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Rising Inflation Presenting A Challenge for Markets, My Two Cents by Mike Simonato

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By Mike Simonato, Blue Mountains, Ontario

Well, that was a fun week.  Here are a few snipits I have gleaned this week

  1. BC is definitely interesting.  First you have 50-degree celsius  summers followed up with a “Cyclone Bomb” weather pattern this week and dishwashers make $50,000  (Actual Restaurant ad)
  1. Alberta has the funniest politicians.  First Jason Kenney handling of Covid and now the newly elected mayor of Calgary says it’s time to move away from Oil and Gas.  This has wide-ranging implications not only for Alberta (Who hasn’t profited from the rise in oil prices the way they should) but also for all of Canada.
  1. Ontario (Who has managed Covid well) who has spent huge sums of money bringing Nat Gas to rural Ontario, now saying they want to be free of Nat Gas by 2030

If that isn’t enough, here are some other tidbits

  1. Inflation is expected to last through 2022  (Including supply chain issue)
  2. Oil, Nat Gas and Propane prices are to continue to spike making Home/ Business heating costs be extremely high this winter
  3. Ontario plans to re asses property values  in 2022 for taxation  In Collingwood you used to buy a home for approx $300,000  Latest sale I was told this week not fancy or in a ritzy neighbourhood was $1.9 Million   Property taxes will really be going up
  4. Break ins in Collingwood are at record highs.  One person got broken into 2x in one week
  5. So many dead birds in Wasaga Beach (due to climate change) they have to shovel them up

Summary: We live in challenging times with Govt and individual debt loads at record highs and now talk of having to raise interest rates in 2022 to curb inflation.

To highlight the challenge of trading stocks, look at Rogers (Which is in the process of buying Shaw making them the biggest telecom in Canada)  Only son, (Who sounds like a real winner) lost a battle and got removed from his position. (mom and sisters on board voted against him)  Problem: He is the head of the trust that controls the most votes, so he is going to try to get back as head honcho and fire the board members that don’t worship him.  Good luck Rogers Shareholders.

Now for some Good News:  As Stan has highlighted we can now buy Quality USA Stocks in Canada for a fraction of the price ie if we were to buy 10 shares of each stock in USA and Canada (Using a 30% exchange rate). These new Canadian Depositary Receipts, CDR’s are created and managed by CIBC. In the USA MKT, 10 shares of each of the eight stocks highlighted below would cost about $112,653.19 $CDN.   In the Canadian MKT, 10 shares of each would cost about $1,833.40. Look at the attachments below for a 2 week Quick Test in both markets and you’ll see the percent return is almost identical.

NOTE: I don’t pretend to understand this entirely nor is this investment advice, This is merely something to look at and be aware of.

Anyway, this is nothing more than my 2 cents and I hope it’s of  value and interest

Now for the Markets

ALL Countries have gone from C/DN to C/UP with USA the only market still urging caution

USA

DOW JONES:            Like the PTSE held support and nice rally since with good buying vol Friday

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NASDAQ:                   Possible Lower high.  Big selling vol Friday

S&P 500:                    Again held support with nice rally since

MKT TIMING:             Held support followed by a nice rally   Needs to continue

READ Views and Strategy

CANADA

PTSE:                          Held support and has taken off since

VENTURE:                  Broke above the 200 SMA which could be new support  Weak vol Friday

MKT TIMING:              all 3 indicators rose  Nice run but candles getting weak  Want to see breakout above previous high

READ View and Strategy

GOLD  Still don’t know if it’s playing with us or if a year end rally could happen.  40SMA looks like new support

AUSTRALIA   Read Views and Strategy

BRITAIN          Read Views and Strategy

Summary.  We are living in a Golden Age of Stupid.  Ride the Bull until he kicks you off, however, as 100% of the really high end money manages have told me, You want to be out before “IT” happens.  Stay safe everyone

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