Still Bullish? (TWTW – Apr 11-15, 2022)

Still Bullish?

The two images below, which were tweeted earlier this week by my former boss Frances Horodelski (good old days 🙂 – and in passing, Hello Frances 🙂 ), illustrate that Bulls have a) become a much rarer breed of late … + b) are at extreme levels of loneliness …

This suggests, from a contrarian perspective, that perhaps the time has come to be more bullish, which … of course, given the proverbial wall of current worries (War, inflation, volatility, next COVID-19 wave, deglobalization et al) isn’t exactly the easiest thing to do.

Anyways here are the pics, which as they say, speak a thousand words:

Noteworthy this past week:

  • BoC – Bank of Canada hiked by 50 bps (as widely expected) => Read more: Click HERE!
  • Canadian banks – were prompt to respond:

  • Prime Rate – Did you realize we are already at 3.2% on Prime (?) … as you know, prime is the reference rate on many types of loans/credit lines etc … so it will bite quickly. Also – anyone seen their High Interest Rates savings account rates move up as quickly (didn’t think so …)
  • Twitter – Elon doesn’t join board, gets sued for disclosing stake too late, and THEN, bids for the whole company… Stock initially pops, then pullback far below the (is it a joke?) USD 54.20 bid. click HERE!
  • Jack Dorsey’s first “Tweet” – LOL … => trying to sell it for Millions, attracts bid for USD 280 … => click HERE!
  • US Mortgage origination is apparently falling rather sharply of late => Click HERE!
  • Canadians are apparently rather exposed to rising rates => Click HERE!
  • JP Morgan Results = Russian write down; stock pulls back some more => click HERE!. Not exactly in a bull market of late. In fact, entire US space has retreated as illustrated here: (for Canadians, that means that the pullback, combined with a CAD that has regained some luster of late = getting into US banks “cheaper” than it has been in a while):

BMO US Banks (EW) ETF (trading in CAD):

Backdrop – NIM improvement on back of rising rates should help … Recession (risk rising) wouldn’t …

  • Delta = better than expected results and upward guidance = nice bump for the stock (pent-up demand is real 🙂 => click HERE!
  • ARK’s Cathie Woods predicts 50% returns in coming years … also a new price target from her firm on TSLA: USD 4600 per share => click HERE!
  • Shopify goes for the stock split magic … Although there inherently is NO economic benefit to having 5X more shares at 1/5 the price … markets have rewarded companies like Amazon; and Google, notably, for splitting their shares recently. Shopify – I guess, decided that maybe, just maybe that could help their stock price also … => click HERE!

Weekly performance – Sectors; Thematic; Factors:

 

  • challenging backdrop (see S&P500 and NASDAQ w/o/w performance …
  • Energy Materials, and Industrials coming out ahead this past week
  • Canadian market overall barely moved …

  • Travel enjoying good uptick this past week (see DAL news obviously helping …)
  • on the flipside of that, Metaverse; Blockchain and ARK all weakening => is this the “longest” duration risk argument?

YTD performance – Sectors; Thematic; Factors:

  • Question – will Financials be “re-energized” by NIM improvements which bound to materialize as rates keep getting moved higher by BoC?
  • Energy and Materials dominating … more to come?
  • Healthcare = note historically a resilient space when it comes to bear markets …

  • Reopening “theme” aka Travel outperforming other themes thus far in 2022 … A function of the “theme”‘s immediate revenue and profit generation as opposed to say “disruption and innovation” overall where that element could be farther and farther into the future?
  • Cyber outperformance confirming the defensive nature of the theme …
  • Q: Will there be rotation across “themes” in coming months?

  • No matter what factor – on a relative basis, it certainly looks to have been Canada’s turn at the better performance derby (obviously Energy and Materials have had an impact on this …)
  • Note several Factors ahead of FTSE Canada reference benchmark: Dividends; Min Vol; Value; and Fundamental. ESG and Growth … laggards for the moment. Will that change at some point in 2022?

HAPPY EASTER 🙂