Top 10 Observations: Week of Nov 17th, 2023

Hello,

This week brought a significant market shift with a weaker-than-expected CPI print, prompting a surge in markets. The rapid drop in the benchmark 10-year rate triggered a buying spree in interest-sensitive names that had faced challenges throughout the year. The unexpected turn of events underscores the impact of short-term market dynamics.

One noteworthy investment avenue I’ve been discussing with clients involves high-quality discount bonds. Bonds issued in 2021 and 2022 with low coupons, now trading below par due to rising rates, present attractive total returns in taxable accounts. The capital gain component, taxed at a lower rate, can result in interest-equivalent returns nearing 7% for terms under 5 years. Contact me if you have some questions.

David Rosenberg issued warnings in two critical areas, emphasizing the magnitude of mortgage issues, and suggesting that the Bank of Canada may need to lower rates. Additionally, he stressed the importance of accurate data from senior bureaucrats to facilitate effective government planning.

n British Columbia, heightened awareness of increasing taxes is causing frustration, particularly with the carbon tax revenue projected to reach $3.4B in 2025/2026, up from $300 million in 2008. Many perceive these funds as contributing to general revenue amid the rising cost of living. The pushback is increasing just like the extras costs and taxes that result in higher housing costs. People are waking and thank goodness the media is too on this story.

The renewable energy sector faces challenges, with Doomberg highlighting flaws in industry and government models, particularly in Levelized Cost of Energy (LCOE) calculations. These issues may have profound effects on our economies, and it bothers many that models are not using proper calculations.

Former BC Premier John Horgan’s appointment as the Canadian Ambassador to Germany is marked by his reputation as a leader who cared about people and was respected across political lines. A podcast featuring Horgan emphasizes the importance of developing relationships, reflecting his past advocacy for LNG in BC. He will be missed, and I feel his relationship comments were directed to a couple people we all know.

Addressing global affairs, a podcast on the Indo-Pacific region emphasized its significance for Canada, while discussing the short-term impact of the House of Commons speech on international relations.

The Daily podcast highlighted the ongoing battle against Big Tech, shedding light on various challenges posed by social media and the commendable efforts of several states to confront these tech giants.

Lastly, Bruce Dowbiggin offers insights into the challenges faced by early-season favorites, the Oilers, and Leafs, in the world of hockey.

Best regards,

David

Ps…as my friends and family know, I am more of a lover than a fighter. It has bothered me immensely the senseless violence that took place over a month ago in Israel and the increased anger and division in our communities.

I thought I would share RFK’s ‘Mindless Menace of Violence’ speech that should be shared far and wide. My oldest son Matthew is taking Jack and I out for dinner tonight and he was born exactly 25 years after that RFK’s death in Los Angeles.

I am grateful that Matt and Jack are both kind gentlemen who prefer peace versus any hatred https://www.youtube.com/watch?v=ncUYKk_CuTM