Contagion? (TWTW – Sept 13-17, 2021)

Well, as we enter a new week, Contagion is making its way back to the top of the hit parade of market concerns. This time, apparently, its called Evergrande – a Chinese Real Estate company. And if you needed anything to worry about, well, you think your mortgage is large? Have a look at their liabilities … Voila – Contagion risk. Not 4th wave, which the market seems to have shrugged off for some time … (helped along by generally spectacular earnings …), BUT financial contagion risk.

Now – that – the risk of financial contagion, gets market participants’ attention.

So what can we look forward to in this instance? Well, the depth and length of the sell-off is one of these episodes of gauging how much everyone else is going to be freaking out … and that, in part, will be driven by how hyped up this whole situation will be in the news. That +, of course, there also is to be factored-in how strong markets have been for some time – and thus, the propensity of players to basically shoot first and ask questions later. As it were, with very solid gains this year, well, here you have a great justification / cover for doing some selling, if you were looking for one.

So, let’s fasten our seatbelts – September, here we go again … but remember, the seasonality folks tell us, get back into the market by late October, for that favorable October to May period 🙂

What else is going on? Well, September 20th is election day for Canada – with a neck and neck race currently impossible to call. The last I checked, it sounds as though we may not even know today whether the Liberals, or the Conservatives will form the next Government, and exactly what that will look like. Will the latest blackface “pics” surfacing in the very last stretch of this very short election run-up make a difference? We’ll see … As I keep liking to tweet, in my books, #Canadiansdeservebetter !!!

TWTW – Sept 13-17, 2021:

Apple’s intro of the iPhone 13 didn’t prevent the stock from declining last week (you know what they say about stocks no longer positively reacting to positive news – right … well, here, we likely have a case of selling the news, because of  course nowadays, new product releases by Apple aren’t exactly “rumours”).

Oil – seasonal disruption in terms of Gulf of Mexico weather has helped push prices back up, with nice spike for Canadian Energy stocks.

This:

which I saw shared on Linkedin last week caught my eye. So much for the demographics side of the equation being able to dictate “de-risking” portfolios …

obviously even worse now … imagine that, already then, had to tolerate close to 3X the risk for the same return … (now TINA, Inflation, and close to 1% rates on US long bonds … where to for “de-risking?)

Elsewhere:

Keeping an eye on what’s happening in the “space” category? you might want to check Harvest’s latest update if you have missed it:

 

click HERE!

For me, driving over the week end and listening to radio, I was entirely blown away to hear 4 businessman paying 55 (i thought it was going to be USD 55,000) to travel in space … NOPE it was USD 55 Million! (guess 1% folks huh …). Hope there is some sort of solid “tax” around that in terms of getting something back for the greater good of the 99%, as opposed to just the bragging rights of the 1% (and of course the “experience”…)

 

weekly sector performance (Sept 10-17, 2021):

notable Energy outperformance (but then again, most of that given back today…)

Otherwise- looking like this week might see greater “dispersion” across sectors … we’ll see …

Have a great week!

Yves