January 16st, 2023

Welcome

Happy new year's Bishop's. Hopefully we can enlighten your morning with some financial news, yay!

Let's paint a picture. Waking up New Year's day with a bad hangover. You crawl out of bed and drag yourself to meet your friends at brunch hoping it will cure your new found illness. At brunch you have two options. You can either endure this temporary awful feeling, or decide to order a Ceasar (or a mimosa), thus postponing that awful feeling, knowing full well that when the feeling comes back again, it will be even more excruciating.

When the initial hangover hit (COVID-19), the economy decided to order bottom-less Ceasar's (and lets just say they got a bang for their buck). 2022 was when the delayed hangover hit.

In attempts to combat the pandemic losses, the government handed out cash like we had a birthday bi-weekly. As bank accounts piled up over lock down, inevitably when rules eased, consumers did what they do best, consumed, and consumed, and consumed. Along with increased money supply, the economy received another Ceasar. The Russia-Ukraine war shocked supply chain even more than the pandemic. These events caused the price of, well everything, to soar.

And then the bill came for brunch, delivered by the fed. The price to pay: interest rate hikes like never seen before. That delayed hangover started to really hit. Uh oh...

2023, the year of "hopefully it doesn't get any worse". Just kidding, that's no way to start off the new year's. Let's reframe: it's the year of "well... we can only really go up from here".

2022 we witnessed:

• A 20% drop in the S&P 500 (7th worst year in 100 years)

• Amazon and Apple both lost over $800 million in market cap

• Inflation reached 9%, its highest level in 40 years

It's safe to say we lost a lot more than we gained:

Capital Markets: DealMakers Making Deals

DealMaker is a rapidly growing tech-driven company that aims to disrupt the traditional model of capital formation by bringing the capital raising process into the digital age. It was founded by securities lawyers, Rebecca Kacaba and Mat Goldstein, and its proprietary technology is designed to create a fast, flexible, seamless investor experience for issuers, allowing them to take control of their raise, equity and investor relationships. It is known colloquially as "the Shopify of capital raising."

Find out how it's disrupting CapM here.

The Bank of Canada may lose between $3.6 billion and $8.8 billion in the next 2-3 years due to rising interest rates and large financial institutions' deposits at the central bank, according to a report from the C.D. Howe Institute. The losses, which pose a communications challenge for the central bank, do not affect its ability to conduct monetary policy. The bank is now looking for a solution from the government to balance its books. The losses are a first for the Bank of Canada, but other central banks also engaged in quantitative easing during the pandemic also posted losses.

New year means new risk. Take a look at the biggest global risk of 2023.

Fixed Income: T-Bill over Bonds

A survey of investors shows that the inflation fight in Europe will drag on for so long that it will tarnish the appeal of the region’s debt this year. The Federal Reserve is seen as closer to ending the cycle than the European Central Bank (ECB) and there's more uncertainty over where euro-area rates peak. As a result, investors favour Treasuries over euro-area bonds this year. The ECB's hawkish stance could derail gains in German debt and lift 10-year yields close to 3% this quarter, from around 2.2% currently. More than three quarters of those surveyed favoured Treasuries over euro-area bonds this year.

Crypto: Bitcoin is back?

The past year has seen a decline in the value of Bitcoin, with it losing over 50% of its value year-over-year. However, in the past few days, Bitcoin has made a spectacular comeback, jumping 5000 US$ from 17 000 US$ to 21 000 US$ in a matter of a few days. This sudden increase in value has sparked a resurgence in the cryptocurrency and it remains to be seen if this is a sign of a change in trend or just a temporary blip in the bearish market.

Additionally, the over-all crypto market has regained its $1 trillion in market capitalization for the first time since November 2021.

Take a look a BTC 1Y return vs. 1 month:

Commodities and World Currencies: Gold and Platinum UP

Gold prices rose in European trade for the second session, trading above $1,900 an ounce for the first time in eight months and heading for the fourth weekly profit in a row as chances of a 0.5% rate hike are all but ruled out.

The dollar tumbled to seven-month lows on track to mark even more losses following major US inflation data, which showed prices down to 14-month lows, reducing pressure on the Fed.

Platinum has been steadily rising in the past few days, recently hitting a 9-month high, as the world continues to deal with a supply crunch this new year. This is largely due to ongoing after-effects of Russia, one of the world’s largest platinum supplies facing multiple international sanctions on the movement of its goods abroad, and a decrease in mine activity due to adverse weather, labour strikes, and decreasing ore quality.

Grab n' Go

What will 2023 Bring. SEE for yourself.

Need a pick me up? Here's what went right this week.

Apple Leaks.

This 93bn$ project is out of this world.

Struggling to keep it together till Holidays? Bishops has got you covered. BU students can contact Empower Me Mental Health and Wellness Support 24 hours a day, 7 days a week, 365 days a year at 1-833-628-5589.