Ch, ch, changes
After some feedback, I have decided to break the Weekly Update into two separate parts. Going forward, the weekly market and portfolio update will now be a separate post from the opening commentary. The weekly update content will remain the same (unless feedback suggests otherwise) and continue to be posted at the end of the week once all the ‘numbers’ are in. The Weekly Updates will still appear on the home page when initially posted and once a new post is posted, it will move to the Weekly Updates page, under the Weekly Updates menu item (original names, I know 😊).
What was the opening commentary at the start of a Weekly Update will now be separate posts. I found these were getting lost in the Weekly Updates and would be easier to find and better organized if they had their own post. Topics will range from how to open an investment account; how to get started generating wealth through investing; questions I had when I started investing; quarterly updates on the Portfolios; thoughts on recent market events; and other investing topics. At this point there is no set schedule for these posts but with each new post they will appear on the home page and when a new post, be it a comment or Weekly Update, it will be moved to the Commentary Page.
Hopefully, this new format will make it easier to find and focus on the information that interests you. If you are only interested in the Weekly Updates, you can go straight to the update. If you only want to check out the Commentary, or see what topic is been covered, you can go directly to the Commentary section. If you have any topics you are interested in, please drop a note in the Comments section at the bottom of a post. Now, onward, and upward (something I would like the market to do more of) and let’s see what happened in the market this past week….
Weekly Market Review
Monday: July got off to a positive start for Canada’s primary Index, the Toronto Stock Exchange Composite Index (TSX), largely on gains in the Energy and Basic Materials sectors. The price of oil shot up over 2% today thanks to fears of tightening supplies. The Energy and Basic Materials sectors account for 30% of the market capitalization on the TSX, so, as these sectors go, the TSX typically follows.
The US markets were closed as America celebrated its 246th birthday.
Tuesday: The price of oil dropped over 8% causing the Canadian Energy sector to take a dive today, down almost 7%. The price of gold and copper, part of the Basic Materials sector, each fell over 4%. The losses in the Canadian Energy and Basic Materials more than offset what was a good day in the Canadian Technology sector.
The fall in oil prices was also a drag on the American markets but thanks to a rally in the S&P Technology and Communication Services sectors, the S&P 500 Index (S&P), the and the Nasdaq Composite Index (Nasdaq) were able to end the day in the black. The Dow Jones Industrial Average (DJIA), which is comprised of 30 prominent and well-known companies joined the TSX in the red at the end of today.
Wednesday: The Energy (read Oil companies) and Basic Materials sectors continued to slide, causing the TSX to approach its lowest point in 15 months. In other Canadian news, the Bank of Canada appears set to raise interest rates by 0.75% later this month, with another 0.50% raise in September. Ouch!
In the US, the day was better as all three American Indexes gained ground with eight of the eleven S&P sectors ending in positive territory. The big news out of the US was the minutes from the last session of the US Federal Reserve (Fed). The minutes showed the Fed was considering both a 0.5% and a 0.75% interest rate hike at their next meeting in late July. Investors took the 0.5% rate hike option as an indicator the Fed realized the impact rising rates could have on the economy. The 0.5% hike would suggest an interest rate target of 3% while a 0.75% hike would suggest a target of 3.25% – 3.5% rate. Why is that important? If the interest rate hits 3.5% the likelihood of a recession is around 50%. We do not want a recession so the Fed acknowledging the potential for unintended consequences is a good thing, in my opinion. And apparently the market agrees with me. 😊 We shall see if the market still agrees tomorrow. As an aside, while we think 3+% is high, in Peru the central bank is expected to raise the interest rate to 6% in an effort to control inflation in that country.
Thursday: The TSX finally gets back on the winning side, joining its American cousins in what was an all-around good day. On the TSX, Energy (oil companies), Basic Materials (resource companies), and Canadian technology companies each rose more than 2% as investors stepped in to snap up beaten down companies in a broad-based rally.
In the US, do not look now but the S&P and Nasdaq have quietly put together 4-day winning streaks. Investors continued to be buoyed by the news the US Fed is not completely sold on a 0.75% interest rate hike. So far, July has been a good month for the stock markets, but the true test will come as the next Fed meetings get closer and if inflation numbers indicate the economy is starting to slow down. A high inflation report will likely force the Fed to go with the larger rate hike. But that is still a few weeks away.
Friday: It was a relatively flat day on the stock markets. The TSX, S&P and DJIA all sagged slightly into the red, while the Nasdaq had inched into positive territory. In Canada, labour data showed low unemployment and rising wages, reinforcing the perception that the Bank of Canada will raise interest rates by a 0.75% increase later this month.
In the US, the Nasdaq is on a mini roll, notching its fifth consecutive day of gains, the longest since November 2021. Thoughts that the US Fed might only raise interest rates by 0.5% has caused investors to think if a bottom has not formed, it may be nearby. The markets are bouncing up and down as investors try to ensure they are not caught on the outside looking in if the markets go on a sustained upward movement.
For the week, the TSX was up 0.9%, the S&P gained 1.9%, the DJIA rose 0.8%, and the Nasdaq jumped 4.5%.
Weekly Portfolio Review
After too many weeks of all four major North American Indexes declining, I feel like Oliver Twist and want some more of what was served this week. A lot more!
Its good to see another winning week, making two of the last three weeks where the stock markets, the Indexes, and the Portfolios all gained ground. As you can see on the chart below, the Nasdaq was the top performer of the Indexes, easily beating the next closest Index (the S&P).
What is even better (for me) is Portfolios 3 and 1 beat the Nasdaq, and Portfolio 2 was only a half percentage behind the Nasdaq. All three Portfolios quadrupled the Canada’s TSX. It has been rare in 2022 that the technology company bias of each of the Portfolios has been beneficial but as I have said before, as the Nasdaq goes, so goes the Portfolios. Unfortunately, I think we are in for more pain this year but hopefully the worst of the market corrections and bear markets are behind us. But any time you end the week farther ahead with your investments, is a good week! 😊
Companies on the Radar
Currently, there are only two companies on the Radar List:
- Amazon (NASD:AMZN): The leader in e-commerce sales, the leader in cloud services (Amazon Web Services), one of the top providers of streaming services through their Prime service; and they quietly have their finger in a number of other pies.
Figure : Radar Check of Amazon
I still must perform the Multibagger Analysis deep dive on Amazon but the share price has been beaten down so much its hard to ignore this opportunity.
- Ferrari (NYSE:RACE): I ran it through my Radar Check and it scored a 9 out of 13.
Figure : Radar Check of Ferrari
Because there is a better chance I could own a piece of the Ferrari than one of their cars, I will run the company through the Multibagger Analysis.
Portfolio Update
Portfolio 1
Portfolio 1 for the week ended July 8, 2022: UP 
- Tesla (NASD:TSLA) reported a decline in deliveries for the first time in two years thanks to supply problems. Tesla had dodged the supply chain issue that had dogged other traditional and electric car manufacturers since 2020, but they finally got caught up with the same challenges that other manufacturers face. Now we shall see if Tesla has the same muscle as a few of the big, traditional car manufacturers to alleviate supply problems or if they have the same challenges as the other new electric vehicle manufacturers.
That being said, Tesla announced they sold 78,000 vehicles made in China in June, up 142% over May’s sales number and up over 135% from the same period in 2021. Not bad for a company with supply issues. - Rivian Automotive (NASD:RIVN) announced they almost quadrupled their first quarter deliveries in the second quarter. That sounds great but when the number is low to begin with its not so impressive. Nonetheless, the delivered 4,467 electric vehicles in the April – June window thanks to improved production and continuing strong demand. I will be much happier when the start delivering Tesla like numbers.
- Voyager Digital (TSX:VOYG) filed for bankruptcy on July 6 and was halt traded by the Investment Industry Regulatory Organization of Canada (IIROC). This effectively locks in a complete loss of my original investment in Voyager. The cryptocurrency markets have been hammered the last few weeks and Voyager has become another casualty of the fall of the once soaring cryptocurrency industry.
- Talks between Rogers Communications (TSX:RCI.B), Shaw Communications (TSX:SJR.B) and the Canadian Competition Tribunal failed to reach a resolution to allow the proposed merger to go ahead. All three parties will continue to negotiate to see if a solution can be reached.
As well, the Attorney-General of Alberta, Shaw’s home province, announced they will intervene in the proceedings because the deal will impact Alberta consumers and the province’s economy. - Lattice Semiconductor (NASD:LSCC) has won an award for the third week in a row. This time it won NEC’s 2021 Partner of the Year Award. This award is for the company that provides “extraordinary operational and customer support that helps NEC deliver technologies that solve a wide range of IT and networking challenges.”
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Cargojet Inc (TSX:CJT)
Telus Corp (TSX:T)
US $
NVIDIA Corp (NASD:NVDA)
Quarterly Reports
No quarterly reports this past week.
Portfolio 2
Portfolio 2 for the week ended July 8, 2022: UP
- TC Energy Corp (TSX:TRP) announced they have agreed with Mexico’s state-owned power company CFE to build a $5 billion gas pipeline in the Mexican state of Veracruz, connecting the ports of Tuxpan and Coatzacoalcos.
- Guardant Health (NASD:GH) announced a partnership with Adicon Holdings, a China based independent clinical laboratory company. Guardant will license its genomic profiling tests to Adicon to enable them to conduct clinical trials to identify which patients fit the profile for researchers’ clinical programs.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Telus Corp (TSX:T) DRIP
US $
No US$ dividends this past week.
Quarterly Reports
No quarterly reports this past week.
Portfolio 3
Portfolio 3 for the week ended July 8, 2022: UP
- Toronto-Dominion Bank (TSX:TD) is considering a deal for U.S. brokerage Cowen, as the company looks to expand in the United States. I seem to recall a few years ago TD sold several US assets and now they are back on a buying spree. Hmmm.
- Microsoft’s (NASD:MSFT) acquisition of Activision (NASD:ATVI) will be reviewed by the United Kingdom’s Competition and Market authority to ensure the acquisition does not cause a “substantial lessening of competition” in the UK.
- Magnite (NASD: MGNI), released an Australian study that found people who watched sports via streaming were “more responsive to advertising than traditional TV watchers, with many stating they often remember the ads seen (39%) and discuss the ads with someone (32%) after the fact.” Since there are three digital advertising companies across the three portfolios, this is good news as advertisers should start increasing their streaming advertising budgets.
- Enghouse Systems (TSX:ENGH) announced the purchase of NTW Software GmbH of Austria. NTW provides products focused on the Cisco (NASD:CSCO) products market.
- Alvopetro Energy Ltd. (TSX:ALV) announced a multizone discovery on one of their Brazilian exploration properties. Very fortuitous the I picked up some shares when I did. Not only did I buy in time to be eligible for the latest dividend, but this discovery gave the shares a nice 10% bump. More please! 😊
- Shopify (TSX:SHOP) announced the closing of their acquisition of Deliverr, an end-to-end logistics platform solution. This deal provides Shopify merchants with a one stop solution for their logistical needs, from receipt of inventory, to distribution, to managing returns. Sounds like Shopify is stepping into the same ring as Amazon. Generally, I avoid companies that go head-to-head with market giants like Amazon, but since I already own Shopify, I will let this play out.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
goeasy Ltd (TSX:GSY)
TD U.S. Equity Index ETF (TSX:TPU)
US $
No US$ dividends this past week.
Quarterly Reports
No quarterly reports this past week.