maplevalue

Memory is a little hazy of the exact details of how these work, but I am starting to think the most likely explanation is these large volumes are related to taxation around the dividend. From what I understand in Canada (and I believe more generally) there are certain entities that pay less tax on dividend payments (a public pension plan would be one such entity I believe). However, many other investors (retail included) are subject to taxes on dividends. I think this might have to do with where the entity resides (I think the tax rate on dividends from Canadian companies is different for Canadians versus international investors). What I believe can happen is you have buy-sell-back agreements where a investor subject to tax sells shares today and simultaneously enters into an agreement to buy them back at a future date. Beneficial ownership passes to the nontaxable entity over the dividend date, pays less tax, and then the shares revert back to the taxable investor afterwards. Tax advantaged investor makes a fee, bank facilitating the trade makes a fee, taxable investor avoids some tax. There was a case in the UK that was related to this type of trading around the dividend date (but in a far more fraudulent manner https://www.reuters.com/business/finance/uk-watchdog-narrows-dividend-stripping-investigation-2022-12-15/). I don't know exactly how everything would be structured, but possibly in this buy-sell-back arrangement something has to be reported to the exchange, and hence the massive volume numbers.

Perhaps FFH converting the TRS into actually buying back the shares?

Is the Bottom Almost Here? Yes.

On this note, it is remarkable how quiet the Toronto subway is during regular week rush hours. For many younger Canadians I think the case for living close to the downtown core is really weakening.

Jack Ma’s Ant Wins Approval for $1.5 Billion Capital Plan https://www.bloomberg.com/news/articles/2023-01-04/jack-ma-s-ant-group-wins-approval-for-1-5-billion-capital-plan

https://www.bailliegifford.com/en/uk/individual-investors/short-briefings-on-long-term-thinking/ic-podcast/short-briefings-on-long-term-thinking-podcasts-episode-5-will-industrial-biotech-be-the-next-manufacturing-revolution-10001896/ EPISODE 5 - WILL INDUSTRIAL BIOTECH BE THE NEXT MANUFACTURING REVOLUTION Industrial biotech companies can already produce synthetic spider silk and plant-based burgers that taste like meat. Future possibilities include timber produced from yeast. In the latest episode of Short Briefings on Long Term Thinking, Kirsty Gibson tells Malcolm Borthwick why she's fascinated by the opportunities of industrial biotech and its enormous investment potential.

In a year where Russia, one of the largest EMs, becomes completely uninvestable for those in developed markets, I find it a bit surprising that EEM and SPY are basically down the same YTD. (and yes I know the EEM looks worse if you look at a longer time horizon)

And it had to happen on a day where SPY -2.5%

I basically view it as a better version of ARKK

I am not sure I would agree with your statement that CPI has a lot of 'noise' right now. Instead, the way I look at it is that the underlying trend of inflation has fluctuated quite a lot recently, and there great uncertainty about the path going forward (despite what confident 2023 year ahead pieces would say!). To me this makes each recent datapoint extremely important as it gives us a better understanding as to what the 'true' inflation level is in an economy emerging from all the disruption of the last few years. If we get a couple more prints like this the question will become when does the Fed restart QE.

SMT - Scottish Mortgage Trust

Was talking to a Political Science professor the other day who said it is now hard to give any take home assignments because the answers ChatGPT can give to his questions would end up with a passing grade :).

The issuers of 5yr GICs are pricing them as a spread to 5yr Canada yields. They have nothing to do with inflation expectations.

In a scenario where rates go up, and CAD economy is very sensitive (bc of structure of mortgage debt) and starts to weaken, and the US economy keeps chugging along then you would probably get CAD weakness as the BoC pauses and the Fed keeps going.

Everything is fine as long as rates go back down! If we are in a 'new normal' (or more accurately, back to a level of rates that prevailed before the GFC) things could become very interesting.

The interesting thing about Canada is that essentially all mortgages are floating rate. There are two types of mortgages, variable rate where payments immediately adjust based on what banks' prime rates are, and fixed rate where a rate is locked in for (in most cases) 5 years. So even if Canadians have a 'fixed' mortgage, they are still exposed to higher rates since every 5 years they need to pay a new going rate. Many people have yet to feel the sting of higher rates, but with the passage of time, as more 5 year fixed mortgages get reset at higher rates, the 'pain' in the market should increase. All this is to say, is that if all the BoC did was to keep rates on hold for the foreseeable future, their policy should still lead to indigestion in Canadian housing. This Twitter thread explains it well. It's a similar dynamic to the federal debt in Canada where about 1/2 of debt matures in the next 5 years (https://www.bankofcanada.ca/stats/goc/results/en-goc_tbill_bond_os_2022_11_30.html). Now there are a lot of factors related to what happens with housing, but I think it is safe to say Canada fairly vulnerable to an extended period of high rates.

My "markets does not have on its radar" scenario is some politician comes along and says "let's make the inflation target 0". It's a vote winner IMO. Low probability, but I think the markets assign it a 0 probability.

Read this again today. Really interesting piece. I noted his view that if there was a productivity boom the stagflation path could be avoided (I often think about the productivity gains we will get from WFH + increasing application of AI across industries...seems like bright days are ahead).

https://wondercollaborative.org/human-nature-documentary-film/ Terrific, terrific documentary on gene editing. Partially funded by Jim Simons' foundation.

On a day when media is at fever pitch over instability in China EEM -0.4% vs. SPY -1.60%. Weak hands already taken out by the CCP congress perhaps?

In Ontario we recently had the government attempt to bypass collective bargaining and enforce a contract on a education union (union wanted more $$$ citing inflation). The government backed down and eventually negotiated after there was talk of an indefinite general strike from a variety of unions in Ontario (https://labornotes.org/2022/11/general-strike-threat-beats-ontario-anti-worker-law). Just a taste of the disruption of what can happen when inflation -> real wage decreases.

Crackdown or not, it increasingly seems like the days of COVID-0 in its most extreme form (i.e. Shanghai lockdowns) is pretty much over. The risk to social stability is probably greater with continuing lockdowns than having uncontrolled spread (think India when it got hit with Delta, it obviously was bad, but the wave was over in a month).

All else equal higher property taxes -> purchase price of investment property would have to be lower to generate same return.

A combination of low property taxes and high development charges has contributed to high housing prices in Canada, particularly GTA. There is some interesting legislation being tabled where Ontario is going to limit development charges by municipalities. In Markham, a Toronto suburb, there is talk of needing to increase property taxes 50%-80% to cover the hole that will be left from these development charges. Could potentially change the math around investment properties, and help with supply. https://globalnews.ca/news/9292260/ontario-cities-protest-ford-government-housing-bill/

Interesting https://www.reuters.com/business/finance/manulife-gets-china-approval-take-full-control-fund-business-2022-11-21/