It's a bit of a mess for Bitcoin - Your Money - February 26th 2021

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All I can say is February was a crazy month and I am glad its behind us. For most of the month investors ignored earnings from tech stocks and bought more as day traders rallied around a “buy the dip” strategy right up until bond yields started rising. At which point somebody woke up to the notion that stocks can go down when interest rates start rising. Suddenly the reflation trade caused investors to look at the extremely high valuations being shown by these high flying stocks. For example Lucid motors, one of the latest private electric vehicles to go public via a SPAC (Special Purpose Acquisition Corp) giving it a market cap of $24 Billion, lost half of its value on its first day of trading. Now don’t go crying for the issuers that created the shell company at $10 bucks back in September because it is still trading at $30 per share. I just feel sorry for  those that jumped in the day before when it was trading at $60. Oops. But that is what happens when a company with billions in market cap have no sales let alone earnings.

On a positive note, Canadian banks reported this week and surprise, surprise the numbers were not that bad. Not quite good enough to boost their dividends but I think they will prefer to wait until Canadian government actually catches up with the rest of the world and vaccinates a bigger portion of the population. So this week most Canadian banks finally traded at 52 week highs… but then you have to understand that 51 weeks ago, stock markets started sliding. Still with bond yields in Canada breaching 1.4% and 1.6% in the US, the rally in bank stocks also benefited from rising yields. Compare their performance to the FAANG gang plus Tesla this week and maybe just maybe life investing might be returning to normal. That could include our energy stocks as the price of crude oil continued to rally through the first half of the week. Falling inventories and shut in production helped lift the sector on both sides of the border.

Next week, earnings will trickle to a close with retailers answering the call and if all goes well could set the stage for a bounce. However, investors and markets will have to contend with the weekly employment numbers on Friday and if they disappoint, could set the stage for more selling.

Happy Trading and Stay Safe.

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Steve Bokor

Steve Bokor

Portfolio Manager