Extrapolative Expectations (TWTW – Nov 22-26, 2021)

Extrapolative Expectations – now figures in the Vocabulary of Central Bankers, as this past week, the Bank of Canada used that descriptive as possibly being at play, and a risk, as pertains to a Canadian Real Estate market its significant stimulus efforts served to propel to unprecedented highs …

Read this:

“The Growing investor activity, coupled by rising prices, is part of a “worrisome development” that has seen activity in the market driven by “extrapolative” expectations that prices will continue to increase.

“Extrapolative” expectations risk creating a disconnect between actual home prices and their more fundamental levels, ” he said.

(Like me, you can presumably remember all too well the one time when such expectations ended up causing … 2008/2009 … but that was in the US, and elsewhere … because obviously in Canada, we never had that “correction” and thus apparently are the world’s second most stretched real estate market, respectively one with significant dislocation in the relationship prices versus income…).

SPR release – Well, the Biden administration, having been rebuffed by OPEC+, or if not rebuffed, certainly duly ignored … ultimately announced a synchronized action regarding energy prices – specifically, a release from their Strategic Petroleum Reserves. Net impact? Perhaps more an acknowledgement of powerlessness than anything else … No matter what, it seems markets are of the view that even if OPEC+ decided to pick up the pace of production increase, it wouldn’t make much of a difference, respectively that their ability to significantly increase output is rather limited …

In any event, with “Black Friday” in terms of Energy being under significant pressures as a result of the latest COVID-19 news regarding a South African strain that may not be well contained via current vaccines, market participants are looking at something significantly more powerful in taming rising oil prices, than a day or two of SPR releases, coordinated, or not!

Canadian Pacific Railways – Vote on the KCS (Kansas City Southern) transaction up ahead, scheduled for December 8, 2021.

US FED – Jerome Powell stays = …

Zoom – Boom … stock got “creamed” on latest quarterly results => click HERE!

(slight rebound on Friday … but still off rather meaningfully from year ago levels …)

talking of which – quite a flameout for several of the flagbearers of companies that earlier shot to the moon on the WFH theme …

The next mega theme ETF?

Evolve launches Meta ETF coming this Monday => click HERE!

which … not to be left behind,

Horizons ETFs is also doing => click HERE!

Controversy? Both companies claim to be the first to launch a Canadian-listed Metaverse ETF …

Lest you think this is something to ignore … META, launched earlier this year in the US has apparently seen an explosion of inflows following Facebook’s (ok META) Mark Zuckerberg announcing where his company is headed next, and rebranding in the process (in part to avoid all of the negative press FB was the object off at the time …

weekly performance:

 

Sectors:

  • despite sustaining significant losses on Friday, XEG up modestly on the week

 

 

Thematic:

  • Travel “theme” in particular negatively impacted by concerns around new variants out of South Africa, which on Friday hammered Airlines and Cruise stocks hard!

 

VIX Friday … ooophs …

Enjoy your week-end!

and let’s hope for a decent week next week … although additional volatility and possible downside not to be precluded – obviously – given the vaccine efficacy concerns surrounding new variant …