Earnings to the rescue (TWTW – Oct 8-15, 2021)

Earnings to the rescue – Markets have had a rough go of it through September (see below for performance data speaking to that – 1 month to Sept 30, and YTD through BMO ETFs) and early October. Then US payrolls missed the mark by a wide margin (but hey, that’s good cos the fears of a tapering exercise months and months in the communicating phase are receding – right?), anyways, this past week, earnings came to the rescue, resulting in a rather good week for equity investors:

First a look at Thematic ETFs, broadly speaking up across the board … (against a Canadian equity market that didn’t exactly have a bad week …)

Then a look at sectors, where this past week, Energy didn’t replicate its strong upside move from the prior week, but Materials shot up to be the best performing sector on the week.

 

BTW – on the topic of Energy … is it just me, or has our Loonie not just enjoyed a rather impressive reversal of fortune in the past 2-3 weeks, courtesy of – presumably, Oil prices on the one hand, and possibly on the other, the fact that Canada’s job creation numbers looked better than their US counterpart…

Keeping an eye on BMO’s extensive product shelf on the ETF front, here are the top 10 and bottom performing ETFs for the month of September, respectively year-to-date:

Noteworthy:

  • Against a generally dismal backdrop as far as overall markets ‘ performance, both Energy and Financials stood out.
  • If looking at Gold stocks, or China as offsets to the inflation spikes we’re witnessing – whether transitory (FED), or increasingly at risk of some of them becoming more permanent (RBC CEO Dave MacKay => Click HERE!) … well, thus far, you are bound to have been rather disappointed – I know I have (re: Gold Bullion certainly …)
  • Long Bonds – not a great month to hide there either. The upshot? at some point, the “diversification” benefit of bonds resurfaces after a correction which could still be sizable, dependent on who and what you should to listen to.

 

Takeaways?

  • Best performing sectors last month – Energy and Banks, also happen to be the YTD chart toppers. Is that a reflection of their abililty to provide offsets to inflation fears, or simply of the fact that they have been undervalued for some time, with improving fundamentals to boot?
  • A lot of “High Quality” amongst hardest hit areas in September
  • At a macro level, does the fact that bonds now have fairly unimpressive trailing returns possibly force more capital into the TINA trade? Can’t help but think that cash flow generation challenge a real problem now that bonds effectively impaired – other than on and off being a risk on/risk off trade
  • EM / China: Buy low … sell high … Is it one of these times when increasing exposure to EM incl. China is a decent risk/reward opportunity? Probably … BUT the “China Thing” isn’t all about fundamentals clearly (although it is in case of Evergrande …) but rather about politics. What’s a “shareholder” to do in terms of gauging fundamentals, but then factoring-in the significant political risk which can overwhelm them?

Upcoming:

We are a week away from Mindpath Virtual 2021 (Bonus day: Oct 25, 2021; Conference: Oct 26, 27, 2021).

Don’t miss it 🙂

Register => click HERE! or on banner below

More info: Click HERE!

Of note:

  • Elon Musk talks to VW => click HERE!
  • We’ve got a Housing Affordability in Canada; built on a related debt binge that doesn’t bode well for our future => click HERE for David Rosenberg’s latest FP Article on the topic
  • Volatility receded meaningfully in recent days. Here is the VIX range over the past 6 months. Q: setting up for a renewed spike in not too distant future?

Stay safe, stay healthy, and Join us for Mindpath Virtual 2021, 8th Annual ETF conference!

Thank you to everyone presenting and participating in this year’s conference – there ALWAYS is lots to talk about and how ETFs can and should best be used to help in providing Advisors and their clients the opportunity to build better and stronger portfolios 🙂