Welcome back to our weekend reading.
As we approach the end of 2021, it seems all but certain that this will be another “thank goodness that’s over” year.
As volatile and overheated as a family on a long car ride with broken aircon.
As the US goes quiet amidst Thanksgiving celebrations and post-Thanksgiving food comas, we are inundated with slightly less news than usual. Lots of COVID stories – how fun.
Let’s look back on the week.
If you’re wondering why the ASX is a sea of red today then – well, stop me if you’ve heard this one before.
Scientists have identified a new coronavirus variant in South Africa, which has since seen two reported cases from international travellers in Hong Kong.
Global markets rushed to safe-haven assets (primarily US Treasuries and JPY), over reinvigorated fears that the strain may spread internationally and limit a global economic recovery.
Equity markets fell (and continue to fall) on the news, though some reports are finding comfort in the fact that countries such as the UK and Israel have been quick to close their borders.
Let’s hope that this won’t be a Delta part 2, which was already a COVID part 2…
Hospitals are not a fun place to be under any circumstance.
Cumulatively, I’ve probably spent around a month and a half in some emergency room or EMU (short stay) ward, you get maybe half an hour of feeling secure and assured that everything is okay before someone starts yelling or your own monitors start bleeping at you.
So, imagine the poor souls in Michigan who now get to tolerate a military escort whilst laying in the ER, after the state requested the US Department of Defence to provide emergency staff.
In yet another reminder both as people and as investors, COVID is not over in the US and the struggle to contain ongoing waves of infections continues despite some economic reopening progress.
18 states in the US are reporting more ICU patients with confirmed or suspected COVID cases than a year ago.
25% Inflation, On Sale Now
Dollar Tree Inc (DLTR:NASDAQ), the discount chain famous for the titular pricing mechanic of $1 products, announced to the market that it will be raising their standard price to $1.25 by Q2 2022.
To be fair – though they do cite inflationary pressures relating to freight, distribution and wage increases – they have maintained the $1 pricing level for over three decades.
The price rise will allow the company to reintroduce products which became uncommercial to sell due to input cost rises in the past, as well as new products which can somehow be worked into their catalogue for $0.25 more.
As an aside, it surprised me to learn that DLTR was a 100-bagger, since its float in 1986 the stock is up 12,539% – that is a lot of $1 keychains sold.
*All numbers in USD from BofA Securities
Equities: $2.7bn out of equities
Bonds: $5.5bn into bonds
Precious Metals: $0.9bn into gold
Cash: $31.0bn into cash
Flows to Know
Only the second outflow from equities in 2021
Largest outflow from EM debt/equity ($3.9bn) since May 2020
Largest outflow from financials ($0.8bn) in three months
LatAM stocks lowest relative to US stocks since 1988
Inflows to equities exceeds combined inflow of past 19 years
A special thanks to Jesse to introducing a new set of flows charts for your reading pleasure
Developed Markets Flows and Holdings
Shares in Best Buy (BBY:NYSE) plunged this week, as their already growing margin pressures were exacerbated by “increased robberies by organised groups of thieves”.
These shoplifting gangs range from the “more of us than them” tactic, where dozens of thieves rushed Best Buy stores to take as much as they could, to smaller groups armed with weapons.
The robberies have hurt the company’s bottom line, and this comes at the same time their gross margin is compressing due to increased spending on advertising and promotions. Not exactly a boon for a company which is struggling to shake off the idea that they are only a pandemic play.
McJab for Duterte
The president of the Philippines seems to be auditioning for a role as the enigmatic owner of a tropical island carnival, with his latest headline being offering free fast food to those who get vaccinated in a bid to improve the country’s remote area inoculation rates.
In an attempt to vaccinate 15 million people across three days, an effort which will require over 160,000 volunteers, the Philippines is breaking out all measures possible in an attempt to combat the ongoing COVID-19 wave ravaging the healthcare system.
Although most of the movement restrictions have been lifted in the country, the country has struggled with a rollout particularly as logistics issues have created stockpiles of millions of jabs with business groups and volunteer services.
Our morning calls continue, please do tune in for a daily dose of market insights and access to some leading experts in the funds management field.
Tune in from 9:30-10:00am AEDT, Tuesdays and Thursdays.
Have a safe and enjoyable weekend.
Max and the Mason Stevens team.
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The views expressed in this article are the views of the stated author as at the date published and are subject to change based on markets and other conditions. Past performance is not a reliable indicator of future performance. Mason Stevens is only providing general advice in providing this information. You should consider this information, along with all your other investments and strategies when assessing the appropriateness of the information to your individual circumstances. Mason Stevens and its associates and their respective directors and other staff each declare that they may hold interests in securities and/or earn fees or other benefits from transactions arising as a result of information contained in this article.