Market Commentary

Making Cents of the Markets

Listen to this week’s episode of Ready.Set.Retire! Tax planning as a business owner can be difficult as there are so many moving parts. Lori and Jon are joined by Shane Schepens, Principal of Clearline CPA and Tax Department Lead. Shane talks about what you need to know to prepare for the sale of your business and some ways to organize your business structure to be more tax efficient.

Shane also breaks down everything you need to know about family trusts: the benefits, the disadvantages, and how to set one up!

Listen here or subscribe on Spotify, Apple Podcasts, and Acast.

Listen now to the most recent Making Cents of the Markets. Lori talked about markets as we anticipate the debates over raising the debt ceiling in the U.S. and Canada’s housing market including Vancouver’s housing supply issues.

Most of us have heard of the phrase “Sell in May and Go Away”, but is it accurate? Lori discussed the flaws associated with this strategy.

Click here to listen.

Beyond the Markets

Vandusen – All British Field Meet (ABFM)

The sun is still shining in Vancouver and there are so many fun things to do this long weekend! On Saturday, May 20th, you can attend the 36th edition of the ABFM at VanDusen Botanical Garden.

The event will showcase the beauty of hundreds of classic British cars and it’s free!

Be in the Know

“Keep a little fire burning; however small, however hidden.” – Cormac McCarthy, The Road

“They pretend to themselves they are in control of events where perhaps they are not.” – C.M.

Market bulls maintained a little fire burning in hopes of a debt-ceiling settlement. Today, the G.O.P. negotiating leader Speaker McCarthy declared it was time to “press pause” and walked out in protest.

Are they just tactically negotiating or is it an indication that the sides remain far apart? It was the far-right leaning House Freedom Caucus that pushed Republicans to walk, upholding demands for steep spending cuts. It’s not clear how much control Speaker McCarthy has over them, if at all.

“No more discussion on watering it down. Period.” tweeted the House Freedom Caucus the day before. A full list of members is not disclosed, though it includes Lauren Boebert, Matt Gaetz, Marjorie Taylor Greene, and Jim Jordan as its chair. These are not your father’s Republicans.

Every modern president has raised the debt ceiling, be it Trump twice or Bush Sr. and Clinton four times, or Bush Jr. and Obama 7 times. But the president with a record 18 debt-ceiling increases? Ronald Reagan.

And which is the only one of them to have run so much as a single-year budget surplus, let alone four in a row? Bill Clinton.

Has the horse left the barn?

In Cormac McCarthy’s novel, The Road (also a major motion picture), the choices humans make determine human culture and its ethical principles. If they choose to survive like “animals,” extinction will result. But if they choose to live as the father and son do and adhere to ethics, they can survive even the most harsh of post-apocalyptic worlds.

Sam Altman, the mastermind behind ChatGPT, sat in front of lawmakers to explain that the regulation of A.I. is essential.

“It’d be crazy not to be a little bit afraid, and I empathize with people who are a lot afraid,” he said recently. “The current worries that I have are that there are going to be disinformation problems or economic shocks, or something else at a level far beyond anything we’re prepared for.”

Lawmakers tend to be old with old-school ways of thinking, it’s a major reason why the internet in general and social media specifically has gone mostly unregulated. Zero regulation, according to long-time tech journalist Kara Swisher.

The FTC and its activist leader Lina Khan warned they would be vigilant for anti-competitive practices by tech giants, as well as fraud. Some stories of abusing A.I. are truly disturbing.

A.I. ethicists, including Altman and the folks at Google, have cautioned against making their A.I. ‘open source’ – (free on the internet) for 3rd parties to build upon.

So, what did Facebook go and do? It shared its A.I. in a reckless way, effectively allowing it to be posted on 4chan, the online bulletin board site famous for spawning the stupefying conspiracy cult Q Anon and worse.

“The platform that will win will be the open one,” Yann LeCun, Meta’s chief A.I. scientist, calling the secrecy approach taken by Google and OpenAI a “huge mistake.” Sure, in terms of profits and market share, which is pretty much all Facebook ever cares about.

A.I. will bring wonderful things to life, from improved medical care to reducing the epidemic of loneliness. But the abuses must be addressed and contained.

Our Strategy

Did you know Cormac McCarthy wrote “No Country for Old Men”? It’s on Netflix until May 31st.

On the Legacy front, the most remarkable was our Netflix position, which was up 7.5% on the week. You’ll recall that they started offering the ad-based service to their biggest market (USA) only in Q2. We are mid-way through the quarter. How many of the new 5 million subscribers are in the U.S.? They didn’t say. But it appears this roll-out remains in its infancy. The ad-tier subscribers save about $100 every year from their regular tier and save $60 from Netflix Basic (lower video quality and fewer devices allowed).

Ad-tier shows about 5 minutes of ads per hour. The average Netflix watcher spends 3.2 hours per day. This shocked us as well – the sun is shining so go outside and enjoy it!

Markets were mostly higher this week showing resilience against the debates surrounding the debt ceiling. We believe that this is a short-term problem that will actually be a buying opportunity, should markets be more volatile before the June 1st deadline. We have seen this story play out too many times to fear it.

We stayed the course this week with most of our holdings, however, we trimmed some of our 15% profit on Lululemon and added Cineplex. We believe the company is finally turning around earnings since they were devastated by covid….and they have about 50% more new releases coming out this summer. Good for movie-goers and shareholders!

Visual of the Week

Andrea sent us this beautiful photo from her kayaking explorations in Desolation Sound!

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. Investing in equities is not guaranteed, values change frequently, and past performance is not necessarily an indicator of future performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges. 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.