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Halloween is almost upon us and there were some tricks and treats for investors. For those that broke Wall Street’s cardinal rule, the punishment was swift and severe. Just ask Twitter, Intel and Lockheed Martin shareholders. Even Amazon and Apple were not immune to selling pressure after missing street estimates. Furthermore, the recurring theme of supply disruptions taking longer than anticipated, hurt the outlook for many companies. Of note investors should read statements from 3M, GE and Kimberly-Clark to gauge the general level of inflationary concern at the C-Suite level.  I don’ want to say stagflation is back, but if it walks like a duck or quacks like a duck….Labor shortages might be a function of either dissatisfaction with low wage rates, or the skill set does not meet the job postings. In either scenario, in my opinion, Tiff Macklem at the Bank of Canada has a better grasp of inflationary pressures than his counterpart in Europe and the US. Yes US 3^rd quarter GDP came in lower than anticipated but to me that only emphasizes the shrinking box central bankers are sitting in. Raise rates and you could kill the stock market as well as derail the economy. Don’t raise interest rates and risk inflation really getting a full head of steam.

However, on the flip side, certain sectors will likely benefit from the changing economic environment. As vaccination rates continue to improve, plus vaccine approvals for children as young as 5, this will help accelerate herd immunity and reinvigorate the economy. I should also mention that avalanche of companies that did beat corporate earning estimates including most of the FAANG gang, aka Microsoft and Google. I also have to mention Facebook. In order to distract the naysayers, Mr. Zuckerberg unveiled a name change from Facebook to Meta. It might be a great move long term but short term I must question the intelligence of investors out there. Check out a Canadian company called Meta materials (MMAT-US). The Canadian based company saw its stock jump on 29 million shares traded over the last two days. You have to love people that don’t read the fine print before they hit the “buy” button. No advisors worth his salt would have permitted their clients to buy Meta Materials thinking it was Facebook.

Speaking of reading the fine print, Telsa reported $3 billion in profits but not all of it came from selling cars. A third of it came from selling green tax credits to other auto makers. That will likely diminish in 2022 and 2023 when the major auto makers start producing their own EV’s. Meanwhile Tesla stock jumped $205 this week. It has 1.1 Billion shares outstanding which means the value of the stock jumped by over $200 billion dollars this week alone. That is more than the combined value of GM and Ford… I have said it before and I will say it again, in my opinion, reality left the train station a long time ago.

Ok enough musings on the week. Next week the earnings wave continues, but at much slower pace with confirmation on US economic activity culminating with the monthly jobs number on Friday.

In Canada, crude oil continues to dominate the headlines and it is a light week for Canadian earnings. I count only 9 names on the list.

Happy trading.

Stay safe.

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