January Rain

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  • March 20, 2023

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January 20, 2023

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Hi, Financial Friend!

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The Big North-American Market Dinos (BMD)

Hot or Not

Source: Google Finance​

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The Toronto (Stock-Exchange): the Centre of the Universe

Canadian stocks were mixed this week as the country’s main stock market index, the S&P/TSX composite climbed steadily, before stumbling and then popping like it’s hot in time for the weekend. Energy helped lead the way upwards until that pesky tech sector dragged on the index with its soured sentiment. Then, in a strange turn of events, investors suddenly realized that maybe they could catch a January deal and the market rallied – making it rain,(songspiration) before the weekend. Investors can’t make up their mind as to how many more rate hikes we’re going to see and how that all is going to affect the economy. With a pessimistic outlook, growth heavy sectors like tech can suffer.

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South of the Border

American stocks didn’t make out too well this week either, as they ticked up very briefly before sliding for several days in a row. All three of the major averages, the Dow Jones, the S&P 500, and the Nasdaq posted their first negative week in three, as investors grew increasingly concerned over the U.S. Federal Reserve’s rate hikes. This was brought on by some fresh employment data that showed a hot labor market, even in the face of all the recent tech sector layoffs. While this may sound like good news, the Fed will be less likely to pause their rate hikes while the labor market remains this strong.

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Risky ROI

Crypto

Source: Google Finance​

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Good News and Bad News

After a year to forget, Bitcoin and the rest of the crypto market have started off the new year strong. Bitcoin, the world’s largest cryptocurrency by market cap, even strung together a sneaky two-week win streak, posting 14 consecutive days in the green, gaining more than 20% in process. This helped lead the way in a market wide rally that saw Crypto’s total market capitalization surpass US $1 trillion for the first time since November.

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It was nice while it lasted, but all good things must come to an end and Bitcoin’s win streak did just that this past Wednesday. A couple of discouraging stories sparked the pullback:

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The U.S. Justice Department charged crypto Exchange Bitzlato with laundering US $700 million and arrested its founder in Miami.

Genesis Global Capital, an institutional crypto brokerage who halted customer withdrawals following FTX’s collapse is now nearing a bankruptcy filing.

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While these mid-week blues may have snapped us back to reality (Songspiration), there’s no denying that it’s been a promising start to the year for crypto.

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Commodities Craze

Like most assets oil has been on a heater to start 2023. The two major oil benchmarks, West Texas Intermediate, and Brent climbedupwards for nearly two weeks straight thanks to strong demand overseas, as well as optimism that the U.S. Federal Reserve is nearing the end of their rate hike cycle. Unfortunately, some disappointing economic data burst that bubble earlier in the week as recession fears sparked a sell-off.

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Moderate and Mellow Market Methods

Sector Spotlight

Radical Real Estate

For an asset class that is thought of by many to be safe and void of volatility, it has certainly been a wild ride for real estate in Canada over the past couple of years. After soaring to new highs amid the pandemic, Canadian home prices posted a record decline in 2022 as rapidly rising interest rates forced a market adjustment that hasn’t yet shown signs of stopping.

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According to the Canadian Real Estate Association, the country’s benchmark home price fell 1.6% in December to $730,600, bringing the total decrease since last February’s peak to 13.2%. It was the biggest peak-to-trough falloff since the group started compiling the data in 2005, while 2022 also saw the biggest price decline for a calendar year since records began, with a 7.5 per cent drop between this December and last.

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With rate hikes still on the rise, it looks like the slump could continue as buyers stay away as a result of increased borrowing costs which seem to be outweighing the decline in home prices.

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Meme Stock Stalkers

Unchartered Territory

Billionaire entrepreneur Ryan Cohen, put himself in the meme stock hall of fame with the impact he’s had on stocks like Gamestop and Bed Bath & beyond. Now, the activist investor has set his sights on Chinese tech darling, Alibaba Group Holding Ltd., but this time, things are going to be a little different.

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Cohen, who believes Alibaba will return to its pre-Covid performance of double-digit growth, has reportedly built up a stake worth hundreds of millions of dollars, and is now pushing for more share buybacks at the Chinese tech giant. The big difference here is that Alibaba doesn’t operate in the same market environment as Cohens past endeavors. Since 2020, Chinese President Xi Jinping’s administration has cracked down hard on growth companies like Alibaba, and only in recent months they’ve seen some relief as the economy tries to rebound from the pandemic.

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To put things into perspective, Alibaba posted a 1% gain following the news of Cohen’s involvement…That 1% might have had a zero or two attached to it if this were another company like Gamestop or Bed Bath.

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ESG

Pfizer Expands Not-For-Profit Program

Pharmaceutical juggernaut Pfizer announced this week a massive expansion of its program that provides medicines and vaccines on a not-for-profit basis in lower income countries, to now include roughly 500 products.

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The program, known as “An Accord for a Healthier World”, launched in May 2022 and initially included a commitment from Pfizer to provide access to all its patented medicines and vaccines available in the U.S. or European Union on a not-for-profit basis, with a goal to reach 1.2 billion people in 45 lower-income countries. The expanded program has a significantly increased scope, increasing the number of available products from 23 to around 500 medicines and vaccines that help to treat or prevent infectious and non-communicable diseases prevalent in lower-income countries.

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Financial Jargon Word of the Week:

A type of crypto scam, a rug pull is when a development team abandons a project before it is completed. All assets are drained, leaving investors with a worthless currency. It gets its name from the expression ‘pulling the rug out from under someone.’ Victims who were scammed will say they ‘got rugged.’

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In a sentence, please!

There’s so many rug pull scams out there, you gotta be careful what you invest your money in a new crypto opportunity.

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