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Five Topics of the Week!

• Crypto
• Risky Roi
• Meme Stock Stalkers
• Moderate and Mellow Markets
• ESG

🦖First let’s check out those BMDs! 🦖

🥁🥁🥁🥁🥁🥁

The Big North American Dinos

Did Someone Say Market Makers?

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​Toronto Stock Exchange

What’s Going On Here?

Canadian stocks got a much needed lift this week, starting off the month of March on a positive note after a disappointing February. Despite mixed results out of the heavyweight financial sector (more on that later), the country’s main stock market index, the S&P/TSX composite, rode some of the momentum from the U.S. markets and closed higher on the week. After a bounceback week, investors will be turning their attention towards next week’s rate hike decision from the Bank of Canada (BoC).

What Does This Mean For You, a North American Investor?

Despite a strong start to 2023, Canadian investors have faced some adversity in the past few weeks with the market erasing some of those early gains. It’s expected that next Wednesday, the BoC will hold interest rates at their current level. This has had a positive effect on the market in the past, but if inflation proves to be sticky, the BoC may be forced to continue their interest rate hikes by an octave. (Songspiration.)

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​South of the Border

What’s Going on Here?

In a volatile week of trading, the big three American indices, the Dow Jones, the S&P 500, and the Nasdaq saw some pretty hefty intraday swings. While this kept investors on their toes, the indices found themselves in the green by the end of the week. Pulling stocks out of a mid-week slide (Songspiration) was Atlanta Federal Reserve President Raphael Bostic who said that he thinks the central bank can keep its interest rate hikes to 25 basis points rather than the half-point increase favored by some other officials.

What Does This Mean For You, a North American Investor?

Investors continue to find themselves between a rock and a hard place. Inflation is putting the pressure on everyone as they deal with the realities of an ever increasing cost of living. While there’s no doubt that inflation needs to be tamed, the ongoing rate hikes have proven to be a real buzz kill for the markets. If you haven’t picked up on the pattern yet, investors go “HOORAY” when the Fed hints at ending their rate hike cycle and they go “BOOO” when they drop the hammer with a big interest rate increase.

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​🚨🗞️Now onto our top 5!🚨🗞️

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Crypto

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What’s Going On Here?

Major cryptocurrencies had a relatively flat February, with the momentum from the start of the year appearing to slow down. Continued regulatory uncertainty and inflation fears have soured investor sentiment in recent weeks, with Bitcoin, the largest cryptocurrency, failing to break through past US $25,000. Despite this, some analysts remain optimistic about the long-term prospects of cryptocurrencies, pointing to continued institutional adoption and growing interest from retail investors. Regardless, investors should exercise caution due to the volatile and unpredictable nature of the asset class.

What Does This Mean For You, a North American Investor?

The recent pullback in the crypto market is no doubt weighing heavy on the minds of the fearless investors who dabble in crypto. The big question is always whether or not the crypto market will be able to once again reach the all-time highs we saw in 2021. While anything is possible, investors would do well to keep their expectations in check given the current state of the market, as well as the ongoing regulatory scrutiny.

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Commodity Craze

What’s Going On Here?

Oil prices retreated this week as investors’ concerns about a potential U.S. economic recession overshadowed the better-than-expected inventory data, resulting in a broad risk-off sentiment that negatively affected commodities. TD Securities’ Bart Melek said oil was likely reacting to the weakening risk appetite and technical factors. This year, oil has been pressured by rising inventories and the possibility of tighter US monetary policy, despite optimism over a rebound in Chinese demand.

What Does This Mean For You, a North American Investor?

Commodities investors and traders will want to closely monitor oil prices and the decisions of OPEC and its allies in the coming weeks. The ongoing demand concerns out of China and their potential impact on global economic growth could continue to impact oil prices. However, bullish inventory data could provide some support, and the decisions of OPEC and its allies may also play a role in determining the direction of oil prices.

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Meme Stock Stalkers

What’s Going On Here?

Trouble in Paradise? The founder of WallStreetBets, Jaime Rogozinski, has launched a lawsuit against the moderators of the subreddit and parent company Reddit, alleging that they unfairly ousted him from his role as a moderator and profited from his intellectual property. Rogozinski claims that his contributions were crucial in building the subreddit’s popularity and creating the “WSB culture,” but that he was removed without warning or explanation. He is seeking damages and the restoration of his position as a moderator. Reddit has not yet commented on the lawsuit.

What Does This Mean For You, a North American Investor?

The lawsuit filed by WallStreetBets founder against Reddit and its moderators is unlikely to have any significant impact on North American investors. However, it highlights the risks associated with social media hype or speculation and reinforces the need for investors to do their own research before making investment decisions.

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Moderate and Mellow Markets

What’s Going On Here?

Canadian banks reported quarterly earnings this week, and the big theme was higher provisions for credit losses, indicating that they are preparing for a potentially more severe economic downturn. While this may appear concerning, it can actually be good news for investors, as it suggests that the banks are taking a prudent approach to risk management and preparing for future challenges. Higher provisions for credit losses can also reduce the risk of future surprises and boost investor confidence in the bank’s long-term prospects. However, investors should still carefully evaluate each bank’s financial position and outlook before making investment decisions.

What Does This Mean For You, a North American Investor?

The big Canadian banks are often on the minds of Canadian investors as they are not only a popular investment on their own, but their performance tends to have a significant impact on the broader market. The higher provisions for credit losses reported by Canadian banks in their quarterly earnings reports suggests a cautious approach to lending and should help reduce future risk. After careful evaluation of each bank’s financial position in relation to their competitors, then picking one, we recommend the investor diversify their portfolio to further reduce concentration risk with companies from other sectors.

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ESG: Environmental, Social, Governance

What’s Going On Here?

The war on ESG wages on! This week, the US Senate voted to block a rule proposed by President Biden’s administration that would require Investment Advisers to consider Environmental, Social, and Governance (ESG) factors when recommending investments to clients. Critics argue that the rule would limit investment choices and lead to lower returns for investors, while supporters claim that it would promote responsible investing and mitigate long-term risks associated with climate change and other issues. The proposed rule has faced opposition from some Republican lawmakers and business groups, who argue that it could be used to promote partisan agendas and limit economic growth.

What Does This Mean For You, a North American Investor?

The reversal of the Biden administration’s ESG investment rule by the U.S. Senate could make ESG investing less accessible and limit investment options for retail investors. However, those who practice DIY investing may still prioritize ESG factors when making investment decisions. Regardless, the ongoing dispute could prove to be a major speed bump in the growth and implementation of ESG investing.

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Financial Jargon Word of the Week:

FALLEN ANGEL

Fallen Angel

In the world of investing, a fallen angel refers to a bond that was initially given an investment-grade rating, but was later reduced to a junk bond rating. Investment-grade refers to a very high quality and stable bond, whereas a junk bond, as the name suggests, is of far worse quality. The reduced rating is usually a result of deterioration in the financial condition of the issuer.

In a sentence, please!

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​“Hark to Herald: I’m a little worried about my bond after it got downgraded, it’s starting to look like a fallen angel!”

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