Investment Activity Review - March 2016

The Canadian Dollar had a bit of a rebirth in March and pushed me to make a few investment decisions. 

Added to position in iShares Europe ETF (Ticker: XEH)

I decided to buy some more shares in the iShares Europe ETF, as the price had come under some additional pressure in March and I thought it would be a good opportunity to average down my costs. There hasn’t been much change in the fundamentals since my last post.

 

Added to position in Walmart (Ticker: WMT), General Electric (Ticker: GE), Williams Sonoma (Ticker: WSM)

In the last month the US$ weakened significantly, falling from $1.47 per CDN$ to $1.33. As a result, US$ assests were about 15 percent cheaper in Canadian Dollar terms so I seized the opportunity to add to some existing positions in Walmart, GE, and Williams Sonoma as the stocks had come under some pricing pressure.

 

Added to short position in S&P500 via HSD

Thanks to the Federal Reserve panicking and saying that they may be done hiking interest rates for a while, US stocks rebounded from their malaise in January to almost get back to even-steven for the year. As expected, my short position did a 180 and is now back in a position of hurt.  If the Fed indeed goes quiet for a while this could give stock prices another reason to surge up, despite the fact that in March it hit a bit of rare territory

Despite this, I’m still convinced we really haven’t had that that iconic “oh-no” moment and it may not happen this year or anytime soon.  I have no idea. As quickly as the mood was calming down, we then start to see trial balloons flying that the Fed may indeed resume rate hikes starting in April. If so then we could revisit January’s hand-wringing, so I decided to use the recent surge to add to my short position to average down my costs. Sure enough, at the end of March, the Fed Reserve Chairwoman, Janet Yellen put a kibosh on the concept of interest rate increases at a speech delivered at the New York club, citing caution should be taken as global economic weakness can impair growth in the US. So on one hand we have the leader of the Fed talking rates down and her minions on the Fed Open Market Committee talking rates up.  The flip-flopping and lack of conviction to me is quite worrisome. If there is one thing that is clear is that the Federal Reserve is very much dependent on stock market data rather than economic data. Another element that is much clear is that Ms. Yellen is more worried about deflation and more concerned about preventing the US economy to into a long term malaise similar to Japan.  Based on these events, or lack thereof, it wouldn’t surprise me to see stock prices track back up again in the short to medium term.

The recent events have also provided a potential game changer in terms of where other specific asset prices could be heading. If interest rates continue to remain depressed and artificially low, it will push the US$ down which could put pressure on commodity prices for oil, gold, and other materials to increase.  A lower US$ will negatively impact my portfolios that are holding US stocks, so I may have to ramp up some of my quasi-hedging on the currency.