#188 - Canadian Recession Is Here, Technology Innovation Is Irreversible, And Story Telling

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* Market update and an interesting future investment theme

* Whats the right price for Oil?

* The Companies That Will Survive ZIRP

* At ai Group chats

* Migration of Millionaires

* Recommendations, Bet Reviews and Predictions

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📈📊Market Update💵📉

Check out the Daily Energy Report for a fantastic piece on how OPEC thinks through the pricing of oil.

Stocks fell while bonds rallied in a shortened week, with individual stock news remaining the focus of investors. The banking industry appears to have stabilized, at least for now. Bank earnings reports, which start next week, should give us better insight into the state of bank balance sheets. Hopefully, the reports will allow markets to take a breath and move forward, but credit is likely going to tighten because of what happened.

Consumers appear to have mostly returned to their usual habits; however, one important retailer did report negative comps in March. Economic pressure may be building, so a recession is not off the table.

Consumer confidence is improving in China

"I do think the Chinese consumer has been under real pressure. But I think that we're seeing some better signs of consumer confidence improving." - Walmart (WMT ) CEO of Walmart International Judith McKenna

Precious metals:

Gold along with bitcoin has started to act as a safe haven, with gold topping $2,000 again. from Allstarcharts. It’s weird to see gold high new all time highs while the Global ETF demand remains subdued.

Canada and Interest Rates:

From RBC Economics:

The Bank of Canada likely won’t make any change to the overnight interest rate next week. After announcing a conditional pause on interest rate hikes in January, the central bank is widely expected to make a second consecutive decision to hold. This is despite economic growth that’s been more resilient than expected so far this year. Indeed, though the January Monetary Policy Report anticipated GDP growth of 0.5%, we’re tracking it at closer to 2.5%. And labour markets remain exceptionally tight, with another 35,000 jobs created in March.

Week Ahead:

* The U.S. year-over-year CPI inflation rate is expected to fall by almost a full percentage point to 5.1% in March. The pullback is largely from a drop in energy prices, although food price growth has also been edging lower in recent months. ‘Core’ (ex-food & energy) inflation has been ‘stickier’ than expected but is also expected to tick lower. Home rents have been driving a rising share of core price growth but should begin to slow going forward as softer growth in current market rents feeds through gradually to the CPI measure as leases are renewed.

* Statistics Canada’s advance estimate of February manufacturing sales showed a 2.8% decline – led by lower sales in the motor vehicle, beverage and tobacco, primary metal and food industries. Lower prices (concentrated in a drop in petroleum prices) would explain about half the nominal February sales drop by our count.

* U.S. retail sales likely saw a second consecutive decline in March (-0.2%), largely driven by a price-related drop in gas station sales (-4.5%) but also softer motor vehicle sales. We expect U.S industrial production to tick up 0.6% in March, thanks to a weather-related increase in utility output (7.1%) and manufacturing output (0.2%).

Chips Demand:

TSMC reports its March revenues: —Net revenue for March down 10.9% MoM and 15.5% YoY to NT$ 145.4B —Q1 revenues up 3.6% YoY to NT$ 508.6B Q1 earnings due on Thursday, April 20th

💸Reformed Millennials - Post of The Week

Oil Prices Spiked This Week: Why?

OPEC+ is cutting production in the face of the economic reopening in China. [1]

This, rightfully, has concerned interest rate watchers as it increases the pressure on inflation.

Many market commentators think that this decision by OPEC+ is a shot at Biden. I think it's more likely to be two-fold

First, it’s important for the group to see global inventories continue to draw and erode pricing power away from those willing to release their barrels. (think countries with less production elasticity)

Second, they are setting themselves up to be the ‘arbiter of oil’ over the next decade. Regaining the “swing production/capacity” vote that they held in the '90s & 2000s.

Over the last 13 years, supply growth has shifted from the East to the West - The Shale Revolution.

Ever since the day the USA became a net exporter, the OPEC+ coalition has been jockeying to regain power and control of prices.

My read on this — the market expects OPEC to support supply and demand balances in the short-term while remaining cautious longer-term. The shift from back-end contango to backwardation [2] over the past year also echo’s the sentiment of a higher longer-term market.

conclusion: I don't think that this supply they are "cutting" is leaving the market, rather, it's being used as a buffer. It will come back at some point. OPEC+ is just flexing its muscles here as the less economic producers in the West struggle with less elastic reserves.

#growth #power #oil #china #OPEC+

1. https://www.reuters.com/.../sarabia-other-opec-producers.../

2. https://www.cmegroup.com/.../what-is-contango-and...

🎙Podcast & YouTube Recommendations🎙

* Theo And Harris had a fantastic video for watch people interested in the Rolex Production increases.

* That wasn’t the bottom from The Compound and Friends - they had Tony Dwyer on this week and he made the case for retesting the October 2022 lows.

🔮Best Links of The Week🔮

* Rogers - Shaw Merger commits $5.5 Billion to expand 5G coverage and services while also further committing $1Billion to connect rural, remote and indigenous communities to high speed internet. Source: Alberta.ca

* "ExxonMobil’s new low-carbon businesses could one day be more lucrative than its fossil fuel production,  a top executive said, as the US oil major laid out ambitious plans to generate tens of billions of dollars from biofuels, hydrogen and carbon capture within a decade." Source: FT

* Dr. Nir Barzilai discovered the first “longevity gene” in humans and pioneered key research around the biology of aging. He’s the founding director of the Institute for Aging Research at the Albert Einstein College of Medicine in New York and the author of the book Age Later. - Source: Safegraph

* A city once remade for voitures has transformed itself into an unlikely utopia for cyclists and pedestrians. What can it teach us? - Source: Slate

* How a shipping error 100 years ago launched the $30 billion chicken industry - Source: Vox

* Mapping the migration of the worlds Millionaires - Source: Visual Capitalist

👉 For specific investment questions or advice contact Joel @ Gold Investment Management.

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