Hello
The focus this week is the fallout from the bank failures, and I have to post something from Jim Thorne to start. Back in January, he had a piece warning the central bankers and now the worry is deflation versus inflation.
It is interesting to note that the gains on the 2-year Treasury Note over the last 6 months are gone after just five days (5% to 3.80%). You can expect borrowing rates to finally subside.
Our own banks get hit during these times like this so I thought it was important to share Brian Belski’s interview. Canadian Banks are truly great stewards of capital and as I have said many times over my 40 years in the business, “thank goodness we have a strong banking system in Canada with a great regulatory framework”.
I asked Amy to produce a 20-year chart on how the total returns look for Royal Bank vs Citigroup, Bank of America and Credit Suisse. Many years ago, a wise and successful investor said, “to make real money is to find great recreational property and have a 20-year time horizon”. Banks may be another choice and better yet, you get to clip dividends and do not have to pay the rising local taxes.
David Rosenberg is actually positive on the Canadian Markets (mind you, in the long term).
There are concerns about China invading Taiwan, but a Freddie Sayers interview explains that even China knows that doing so would make no sense.
I had former CEO Ian Anderson speak to a group a couple times about the twinning of Trans Mountain and back then, the budget was about $12 to $14 Billion. As you can see, us ‘taxpayers’ now are stuck with a project that is now over $30 Billion and who knows what the final costs will end up to. The Financial Post had a great overview of why it is so expensive.
Here in BC, the NDP government does not want to say they are supporting the energy sector, but a chart shows that drilling activity is on a huge upswing. Plus, they approved the Cedar LNG Project. I will mention this to my readers that one of the true up and coming mayors in BC is in touch with my energy consultant friend on a regular basis. The reason: the mayor knows that the only way for the province to finance themselves properly is by supporting responsible resource projects.
Jim Bianco is one of the bright minds on the credit side and he highlighted a paragraph about some of the activities of Credit Suisse.
I remember over 10 years ago when I was going down the 7th hole at VGC when my friend who was and still is with Morgan Stanley. He advised me that their firm and Goldman were testing the new IPhones by Apple to replace the Blackberry phones at their firm. Why I did not short BB and go long AAPL that day is beyond me. A movie about Blackberry is coming out on May 12th and I love this exchange in the trailer I shared.
“you said they were the best engineers in the world.” reply …..“I said they were the best engineers in Canada”-
Have a great weekend
David
Number 1 - Jim Thorne
The Phillips Curve is Dead .. My Globe and Mail article from early this year.. section on financial instability caused by central bank actions.
I’ve been talking about this since late 2020. Wrote about numerous times in MI. Went on TV and radio pitching this non-consensus view. Now it’s the new shiny object.
Below is my Globe and Mail article from January on this topic. Resending it.
Number 2 - U.S. Fed has been excessively communicative, messaging will be crucial going forward: BMO's Belski
Brian Belski, chief market strategist at BMO, joins BNN Bloomberg to talk about his market outlook amid the collapse of Silicon Valley Bank. Belski says Canadian banks are strong stewards of capital on a global scale and the worst thing an investor can do is treat all financials the same. He also says he thinks the likelihood of a 50 basis point rate hike at the next U.S. Fed meeting is relatively low.
Number 4 - Rosenberg likes Canadian Stocks for the long term
Against this backdrop, notwithstanding the challenges facing the Canadian economy, we believe there are still good opportunities for investors. For starters, the easing of inflationary pressures and slowdown in economic activity – as well as the pause from the BoC – make long-dated government bonds very appealing.
Furthermore, for equity investors, the fact of the matter is there is already a lot of “bad news” embedded in current prices. After all, the TSX Composite Index trades at just 13 times forward earnings versus 18 times for the S&P 500 (whereas they have traded much more in line historically).
Number 6-'Horrified': Trans Mountain's latest big cost increase catches watchers by surprise
Here’s what you need to know about TMX’s skyrocketing costs, which could complicate the sale process.
Number 7 - BC Well Licensing Activity
BC well licensing activity continues to bounce back. A total of 542 wells were licensed in February, up from 341 at this time last year. There were 119 new well licenses approved in BC last month vs. zero for the month last year. The total BC well licenses issued during the first two months of this year now stands at 303.
The top licensees in February were: Tourmaline (58), Canadian Natural Resources (45), Strathcona Resources (29), Cenovus Energy (28) and Tundra Oil & Gas (23).
Number 9 – Jim Bianco highlights Credit Suisse
Read this paragraph that Bloomberg wrote about “What Went Wrong” at Credit Suisse. Wow, just wow!
Keep this in mind the next time someone drones on and on about why Crypto is dangerous. —
‘Credit Suisse’s failings have included a criminal conviction for allowing drug dealers to launder money in Bulgaria, entanglement in a Mozambique corruption case, a spying scandal involving a former employee and an executive and a massive leak of client data to the media. Its association with disgraced financier Lex Greensill and failed New York-based investment firm Archegos Capital Management compounded the sense of an institution that didn’t have a firm grip on its affairs. Many fed up clients have voted with their feet, leading to unprecedented client outflows in late 2022.’
Number 10 - BLACKBERRY Official Trailer (2023)
https://www.youtube.com/watch?v=AVwA2kLJlzc
The story of the meteoric rise and catastrophic demise of the world’s first smartphone. A company that toppled global giants before succumbing to the ruthlessly competitive forces of Silicon Valley. This is not a conventional tale of modern business failure by fraud and greed. The rise and fall of BlackBerry reveals the dangerous speed at which innovators race along the information superhighway.
We hope you found the Top Ten interesting this week, and are looking forward to another selection of articles, stories, and commentary next week. If you know of anyone else who would be interested in receiving our weekly note, please let me know.
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