One Year later – Markets bottomed March 23, 2020, after the fastest and most brutal Bear markets from highs reached barely a month prior, at the hands of a pandemic forcing total shutdowns across economies worldwide.
Is this week’s Suez Canal saga – clogging world trade – a good illustration of what looks to be unfolding in markets lately? We’ll let that thought sit for now … suffice to say it’s a situation that borders on the comical, all the while actually having the potential to be increasingly harmful, the longer it remains unsolved.
If the week felt volatile … it is probably because it was, as illustrated by this VIX chart of the week:
And yet, yes, we ended the week below 20 on the “vol” side of things, suggesting that despite bumps, market participants continue to remain constructive on the outlook.
Reopening themes rebounded (think Airlines and Cruise stocks) although not clearing recent highs, as markets are grappling with concerns regarding the 3rd wave. The cyclical components of the reopening story also rebounded after experiencing significant downside lately – Energy (after experiencing sizeable swings as crude prices themselves experienced large daily swings), Materials, and Financials, which as far as the US side of the story, benefited from the FEDs indicating that dividend increases and share buybacks would be allowed to resume in June after the next stress tests results have been compiled.
ETF Research – you may wish to read this from Larry Swedroe, Chief Research Officer at Buckingham Strategic Wealth,reporting on the fact that investors in fact … do not allocate to ETFs optimally …
Read more: Click HERE!
Sectors: The Canadian Telecom sector in Canada was weak on Friday, on the back of a Telus equity offering for $1.3 Billion, with proceeds going to 5G infrastructure build. Telus’s stock dropped as a result of the offering -3.47% on Friday, in line with the discount at which the shares were offered ($25.35 / shs, 3.4% lower than Thursdays’ close). For what it’s worth, I picked up a few shares, which a juicy dividend yield of close to 5% renders relatively painless …
Themes / Factors: ESG (Environmental, Social, Governance) – is very much in the news these days, and by now mainstream, further bolstered by the impact on our lives of the COVID-19 pandemic. Will all that ESG “awareness” have the desired results – we shall see. Someone who one would think has a pretty good idea about this would be BlackRock’s former Chief Investment Officer for sustainable investing. In a Globe and Mail article this week, Tariq Fancy, now CEO of a global education technology non profit expressed his doubts. Read more: Click HERE!
One clearly expressed thought that definitely resonated with me was this:
“Unfortunately, the crisis was also a sharp reminder of what science and policy experts have told us for decades: that similar government action is desperately needed to avert the far more dangerous threat posed by climate change.
Yet that action is still being held up by the illusion promoted by many global business leaders that the free market will somehow correct itself and the climate crisis without government action. I know, because I helped contribute to this fantasy.”
For me, the important takeaway is that indeed, to expect “free markets” to alone solve this … GOOD LUCK! Remember when deregulation in the US was all the rage … REMBEMBER HOW IT “SOLVING” everything resulted in the Great Financial Crisis of 2008/2009?
Be it as it may, as stated above, ESG isn’t going away anytime soon, and still, should do its part to help shape or influence behaviours, by looking to prod everyone along the path of getting to higher standards.
BMO Global Asset Management is hosting a webinar on Tuesday on the topic:
Outsourcing ESG for institutions – integrate ESG thought Index Solutions. To register, Click HERE!
Bitcoin: Fidelity joining the fray as far as looking to launch a Bitcoin ETF => Read More: Click HERE!
From what I read here, the ETF will invest in the Futures market, as opposed to investing in bitcoin directly, which is what the world’s first ETF launched here in Canada a few weeks back by PURPOSE Investments does. For my money, at the moment, notwithstanding the Fidelity name in the US obviously carries a lot of weight, I’d go with our home grown solution here, the Purpose one. BTW … no, I have no exposure to bitcoin at the moment, and no, I don’t generally suffer from FOMO, but clearly many people do …
Thoughts on the macro outlook from Forstrong’s Tyler Mordy: The Stock Market is up strongly since its COVID bottom. What Happens Next? Read more: Click HERE!
The key takeaway: In the new paradigm, investments tied to broader global growth will continue outperforming as they have in 2021. That means a generally weak US dollar, persistent strong growth in Asia and a continuing tailwind for value over growth. All of these trends are still spring-loaded to last for years.
Is this where we are in the market at the moment? “Offense sells tickets, but defense wins championships”. A look at what I’d characterize as a market in transition: “We are in a bearish environment: veteran trader = > Read more: Click HERE!
Upcoming Webinar: A Look at Cleantech / Green Energy – MARK YOUR CALENDAR!
Clean Green Energy Webinar (April 21, 2021 14:00 EST)No challenge is potentially greater at this juncture in history than addressing Climate Change.With one of newly elected US President Joe Biden’s first move upon taking office to rejoin the Paris Accord, and re-engage in a global effort to tacklethis existentialist question for humanity, we look forward to hearing from Ron Pernick, founder and managing director of clean-tech research firm Clean Edge, Inc.Ron will discuss the First Trust Nasdaq Clean Edge Green Energy ETF. He will discuss its structure and exposure, putting it in the context of the thematic backdrop that renders such forward-looking investment solutions relevant to investors and Advisors seeking to incorporate themes powered by technological innovations as well as the ultimate imperative necessity of protecting our planet.ETF: QCLNThe First Trust Nasdaq Clean Edge Green Energy ETF (the “First Trust ETF”) seeks to replicate, to the extent possible, the performance of an index of U.S. listed companies designed to track the performance of clean energy companies engaged in manufacturing, development, distribution and installation of clean-energy technologies including, but not limited to, solar photovoltaics, wind power, advanced batteries, fuel cells, and electric vehicles, initially the NASDAQ® Clean Edge® Green Energy IndexSM.