Insights: Biden moves to protect old Wall Street

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August 8th, 2021

The summer of 2021 is shaping up to be a season of conflict across the investment world. In the tug-of-war between the forces of deflation and inflation, the week started off strong for D-economy economy stocks, particularly those stocks which we highighted last week in our #stock_ideas channel on Jully 20th. On Tuesday, August 3rd, Sanofi (SNY) agreed to acquire Translate Bio (TBIO) which is focused on mRNA biotechnology. The all cash offer of $38 per share resulted in a 23% return in just two weeks.

Translate Bio receives a takeover offer 14 days after being highlighted in INK Chat

G-economy stocks fought back later in the week on the back of the stronger than expected US jobs reported. Financial stocks were the big leader with the TSX Financials index jumping 1.2% on Friday. However, US regional banks were the big winners of the day with the SPDR S&P Regional Banking ETF (KRE) rising 3.0%. We highlighted the potential upside for US Financials in our Wednesday US market update and on Friday we posted our 10 top-ranked US Financials stocks in the #stock_ideas channel

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We will have to see if the Financials and other G-economy stocks which would do well in a continued strong inflationary environment can keep up the momentum in the weeks ahead. Jim Bianco made a good case for taking a cautious approach in the Daily Briefing on Friday. His take on things is in line with our approach to have exposure to both D-economy stocks, notably healthcare, and G-economy stocks right now. There is a major conflict underway between the two groups and we are not sure which one is going to pull ahead over the next few months.

Bianco: Jobless claims are a worry

Meanwhile, established banking and payment institutions on Wall Street that have enjoyed oligopoly status for decades all of a sudden seem to have realized that they are under threat from cryptocurrencies. In a cynical move by the Biden Administration, it has decided to use the bi-partisan infrastructure bill now before the Senate as a way to try to stop further development of decentralized finance in the United States by inserting tax reporting provisions into the 2,700 plus page legislation. If successful, the amendment would require that DeFi platforms such as Aave, Compound or Uniswap to undertake reporting that is not technically possible. That would represent a big win for old Wall Street banks. The White House has lined up with a coalition of old-school Democrats and big business Republicans to advance this amendment which looks more about protecting the status quo financial system than actually collecting taxes.

The anti-financial innovation White House strategy makes all the more sense when viewed in the context of the overall assault on individual financial freedom being contemplated by the unelected but powerful global body known as the Financial Action Task Force (FATF). The Coinbureau explains how FATF is putting global financial freedom at risk in our video of the week.

There is an opposing group of Senators led by Democrat Ron Wyden who have a competing amendment. Wyden is chairman of the Senate Finance Committee and a member of the Joint Committee of Taxation which estimates that increased crypto tax enforcemen could raise an additional US$28 billion in taxes over several years. He is razor-focused on collecting taxes owed by crypto investors. Given Wyden's background, seeing him oppose the White House reinforces our view that Biden has more up his sleeve than just bringing in a few extra dollars for the US$1 trillion-plus infrastructure plan. We will be watching this week to see whether old Wall Street and its friends can defeat the champions of decentralized cryptocurrency networks. The outcome could have big implications across the crypto investing universe. We will provide updates on our take in the #innovation-crypto_blockchain channel.

Top 3 Gainers Last Week

Company NameStock Symbol1 Week Return %
Sierra MetalsSMT11.8
Fairfax FinancialFFH7.4

Top 3 Losers Last Week

Company NameStock Symbol1 Week Return %
Frontera EnergyFEC-7.6
Hudbay MineralsHBM-7.2

Returns are as of the last trading day of the previous week.

Featured Clip

Insider of the Week

Jamie Levy of Generation Mining

Generation Mining (GENM) CEO Jamie Levy and his team have made some impressive progress on the Northwestern Ontario Marathon palladium-copper project. Since acquiring an interest in Marathon in July 2019, the company has moved the project all the way to delivering a feasibility study which was announced on March 3rd. As we wrote in our August 5th morning report, the CEO has been buying again as the stock fell on news that Sibanye-Stillwater (SBSW) would not be increasing its stake in the project.

INK Canadian Insider Index

1 Year Total Return Performance

Historical Performance

Annualized Total Return as of August 6, 2021 04:49 pm
1 Year 54.73%
3 Years 9.78%
5 Years 9.74%
10 Years 9.97%

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5 Year Total Return Performance

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