Written by: Mike Simonato, Ontario Presenter: “Investing for the Long Term, presented to the Feb. 6 2021 International Online Forum, you can watch by CLICKING HERE.
NEWS (Sources CNBC, Financial Post and Real Life)
US Jobs Report Concensus 675,000 Actual 916,000 Unemployment Rate fell to 6% Highlights the Economy is healing.
Manufacturing Expanded at the fastest rate since Dec 1983 RESULT Inflation Pressures are Building Rapidly.
Big Supply Chain Issues (Suez Canal didn’t help) and huge pricing pressures.
2 Biggest Issues facing Manufacturers/ Businesses – Can’t get supplies and can’t find good workers Back logs rose to 67.5% whereas Inventories fell to 29.9% – Usually leads to higher costs.
Big Semi Conductor Shortage until at least 2022 or longer. Delays Car Production and Consumer Electronics Manufacturers and more.
Canada’s Housing Boom is causing people to take on insane levels of debt. Real Estate Prices up 25% year over year. Common to hear of people bidding $200,000 to 800,000 over asking. In Ontario, initially, people leaving the city for lower cost of living were focused on a few areas. Now everyone is affected.
People now also viewing houses as investments and not a place to live. ie Chinese will buy a house and rent each room for $600 per month and tenants share the Kitchen and Bathrooms 5 rooms = $3,000 per month which usually covers all costs and Real Estate prices usually appreciate so on paper a good investment. However, with Covid, the Chinese can’t come to Canada for a better life and Chinese students not coming either because of virtual learning, therefore nobody to rent.
Also, as I previously wrote, Canadian businesses have on average taken on $170,000 of debt per business. This week they showed a gym owner who had to sell his home to try to keep his gym afloat, and now Ontario is in a Version of Lockdown for 28 days closing gyms, hair salons etc. Many other businesses can only open at 25% to 50% capacity max. Look for many more bankruptcies and increased debt loads when all is said and done. Unfortunately, in Ontario the level of Stupid is at record levels and families and businesses at all levels will pay the price.
The 10 yr Bond yield rose to 1.688% so still well below the magic 2% which would be a scary level
VIX Volatility continues to fall. Now below 20, so watch for volatility to diminish but at some point look for a move either to the upside or downside.
2 out of 5 mkts Vector Vest covers are in a Confirmed Down Call, C/DN. All mkts in their Strategy of the Week are urging Caution. My Watchlist from my Presentation is wedged between the 79 SMA and 200 SMA so I’m watching closely.
$CDN was bouncing between 79,85 and 79.50 this week Still in an uptrend with higher highs and higher lows and the world view is Bullish on the $CDN
Showing the need for continued caution there are many more big mergers happening as companies position themselves for the new reality some mergers are being called off ie Air Canada is no longer buying Air Transat. This is far from over however when we come out of this look for a possible boom like we can only dream about and be ready to prosper from the new normal. As an example, ETSY is up over 20% already this year.
Now for the Markets:
USA C/DN on Monday
DOW JONES: Still in an uptrend, Holding the 79 SMA but far from being smooth
NASDAQ: Broke out of Wedge Thursday and RT Crossed above 1 Look for follow through next week
S&P 500: Broke out Thursday Watch for follow through
MKT TIMING: Holding the 79 but needs to break above resistance
READ Views, Strategy. Earnings Indicator unchanged
PTSE: Big up day Friday. Note 3 pullbacks followed by 2 nice rallies. Could this be the start of the 3rd rally Next week may tell us
VENTURE: Held 79 SMA Still weak until it proves otherwise
MKT TIMING: Price at Resistance however MTI, BSR and RT in downtrend. Not the only country in this setup
READ VIEWS, Strategy section, Earnings Indicator still flat
AUSTRALIA: READ VIEWS (Important) and Strategy C/DN Mar 30 BSR was as low as 33 Price in nice uptrend but MTI, BSR and RT in Downtrend
EUROPE: Read Views especially about Eleanor Roosevelt and Mary Ellen Pleasant and Strategy
BRITAIN: Read Views (For Aggressive Traders) and Strategy (All urging caution)
BRITAIN 5 times hit and failed at Resistance Has been in a channel for all of 2021however MTI, BSR and RT are in Downtrends
NOTE Earnings reports from the 1st quarter will interest me as well as the 2nd quarter activity ie Strong sectors, Bankruptcies and Mergers Or Non-Mergers. The 2nd half of 2021 has the potential to be explosive and we want to be ready to prosper
As always nothing more than my 2 cents and I hope it’s of value and interest Enjoy a Good Holiday Weekend everyone