#134 - Canadian Commodity Pinch, War and The Future of Energy Policy in North America
In this week's episode of Reformed Millennials, Broc and Joel discuss the often overlooked side of innovation which is the commodities and raw materials. We’ll give some context behind oil and gas prices, what we’re likely to see increase next, and what knock-on effects this is likely to have in the future.
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The Nasdaq 100 is currently in its third bear market of the last 5 years.
Tech stocks are getting vaporized. Amazon fell 5.6% today, wiping out all the gains going back to July 2020. Netflix and Facebook are trading at the same level they were at in 2018.
The three strongest names in the group, Apple, Google, and Microsoft, are finally losing their bids. All are in correction territory.
The amount of market cap that’s being sucked out of these names is without precedent. The seven biggest stocks in the United States are $3 trillion lower today than they were at their combined peaks.
Facebook has shed more market cap than any other stock in the world. $567 billion wiped out. $510 billion remain.
The somewhat messy chart below is sorted by market cap decline. Fun fact; PayPal is the 20th biggest company in the S&P 500 and has the ignominious honor of losing more market cap than all but 7 companies. A 70% decline in seven months for a mega-cap company is really something else.
It’s hard to find a lot of positives to say about the current market environment, but I’ll try anyway; These businesses are cheaper today than they were a year ago.
💸Reformed Millennials - Post of The Week
Some are direct, like the price at the pump. Some are more difficult to see, like sleepless nights as a new parent.
As an Albertan, it's awfully difficult to not say - "I told you so." during times like these. A pipeline to our ports west and east would go a long way in solving the 4-5mm bpd the oil market is missing right now...
Either way, you have to pay a price for the decisions we make.
When an invasion through needless acts of aggression threatens the post cold war era of peace, a price is being paid by both sides.
The tangible prices of war are civilian lives, guns, ammunition, tanks, and fighter jets. The intangible prices are fear, terror, and despair.
The tangible mediums of aggression usually do not spawn alone from fierce nationalism but need to be financed through capital in order to be obtained. Someone needs to pay for the war machine to run.
Choking the funding source will limit the resources available.
The ultimate fight against tyranny is refusing to be a bystander in an ever-connected global social economy. Imposing sanctions is a good start - but even further measures are now being taken.
So how is everything connected? Let's take a look at Russia's major exports and their impact on the global economy: Russia is a commodity-driven economy, with its major exports broken down as follows.
The main takeaway from the image above is energy dominance and extreme concentration. At this point in the war we know a primary driver of their economy is exporting Oil & Gas, but who is it to?
Canadian Housing Market - Feb Data
A turning point? More sellers enter Canada's housing market in February.
One month doesn’t make a trend but if February is any indication, more sellers may be (finally) making their way into Canada’s housing market. Early results from local real estate boards showed notable month-to-month increases in new listings across major markets. This was especially the case in Calgary and Edmonton where a wave of properties put up for sale set the stage for the strongest number of transactions ever recorded in a February. Elsewhere, the impact on activity was generally positive albeit more muted. Buyers still face a dearth of supply, maintaining intense upward pressure on prices. Local real estate boards reported further price acceleration, led by the Fraser Valley, Toronto and Vancouver where property values made big leaps (again) from already sky-high levels in January.
read the rest here
My 2 favorite quotes from his post:
Historian Dan Carlin recently wrote:
For all its evil, war sometimes has a tiny silver lining. It can clarify the mind and reboot our ethical compass. It puts less serious things in perspective. It nudges us towards our neighbor and reminds us that our needs and interests are intertwined. It reignites our compassion.
That’s the great irony of war, one I never know how to reconcile: So many of the greatest things we value came from the worst events we pray to avoid.
“History doesn’t crawl; it leaps,” says Nassim Taleb. The most important events tend to be abrupt, out of the blue, changing the world before people have time to rub their eyes and understand what’s happening.
🌊 Canadian Companies To Peruse 🌊
Partake Brewing - Calgary non-alcoholic beer company raises $16.5m Series B
🔮Best Links of The Week🔮
Caution and Innovation at Lux Capital - Josh Wolfe shares his cautious approach to investing in today’s environment and discusses technological advances across science, space, and defense.
Moving Money Internationally - A timely article explains how the SWIFT global payments system and other aspects of financial plumbing work in an accessible way.
Invest Like The Best Podcast - Eric Mandelblatt
Odd Lots Oil and Gas and Geopolitics - Matt Klein