The difference a week makes … (TWTW – Dec 5-9, 2022)

The difference a week makes …

Last week, it was all about how the FEDs were going to reduce the size of upcoming rate hikes (next up US FED Dec 14, 2022 (e) 50 bps), how inflation was gradually abating and about how stocks could continue to possibly move up further as the economy overall remains strong.

This week? All about recession worries again. Energy dropped sharply, notwithstanding potential supply disruption resulting from European countries embarking on the earlier announced embargo of Russian Oil, including a price cap at USD 60.00. OPEC+ didn’t reduce production further last Sunday, and Energy stocks were the worst performers last week, arguably catching up to the recent retreat in crude prices, which they had until then mostly ignored …

Some people are pointing out that all of this could just be year-end related, protecting portfolios heading into the final stretch of 2022 – which it may well be. As well, and related to that, of course, there is the fact that a lot of speculation via futures markets is just that … speculation, and hence, risk aversion possibly kicking-in in these uncertain times may mean, if I get this right, that everyone is for the moment leaving, hoping to re-establish position later, perhaps at lower prices. Will that happen? Time will tell.

Newsworthy:

citing confusion between “indexing”, which is what the firm is most known for, versus implications of focusing squarely on Net Zero initiatives

  • over at iShares – ESG also causing some “challenges”, with the firm, which earlier landed itself in hotwaters with Texas, for instance, now seeing its CEO Larry Fink under pressure to resign on account of the firm’s focus and position on pushing hard for ESG standards to become increasingly mainstream, something some see as beyond their mandate =>Click HERE!
  • BMO ETFs – Recently adding ARK Invest “disruptive” suite of ETFs => click HERE!

What does that do to Emerge Canada‘s suite of ARK ETFs? Can’t imagine having competition from Canada’s #2 ETF provider (with significant distribution capabilities, and a massive ETF shelf …) is welcomed news for Emerge. In strategic terms, interesting move further broadening the Bank’s ETF shelf, and providing it with ability to get front row seat in disruptive innovation space going forward. Telling will be “flows”. With AUM of $2.8-$3.0 Million as at Nov 30, 2022 – early days …

  • Mr. Wonderful – lamenting a $15 Million spokesperson “fee” going up in smoke with FTX bankruptcy …
  • Banks – Both Royal Bank, and now CIBC introducing discount DRIP for investors (2%)
  • OSFI – increase reserve requirements for banks => click HERE!
  • Hamilton ETFs – noticing a 5.9% ish estimated special cash distribution being press released => click HERE! on their $HBG ETF.
  • David Rosenberg … Yup, recession is coming … + talking about deflation … => Click HERE!
  • CIBC likes covered calls as a strategy for 2023 => click HERE!
  • Evolve – announced it crossed $4 Billion of AUM – which I am puzzled by, given National Bank Financial’s AUM data as at Nov 30, 2022 has them at $2 Billion or so …
  • Lululemon reported results, with inventories rising rather sharply => click HERE!

Talking about NBF – click here is their ETF report as at Nov 30, 2022 – showing highest inflows since March 2022 at $4.2Billion for the month.

Other – I took a look at last month flows for Vanguard, as well as performance across their line up:

A little faster, a little more intense click HERE! and Bear Market, what bear market =>click HERE!

Have a great week-end!

oh, wait, weekly and YTD performance numbers:

Weekly:

Sectors

  • Defense (staples utes) the only area in positive territory this past week. everything else which had done well the prior week … pullback …
  • Energy and Tech the worst performers this past week – Energy: catching up to recent crude price weakness … Tech pulling back after sharp advance the prior week?

Thematics

  • High Beta disruption play ARKK down when market sentiment poor – on recession concerns … a recurring “theme”?

Factors

  • Notable relative performance from min vol and quality dividends (likely to persist imo as far as a 2023 “theme”)

Regions

  • Knock back Tech for S+P500 and Energy for TSX and voila, US and Canada did not enjoy the best of weeks …

YTD:

Sectors

  • Not much in positive territory … Energy still dominant as far as YTD performance, despite a painful pullback this past week …

Thematics

  • A common “theme” for the themes in 2022? sharply lower prices, and vastly worse bear market experience than traditional indices and sectors (exception tech). Better days ahead in 2023?

Factors

  • Canada outperforming, and value, min vol, fundamental, and dividend outperforming IT. Says it all imo as far as factors that are “working” and likely to continue to do so given market backdrop …

Regions

  • who was it last week? Morgan Stanley who upgraded prospects for Chinese equities, on account of reopening scenario? BUT … do you want to invest there? $FRDM might be a more advisable exposure …