01.04.2019

The True North Strong and Green

4/20 on Parliament Hill aka Andrew Scheer’s worst nightmare.
Credit: Ottawa Citizen

It’s been 6 months since cannabis was legalized, and it’s time for a status update.

You’ll recall that one of the major arguments made in favour of legalizing recreational cannabis was that legalization could give Canada’s economy a boost. Specifically, by becoming the second country in the world to legalize, we would get a head start on the global competition, and become a leader in cannabis exports.

So has that happened? Kind of.

Legalization has fostered the growth of quite a few major Canadian cannabis companies, like Aphria, Aurora, Canopy, and Tilray. They’re getting a head-start on global expansion by setting up facilities abroad in jurisdictions that allow medicinal cannabis – for example, Aurora is active in 22 countries. Canadian companies are also making moves to set up production in countries more geographically suited for growing cannabis, meaning that long-run, we could see Canada become more of a head-office location, while production jobs are exported.

Yet despite the seeming appeal of ‘legal pot’, the black market still prevails in Canada, and is posing a serious challenge to the legal market. Why? Simply put, regulations.

Thus far, Canadian producers are only allowed to sell a limited range of products, leaving out edibles and more potent varieties.  The health warnings on cannabis products don’t help either, nor does the lack of storefronts in certain provinces.

Here at Btchcoin, we predict that these are temporary hurdles that will ease with time – especially once better market data is available to shape regulation. But we can’t just settle with perfecting our domestic market – global tides are shifting and it’s likely other countries will soon see legalization. Setting up Canadian producers to succeed in an expanding global marketplace is in our economy’s best interest.


What the F**k is a Yield Curve (and why you should care)

There’s been a lot of buzz about Canada’s inverted yield curve and the impending doom this supposedly signals for our economy. It all started last week when the yield on Canada’s 10-year bond dipped to 1.57 per cent – 10 basis points lower than the rate of a three-month bond.

It’s inverted. Get it?

So, what is a yield curve and why does it matter? Essentially, it’s a line that plots the yield (return on investment) on bonds of equal quality and varying maturity. Maturity indicates the amount of time that an investor must hold the bond before it pays out.

Bond maturity can range from three-months up to 30-years. Short-term yields are usually lower than long-term yields, so the curve slopes upwards. Long-term investments normally have higher yields in exchange for investors tying up their money for an extended period.

Investors pay close attention to the yield curve as it provides an indication of where short-term interest rates and economic growth are headed in the future. What has happened in Canada, as well as the US, is that short-term bonds are now more attractive to investors than long-term bonds – creating an inverted yield curve.

This is Canada’s first inverted curve in 12 years. In the past they’ve preceded major economic slowdowns by about a year and are seen as a barometer for the health of an economy. Seeing these curves in Canada and the US reflects concerns that a global economic slowdown will keep the central banks from raising rates and may even prompt a rate cut to stimulate the economy. Investors care about this because a future cut in interest rates means less return for them on their long-term investments.

Concerns over a global economic slowdown are certainly legitimate. We’re in year 10 of economic expansion and the boom-bust nature of modern-day economies has many preparing for a recession. But the reviews are mixed: some analysts say the curve is just one indicator among generally positive numbers – jobs are up, the loonie is doing well, and the energy industry is gaining in the bond market.

However, it’s important to keep in mind that the curve is just one predictor of a recession, and no other indicators have been detected yet. For now, stay alert and stay tuned.


Lululemon is in the BEST (financial) shape of its life!!!

Everyone’s favourite Canadian upscale athleisure giant/creator of god-tier leggings is capping off 2019 the right way, reporting some of the strongest financial numbers they’ve seen. Ever.

Shares in Lululemon Athletica jumped up by a record-breaking 16% following the company’s positive fourth-quarter earnings release, leading many Wall street analysts to raise their price targets for the company. With share value already up by an outstanding 87% over the past year, it’s safe to say that Lulu is on top of their financial game heading in to 2019.

Due to a particularly lucrative holiday season, net revenue for Lululemon came in at a whopping $1.2 billion USD, which represents a 26% increase on Q4 in 2017. To cap off these rosy results, its annual profits nearly doubled, and total revenue for Lululemon amounted to $3.3 billion USD, inching the company ever-closer to its 2020 $4 billion USD milestone goal.

Although rife with controversy in the past (lest we forget former CEO and company founder Chip Wilson’s fat-shaming incident), Lululemon’s future is brighter than ever. In the coming year, it plans to open 30 stores across the globe, with more than half in Asia.

“We’re excited to see accelerating trends now in Europe as our brand awareness levels continue to increase,” said chief operating officer Stuart Haselden – the man spearheading the push outside the US and Canada for the brand.

As part of its ongoing evolution, Lululemon CEO Calvin McDonald said in a conference call with analysts that they are looking to expand into women’s office, travel, commute, and outer-wear, in addition to widening its current product selection of bras. On top of this, Lulu is also looking to expand on their male clothing lines, and is eyeing the #selfcare movement, with plans to create hair, face and body products.


#MoneyCrushMonday

This week, we chat with Founder and CEO of Pressed News, Jacqueline Leung, about founding her own business, competing in the Canadian news industry, and trusting her intuition.


 

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