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Comments of the Day
04 March 2021
Video commentary for March 3rd 2021
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Bond yields continue to trend higher, stock markets beginning to feel the effects, oil and banks steady, gold weak, bitcoin steady.
Sunak Offers U.K. Companies Way to Cut Tax Bill in Next 2 Years
This note from Bloomberg may be of interest to subscribers. Here is a section:
Chancellor of the Exchequer Rishi Sunak says the U.K. will introduce a new “super deduction” to reduce tax bills for investments in the next two years.
Sunak speaks in Parliament: “For the next two years, when companies invest, they can reduce their tax bill, not just by a proportion of the cost of that investment, as they do now or even by 100% of the cost, the so-called full expensing some have called for. With the Super Deduction they can now reduce their tax bill by 130% of the cost”
Sunak gives example: “Under the existing rules, a construction firm buying £10m of new equipment could reduce their taxable income, in the year they invest, by £2.6m. With the Super Deduction, they can now reduce it by £13 million”
Eoin Treacy's view
This measure is designed to motivate companies to invest in new plant and machinery. It will create a significant boost to consumption over the next year by pulling forward any such investment from the future. It’s one of a range of measures in today’s budget aimed at promoting economic growth even as the government look at what will be required to deal with the massive rise in debt resulting from the pandemic.
Gold ETF Exodus Quickens in Ominous Sign for Faltering Metal
This article by Yvonne Yue Li and Eddie Spence for Bloomberg may be of interest to subscribers. Here is a section:
Gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs,” Carsten Fritsch, an analyst at Commerzbank AG, said in a note. “A shift in sentiment among investors would be needed for gold to free itself from its extremely difficult predicament.”
Federal Reserve officials slated to speak this week may give more insight into the economic outlook and how the central bank might respond to the recent tumult in bond markets. Higher yields dim the appeal of the non-interest-bearing metal.
“Gold remains vulnerable to a further tightening from real rates,” TD Securities analysts led by Bart Melek said in a note.
Eoin Treacy's view
Sentiment towards gold is rapidly deteriorating as the pace of the decline from the August peak picks up. The trend of gold holdings in ETFs is also now below its trend mean as investors migrate away from the yellow metal in favour of better performing assets. The big question for investors is whether this is a temporary or major correction.
Email of the day - on moving home
At some time could you tell subscribers the reason for moving from LA to Dallas? Do you consider it easier to work in Central time, or the property market has more potential? Apologies if you have already told us, and I missed it.
Eoin Treacy's view
Bitcoin ETF Competition Heats Up as Crypto Trust Eyes Conversion
This article from Bloomberg may be of interest to subscribers. Here is a section:
Less than a month after the first Bitcoin exchange-traded fund debuted in Canada, a Toronto-based asset manager is looking to convert its cryptocurrency trust to the format.
Ninepoint Partners LP plans to ask holders of its $266 million (C$335 million) Bitcoin Trust (BITC.U) to approve its conversion from a closed-end investment fund into an ETF, according to a statement Wednesday. The firm, which manages $9 billion in assets, cited increased liquidity and a better price to the fund’s net asset value as reasons for the change.
Discounts and premiums to the net-asset value are common among such crypto trust because unlike ETFs, new shares can’t be quickly created. The BITC.U fund was trading at a 9.13% discount
to its NAV on Tuesday.
The meeting to approve the conversion will take place April 19 and all costs of the conversion will be covered by the firm, the release said
Eoin Treacy's view
In March 2017 there was a lot of discussion about the creation of a bitcoin ETF. The Winklevoss twins in particular were at the forefront of attempts to launch one. Those efforts failed because the market was not sufficiently well understood or supported by institutions and because cryptocurrencies are completely unregulated.
Eoin's personal portfolio - stop triggered on hedge position
Eoin Treacy's view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.
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