#186 - Canadian Budget Predictions, the End of TikTok and the Underused Housing Tax
Canadian Housing Tax Solution, Chinese Tensions and the Canadian Opportunity in Semiconductors
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Chinese Tensions Increase
New Canadian Tax Filing Requirements
Recommendations and Predictions
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We go into this week with Futures strongly believing the Fed is done raising rates and will be easing aggressively in the second half of 2023.
Now investors need to suss-out why or for what reason is the fed cutting the rates at the back half of this year.
Are they cutting because this most recent credit crunch is finally slaying the inflation dragon - allowing for an economic soft landing?
Or is it that these markets now see a deep recession as inevitable?
If it’s a soft landing because inflation has retreated to the feds target 2% rate, one might a interpret that as bullish.
If its the perception of a recession in earnings, an investor would probably assume equities would trade lower…
JC Parets from All Star charts had a terrific post on what he’s watching to assess where the market see’s this going - see below and here
US interest rates have fallen to their lowest levels since Q3 last year. And with falling rates has come a consistent bid into Technology and growth all year so far. That has driven the Nasdaq100 to its highest weekly close in 7 months:
And it's not just Large-cap Growth that's showing relative strength. You're seeing it as you go down the cap scale as well. Look at Small-cap growth stocks hitting new 52-week highs relative to Value:
This is all being driven by interest rates. So proof once again that even if you don't trade bonds, they need to be front and center for stock traders and investors. Now, on an absolute basis, the Russell2000 Small-cap Index is at key levels right now. The buyers stepped in this week, and they better keep stepping in, or else...
That former resistance in $IWM from 2018 and 2020 has turned into support since last summer. But if that gives out, it's going to be a major problem for this market.
💸Reformed Millennials - Post of The Week
One of the bigger questions facing Canadian investors this year has revolved around real estate and interest rates.
For me, the missing factor in valuing real estate for the long term is demographics, but more importantly, immigration flows.
Recently, there have been some fantastic improvements in tracking the Canadian population:
Canada's population grew by more than 1 million people in 2022. Fastest growth since 1972.
Yet our federal, provincial, and municipal governments still don't have any plans in place to build housing...
Interest rates might be high. But supply shortages are worse.
🎙Podcast & YouTube Recommendations🎙
The Best 4 Mins on TikTok from Scott Galloway:
Odd Lots Has 2 phenomenal podcasts: Where the stress is showing in the 20 Trillion Commercial RE Market:
🔮Best Links of The Week🔮
No matter how many rough-cut gems you can shove up your ass or how plush your bunker, there is no escaping the fallout of our democracy failing. - Scott Galloways - No Mercy No Malice
Why not put TSMC and Samsung fabs in Canada? - Noahpinion
China’s Political Discourse February 2023: A Balloon Comes to Symbolize High-Altitude Tensions; Chinese Modernization; TikTok - Sinocism
Daisy & The Six from Amazon Studios - by Matthew Milam
Spot prices for gold this week touched $2,000 per ounce for the first time since the immediate aftermath of Russia’s invasion of Ukraine. Prices slipped back after testing the level several times throughout the week, but trading in options contracts linked to the metal suggest many investors are expecting a more sustained rally in the weeks ahead." Source: FT
In the United States, there are growing calls to ban TikTok, owned by China-based company ByteDance, or to pass bipartisan legislation to give President Joe Biden’s administration legal authority to seek a ban. Devices owned by the U.S. government were recently banned from having the app installed." Source: CNBC
👉 For specific investment questions or advice contact Joel @ Gold Investment Management.