Running Hot (TWTW – Mar 15-19, 2021)

Another “interesting” week … with “headline” volatility (VIX) touching below 20% briefly, which in a way seems like a paradox, given market conditions appear, if anything, to be exhibiting signs of heightened volatility since about mid-February.

Backdrop: Another “interesting” week … with “headline” volatility (VIX) touching below 20% briefly, which in a way seems like a paradox, given market conditions appear, if anything, to be exhibiting signs of heightened volatility since about mid-February.

FOMC: Jay Powell’s FED met this week, with the market initially pushing higher late in Wednesday’s session, before a “rethink” (Maybe?) on Thursday, which saw meaningful weakness, as rising yields seem to continue to cause concerns. Net on net, yet again high priced growth stocks got hit (Tech in particular, with all the usual suspects), AND Energy joined to the downside – sustaining significant losses Thursday against a backdrop of crude price weakness, before regaining some ground in Friday’s session.

What do I make of this? Markets appear particularly sensitive to developments on the interest rates front. 10 years yields evidently have moved up fast and furious in recent months … BUT then again, what do we expect … they were priced for Armaggedon last year. Fact is – as far as what I can read … they still DON’T cover off inflation … NEVER MIND that … Inflation looks to be a genie the FED is prepared to let out of the bottle before reaching for the fire extinguisher. Running the economy hotter, as it were, when you expect … WHAT? 6.5% GDP, BUT you commit to not raising rates till 2023? The market evidently is concerned that this could end-up with some possibly undesirable surprises.

My sense is there must be something more going on to explain the kind of price action we’ve witnessed thus far in 2021. Hopefully nothing too serious … BUT this:

(The Economist): Greensill Capital, once touted as having a market value of $ 7Bn, filed for insolvency earlier this month …

I am not liking the looks, or sounds of  …

Otherwise … I believe we are still dealing with a broader portfolio realignment exercise aimed at positioning for the “reopening economy”, which should continue to support a broader rotation that kicked off in earnest in November – once the vaccine news gave markets … a real SHOT in the arm 😊

Talking of which … I got my first shot this past Tuesday in Toronto, and, well, NOTHING, ZIP, NADA as far as any side effects, pains and aches etc. Thank you Health Professionals and scientists / Vaccine makers thx thx thx 😉 and NO – no blood clots either (and I received the ASTRA Zeneca Vaccine …)

 

ETF News:

  • Purpose Investment’s BITCOIN ETFs is through … CAD 1 Billion. The fastest CAD 0-1 Billion I can recall, and as I mentioned that fact repeatedly this week, nobody has contradicted me, so we’ll take it as “verified”. For perspective, Bloomberg’s Eric Balchunas tweeted that given ETF markets differential, it was akin to an ETF in the States going from USD 0 to … I think he said USD 27 Billion. That … spells two things as far as I am concerned: 1) crazy FOMO vis a vis Bitcoin, and now that an ETF is available … well, here we are … 2) First mover advantage in this instance has been HUGE. Certainly NOT as far as I am concerned, a reflection of just Canadians going for Bitcoin, but more likely, a reflection of the fact that many investors in various jurisdictions were awaiting such a product anxiously, and now that it is here, they hopped on it. In the US, the SEC has apparently acknowledged two things this week: 1) that it may have been a tad slow dealing with a bitcoin ETF, 2) that VanEck has filed for … a bitcoin ETF. Eric, if I recall, is taking Over / Under as far as one being avail to the South of us by end of Q3, 2021.

 

 

 

  • Horizons ETFs – announced the completion of the merger of Guardian-managed dividend ETFs HAU and HAJ with HAZ, the continuing ETF => read more Click HERE.

Also – Horizons PM Hans Albrecht was quoted in this article speaking about a bullish backdrop for Semi-conductor stocks: Perfect storm in semi conductors opens door for investors => click HERE

 

  • Invesco/PowerShares – Congratulations, Pat Chiefalo! Read More: click HERE!

 

 

  • Harvest Portfolios ETFs – announced it had filed for a space innovation ETF = click HERE! Something which US Thematic/Disruption/Innovation superstar Cathie Wood’s ARK announced it was launching a couple of months ago, if memory serves.

 

Corporate News:

Competition in Canada is fierce …

NOT … it’s NOT, it is seemingly ALWAYS aimed at supporting strong oligopolies economics … Rogers made an offer for Shaw; Sobey’s parent took a stake in LONGOs. Bet on costs of wireless and groceries not going down would be my takeaway, sadly … (WE need – it would appear, more billionaire wireless and groceries families …)

Starbucks – Full disclosure, I have been a shareholder for the better part of this millennium (boy doesn’t that sound like great long term investing 😊 ?) so, what is the news this week that caught my attention there? Shareholders rejecting CEO compensation, on the topic of if I read correctly, “retention incentive”, because they have lost a couple of key executives in past 12 months. I am glad they rejected it – not because the CEO is replacable … which he is … BUT because I resent this whole business of perks inflation. THESE never ending perks for people in position of “leadership” is what results in that whole 1% / 99% business, and frankly needs to stop! STOP getting people suggesting these perks and getting them endorsed by other people getting the same, under the guise that it is common practice. JUST STOP!!! Aren’t you getting pretty well compensated already? OMG.

Seriously. AND oh, I like you Starbucks, I do. Please show “leadership” on the S of ESG front (and for that matter also the E and the G). You’ve done it before. Do it again. Stop EXECs comp inflation, which has in recent decades become entirely unhinged from any “inflation” any middle class person has experienced. Enough said. Thank you.

US Banks – showing strength during this week’s market weakness, as a result of standing to benefit from improving Net Interest Margins, respectively steepening of the yield curve. An economic recovery play with inflation-hedge characteristics, s it were? I would guess so … That said, Friday, US banks lost some grounds as the FED signalled it wasn’t going to extend some beneficial rules related to leverage. Click HERE!

Other NEWS: Upcoming (April 21, 2021) – Disruption / Innovation webinar with First Trust Canada, which recently made important changes to their line up of sector ETFs, by going what we’ll call “old sector” to “new sector” => Read More: Click HERE! 

S+P Dow Jones – latest SPIVA report for Canada, touching on whether active managers proved their mettle in that challenging 2020 we all had to endure … Spoiler alert: Nope … except in small/mid cap segment … Read more => click HERE!