‘The Third Wave Portfolio’ unveiled today

Wednesday, 5 December 2018
Melbourne, Australia
By Bernd Struben

  • It’s all part of the show
  • Roll another one

Global stock markets are beating a hasty retreat.

Meanwhile, Canada’s legal marijuana market is in such demand the industry is importing foreign workers to try to keep up.

We’ll get back to all of that shortly.

First, there’s something far more important to put in front of you today.

And that is The Third Wave Portfolio.

I wrote to you about this over the past few days. In case you missed that, The Third Wave Portfolio is a brand new initiative set in motion by publisher Kris Sayce earlier this year.

Over the course of the past few months, Kris’ handpicked team of Port Phillip Publishing’s leading editors and analysts racked their brains and scoured the world for what could be 10 of the best performing stocks over the next decade.

The next Netflix, if you will. Times ten.

These stocks could gain thousands or even tens of thousands of percent. Now that won’t happen overnight. These stocks are intended to ride ‘the third wave’ over the next 10 years.

Yes, that’s a long term horizon. And there are no guarantees. But if The Third Wave Portfolio pays off as Kris’ team of top analysts expects, these kinds of potential gains could have a tremendously positive impact on your retirement plans.

And this is only the beginning. The Third Wave Portfolio is the first instalment of a unique new initiative, The Elite Portfolio Series.

Today, after months of research and preparation, the team is ready to unveil that first instalment.

You can click here to get the full details on The Third Wave Portfolio now.

Now to those tumbling markets…

Markets

Overnight, the Dow Jones Industrial Average was down 799.36 points, or 3.10%.

The S&P 500 lost 90.31 points, or 3.24%.

In Europe the Euro Stoxx 50 index finished down 25.74 points, or 0.80%. Meanwhile, the FTSE 100 fell 0.56%, and Germany’s DAX closed down 130.14 points, or 1.14%.

In Asian markets, Japan’s Nikkei 225 is down 189.63 points, or 0.86%. China’s CSI 300 is down 0.04%.

In Australia, the S&P/ASX 200 is down 54.14 points, or 0.95%.

On the commodities markets, West Texas Intermediate crude oil is US$52.78 per barrel. Brent crude is US$62.08 per barrel.

Turning to gold, the yellow metal is trading for US$1,238.20 (AU$1,686.00) per troy ounce. Silver is US$14.54 (AU$19.80) per troy ounce.

One bitcoin is worth US$3.882.63.

The Aussie dollar is worth 73.44 US cents.

It’s all part of the show

There’s no shortage of analysts attempting to explain the depth of the market sell off.

The tech sector in the US again saw some of the heaviest selling. By the time it was over, the NASDAQ closed down 3.80%.

Ouch!

A good thing, perhaps, that US markets will be closed on Wednesday (overnight our time) to honour former US President George HW Bush.

Clearly the markets are fragile. Investors are nervous. And it doesn’t take much to start a run for the exits.

The ever flatter Treasury yield curve — the difference between short-term and long-term interest rates — gets part of the blame. As the AFR notes, ‘The first inversion of any portion of the Treasury yield curve in more than a decade awoke the spectre of a recession…’

When short-term interest rates rise above long-term rates, it tends to spook the market.

Then there are the renewed doubts over Brexit and a crossover of the 200 day moving average on the S&P 500. The twin events shook both investors who focus on geopolitics as well as those relying on technical indicators.

But the dominant factor in the selloff is uncertainty over the direction of US-Chinese trade negotiations.

On Monday, most every global index traded well into the black on positive comments from Trump. ‘It’s an incredible deal. What I’d be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs.

Trump’s comments were more subtly echoed by China’s negotiators.

As reported on the RAW newswire:

State Councillor Wang Yi, the Chinese government’s top diplomat, told reporters in Buenos Aires the two sides believed the agreement “effectively prevented the expansion of economic frictions between the two countries”.

Good news, right?

Not so fast. As expected, the doubters have come out of the woodwork.

There’s a heck of a lot of work ahead to see the 90 day truce turn into a real ‘great new deal’, they point out. It’s far more than just the trade imbalance. The issues on intellectual property rights and Chinese cyber theft are unlikely to ever be resolved, they add.

You’re also likely to hear that China is well known for saying one thing and doing another. And this looks like little more than a delaying tactic.

Trump’s own typically brazen approach to the negotiations certainly didn’t help soothe investors’ frazzled nerves.

From The Australian Financial Review:

US President Donald Trump held out the possibility of an extension of the 90-day trade truce with China but made clear he would revert to tariffs if the two sides could not resolve their differences.

Trump said his team of trade advisers led by China trade hawk US Trade Representative Robert Lighthizer will determine whether a “REAL deal” with China was possible.

“If it is, we will get it done,” Trump said in a Twitter post. “But if not remember, I am a Tariff Man.”

What surprises me, really, is that anyone was surprised by this.

This is all textbook Trump negotiating style.

Here, for example, is an excerpt of what I wrote to you in Monday’s Port Phillip Insider:

Already, political and financial pundits are coming out of the woodwork cautioning about the potential pitfalls ahead that could yet usher in a global trade war…

While anything is possible, I’ll go back on record to say both sides have enormous reasons for seeing this new “incredible deal” through. And I fully expect them to do so. Just as I fully expect there to be further bluster and threats from Trump on the way.’

Well we certainly didn’t need to wait long for further bluster and threats from Trump.

As for the host of financial pundits heaping doubt on the possibility of a positive outcome, I imagine the majority have no clue what to make of Trump’s unorthodox negotiating tactics.

Worse still, I reckon most of these analysts, like Nobel Prize winning economist Joseph Stiglitz, are biased by their own dislike of the US president.

And as we covered last week, bias has no place in the investing world.

So do your best to ignore this latest round of negativity.

There are all kinds of factors that will determine the fate of the stock markets in 2019. Some will help boost sentiment and share prices. Others will stir fear and see fresh rounds of selling.

As for the US-China trade dispute, neither side will walk away with everything they want. But I believe the Chinese will make some serious concessions. Enough, at least, to enable the ‘Tariff Man’ to claim success.

Then we can all move on to the next big show.

Roll another one

Speaking of big shows…

Yesterday, we had a look at the cannabis shortage in Canada’s booming new legal market.

Industry insiders believe the current supply crunch could last for years.

That’s despite the nation having devoted 11 million square feet of space to growing and selling marijuana.

They need more space, more time to navigate the red tape involved…and more labour.

That’s right.

Canada’s marijuana sector is struggling to find enough workers to meet the booming demand.

According to Bloomberg, since 1 September:

‘[Aphria Inc.] has doubled the staff at its Aphria One greenhouse thanks in part to Canada’s Seasonal Agriculture Worker Program, which has allowed it to hire about 50 temporary workers from the Caribbean and Guatemala with plans to bring in up to 100 more.’

As you can see in the chart below, it’s not just Aphria.



chart image

Source: Indeed / Bloomberg
Click to enlarge

Data compiled by Bloomberg shows that eight of Canada’s largest cannabis companies are now actively recruiting for some 1,700 new positions.

And that number is only likely to grow.

Does this sound like a market that’s peaked? One that’s saturated? One where there’s no further room for outsized gains by nimble players?

No. No. And no.

Which is why Sam Volkering is convinced the ASX listed small-cap pot stock he’s recommending should have tremendous gains ahead of it. Although based in Australia, this company is already entrenched in the Canadian cannabis market.

But pot stock mania is unlikely to stop there. As Sam writes in Australian Small-Cap Investigator:

Cannabis is bigger than Canada.

Yes, they are the current star of the show, but this story has more than just one lead. It’s just that right now, we’re only at the beginning of our story.’

I think Sam’s spot on here. But as always, the biggest gains tend to be made by investors who get in on these kinds of stories early.

You can find all the details on Sam’s current favourite pot stock play by clicking here.

Comments, ideas, idle musings? Send them to letters@portphillipinsider.com.au. Just put ‘Attention Bernd’ in the subject line so I’m sure to receive it.

And don’t forget to check out the latest French retreat from The Australian Tribune:

‘French PM Puts Self Interest Above Emissions Cuts’

The Australian government has taken a lot of flak from the EU for not doing ever more to cut back on carbon emissions. Much of that noise has come from France.

The nation — which derives 75% of its electricity from nuclear power — has been among the voices on EU panels threatening to cut Australia out of any free trade deals if the government doesn’t commit to ramping up onerous and costly reductions.

But in a striking sign of hypocrisy, French Prime Minister Edouard Philippe has…

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd