Market Commentary

Making Cents of the Markets

Listen now to the most recent Making Cents of the Markets on CKNW, with a more positive market update as a result of great earnings reports as well as comments from a calmer Fed.

We also discussed the definition of ESG focused funds (environmental, social, governance) and what investors should research before investing in them as they may not be as good as they seem!

Click to listen here.

Beyond the Markets

Come From Away 

Broadway’s “Come from Away” is finally coming to Vancouver! Don’t miss this breathtaking new musical written by Tony nominees Irene Sankoff and David Hein, and voted best musical all across North America.

On 9/11, the world stopped. On 9/12, their stories moved us all. Do not miss out on the opportunity to watch this incredible performance.

Find out all the details here.

Be in the Know

“People complain about the bad things that happen to ‘em that they don’t deserve but they seldom mention the good.  About what they done to deserve them things.” –  Sheriff Tom Bell (Tommy Lee Jones), No Country For Old Men

Worry is away on vacation

Stocks generally held their own this week, despite the European Central Bank hiking the most in 25 years and U.S. jobs numbers for July coming in very hot and casting doubt that the U.S. economy is in recession. It suggests the Fed’s push to slow the economy will have to continue with further rate hikes in September.

One positive development in the inflation fight was oil falling below $90 for the first time since Russia’s invasion. It’s why the TSX Composite (the “Canadian stock market”) was down on the week, as oil stocks fell almost 9%. OPEC+ agreed to a tiny (some say insulting) 100,000 barrel per day increase, as per Joe Biden’s request. Global oil production hovers in the high 90 million range.

CNN’s Fear & Greed Index further illustrates a calmer marketplace where investor emotions are no longer driving the bus.

A tough-as-nails lady with a chip on her shoulder

“The world faces a choice between democracy and autocracy,” said Nancy Pelosi to Taiwan’s president on her recent visit. “America’s determination to preserve democracy here in Taiwan and around the world remains ironclad.”

Such talk is why Republicans supported her trip while China stamped it’s feet in anger. But her trip also involved important business: meeting with the chairman of Taiwan Semiconductor Manufacturing Company, the world’s largest and most sophisticated computer chip manufacturer. T.S.M.C. is erecting a plant in Arizona, one that is eligible for financial support from the recently passed CHIPS and Science Act.

T.S.M.C.’s importance to the world can’t be overestimated. It’s technology is incredibly tightly guarded, further protected by the fact that it’s key equipment providers (especially ASML Holdings of the Netherlands) also guard their tech secrets fiercely.

On the one hand, it’s existence in Taiwan acts as a shield against Chinese aggression. On the other hand, the Russian invasion of Ukraine and resulting disruptions to key commodity supplies has woken up the imaginations of global leaders in the West and it’s allies. America’s efforts to onshore production is an example, as is South Korean semiconductor chip makers re-thinking expansion plans in China.

The truth is, democratic nations tethering their trade fortunes to autocratic governments is riskier than previously believed.

‘Ol King Cole is once again a merry ol’ soul

As we’ve discussed often, the raging war on Ukraine has stoked a European frenzy to get off Russian natural gas. But the same is true for Russian coal exports, which accounts for an even greater percentage of EU imports than natural gas (46% vs. 40%). Russia is the world’s 3rd largest exporter of coal after Australia and Indonesia (followed by the U.S., South Africa and Canada).

Europe is pushing other export nations such as Australia, South Africa, the U.S. and Colombia to uptick supplies. Prices have jumped from $134 a metric ton entering the year to $400 a ton.

Our Strategy

Although North American indices have had a mixed week, digesting further central bank updates and a key American jobs report, our Legacy portfolios have advanced further ahead.

We continue to focus on leadership in the market since the recovery began. The tech sector also had an impressive comeback, and we are delighted that we maintained or added exposure to some of the strongest and most profitable companies in that space. The latest sharp bounce in markets has put some of these names that we hold under the spotlight.

We saw some jaw-dropping rallies in the MEGA Cap tech stocks recently:
AAPL up 28% since 6/16
AMZN up 37% since 6/14
GOOGL up 13% since 7/26
MSFT ‘only’ up 17% since 6/13

We are happy with our latest move off the lows and how we’ve positioned the portfolios according to continuously changing market conditions. We also added a few positions this week on the consumer side as we continue to see data that the job market remains strong, and consumers are still spending.

However, we also decided to trim and take profits on some of the industrials in the portfolios as the economy will eventually slow with all the rate hikes and certain companies may not do as well in that environment. It is important to be proactive when markets are moving!

We now wait patiently for another fresh batch of earnings from our companies that are reporting next week, as well as the extremely important US July inflation report. Economists are expecting a cooldown of headline inflation in the US, which could act as a sign for the Fed that they’re en route to achieving their biggest objective, taming inflation. We know that market sentiment should further improve when we see lower inflation over the coming months!

The comments and opinions expressed in this newsletter are solely the work of Pinkowski Wealth Management, not an official publication of Canaccord Genuity Corp., and may differ from the opinion of Canaccord Genuity Corp’s. Research Department. Accordingly, they should not be considered as representative of Canaccord Genuity Corp’s. beliefs, opinions or recommendations. All information is given as of the date appearing in this newsletter, is for general information only, does not constitute legal or tax advice, and the author Pinkowski Wealth Management does not assume any obligation to update it or to advise on further developments related. All information included herein has been compiled from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or Canaccord Genuity Corp. assume any liability.