that of CN Rail beating CP Rail to clinch Kansas City Southern rail deal. Stock (CN Rail) still pressured – presumably winner’s curse as far as really paying up for this – effectively a massive infrastructure play … Oh … and apparently, it is possible to disappoint on the subscriber growth front for Disney, which up until then had really nailed it, I guess with Disney+. That stock – Disney, under pressure as well and significantly off vs $200 recently reached …

Where are the rails to be found? CP and CN are both included in the BMO EW Industrials ETF => Click HERE!

If you opt to play industrials on a global basis, more Rails can be found in the iShares Global Industrial ETF (EXI in the US, which available in Canada under XGI) => Click HERE!

Of course, as you know, Rails obviously also play a meaningful role in infrastructure overall, and if you’re looking at that whole US infrastructure “story”, then you can also look at Global X’s $PAVE – the US Infrastructure Development ETF => Click HERE!

And … also noteworthy – Brookfield announcing the company had disposed of USD 13 Billion worth of Assets in Q1, 2021. What is noteworthy about this? The comments made by the company’s CEO Bruce Flatt, making reference to the cycle of “sowing” and “harvesting” – in this instance pointing out that the quarter was a time to harvest, all the while making positive comments regarding commercial real estate => Click HERE!

In terms of Brookfield = the stock had a decent uptick on Friday if memory serves, and evidently, one can get some BAM inside XFN => click HERE! 

As far as being more “positive” toward Real Estate – apparently the recovery on that front is continuing from a price appreciation standpoint, even though … evidently we aren’t back in the office quite yet in Canada … Click HERE! for the iShares S&P/TSX Capped REIT Index ETF

Although obviously when you go that route – you end up with for the most part a hefty dose of banks – which … personally I prefer to play via $HCAL = Hamilton ETFs Enhanced Canadian Banks ETF = Click HERE!

If I hadn’t already decided to go with the “At least let’s talk about it” from the Druckenmiller story this past week, obviously “A time to Harvest” would have been a great title 🙂

Oh – and how could I forget: looking for some insights into the ESG market in Canada as far as investors knowledge? => click HERE! for a BMO Survey recently released suggesting knowledge has room to grow … (and AUM!!!)

Talking of which – reviewing here the topic of Clean Green Energy with the TMX’s Keith Wu, is Karl Cheong, Head ETFs Canada at First Trust Portfolios Canada.

Next Webinar with First Trust Portfolios Canada – we are talking 5G this week => Click HERE! to Register.