Welcome to A Brighter Future

Welcome to A Brighter Future

The Laidlaw Podcast Series where we discuss relevant and timely financial matters with leading experts in the field.

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Discussions With David Garrity (2021 Q1 & Q2)

In this ongoing series of interviews, renowned market strategist David Garrity and Richard Calhoun, CEO of Laidlaw Wealth Management discuss the 2020 market forecast and offer invaluable insights into the capital markets in light of current events and the resulting unprecedented volatility.

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Featured Guest: David Garrity

Chief Market Strategist, Laidlaw Ltd.

Mr. Garrity has had an extensive career in investment research. In 2000, Mr. Garrity was appointed Global Research Coordinator – Automotive at Dresdner Kleinwort Benson. Soon after, he drew media attention during his time at Dresdner Kleinwort Benson, when he put a 1,000 price target on Commerce One (CMRC). The high-profile call marked a turning point in Garrity’s analyst career as he went from Auto Analyst to Technology Analyst. Mr. Garrity is an authority on blockchain technology, highlighting the difference between cryptocurrency and the underlying blockchain.

Interviewed by: Richard J. Callhoun

CEO, Laidlaw Wealth Management

Mr. Calhoun is the Chief Executive Offer of Laidlaw Wealth Management – a wholly subsidiary of Laidlaw Holdings. Previously Mr. Calhoun was the President of a Private Investment Boutique firm in MD/DC Metro market and prior to that was a Managing Director with Well Fargo Advisors Financial Network (FiNet), the Independent Advisor Channel of Wells Fargo Advisors. Mr. Calhoun has also held leadership roles with Smith Barney and Legg Mason. He began his career as a Financial Advisor with Merrill Lynch.

Partner Profiles

These podcasts feature in depth interviews with partners who offer unique investment strategies and services complimenting Laidlaw’s capabilities and offering “ best in class” solutions for our clients.


A BRIGHTER FUTURE, with Laidlaw, in this episode Richard Calhoun, CEO of Wealth Management at Laidlaw and Company discusses thematic investment opportunities with Paul Dellaquila, President of Defiance ETFs. Defiance ETFs were created to take advantage of certain themes which weren’t covered by existing ETF providers. They currently offer three thematic ETFs 5G, Food & Sustainability and Quantum Computing and Machine Learning.

A BRIGHTER FUTURE with Laidlaw, Episode #2 an interview with Robert Holderith, CEO of Green Harvest Asset Management which provides tax beneficial investment products and services. Robert and Ken Mathieson, Head of Laidlaw Asset Management, discuss what makes Green Harvest unique within the tax-loss harvesting space.

2022 “Laidlaw Five”

With 2021 drawing to a close, the Laidlaw Wealth Management & Naples Wealth Planning Investment Policy Committee presents the “Laidlaw Five” forecasts for 2022 to offer investors thoughts on five particular areas to take into account when considering how best to navigate the capital markets in the year ahead.

The “Laidlaw Five” will be periodically revised as the year unfolds and significant events necessitate. Prior to hurling ourselves into the unknown, best we review just how well our 2021 prognostications fared in providing useful guidance in considering the lay of the land investment-wise. Following our candid, brutally frank self-assessment, we provide the 2022 “Laidlaw Five” forecasts:

2021 Assessment: A Dollar Short & Should Have Stayed Home, But Directionally Correct

Politics: With Fiscal Stimulus Efforts Still Critical To Economy, Congress Remains In Spotlight

While it would be nice to consider the possibility that, after an election year, investors could just go back to focusing on things other than politics, it would be difficult, if not detrimental, to ignore fiscal policy as new, expanded programs are very likely to remain a critical element in supporting global economic recovery and thus financial markets.

The path for the incoming administration will be challenging as the first order of business is to get COVID-19 addressed with a well-executed federal-led plan. The pay-off is quite clear: beat COVID-19, win the hearts and minds of the nation; and in the process perhaps get some significant percentage of the 74mm voters (46.9% of turnout) who voted for the incumbent to accept the new administration as the nation yearns for competence and leadership in government.

While Congress is expected to pass an additional $900bn in fiscal stimulus, bringing the total provided since the onset of COVID-19 to $3.2tn, passage of the larger further stimulus effort sought by the new administration will take time and have to confront determined political resistance should the party leadership in the Senate not shift following the two Senate run-off elections in Georgia scheduled for early January. Away from the run-off outcome, we are open to the possibility that certain senators may opt to become independent in an effort to promote bipartisanship.

That said, Laidlaw expects positive investment returns will again be skewed towards the back half of 2021 as a better sense is gained as to how well the new Congress operates to support the nation’s recovery. In particular areas, trade policy, technology sector regulation, and health care reform will be important. The government will be looking for new sources of revenue, something that may lead to the legalization of controlled substances such as marijuana. Note that Prohibition was repealed in 1933 as a means to generate new tax revenues in the midst of the Great Depression. Other developments such as the ongoing population shift prompted by COVID-19 from densely populated cities to less densely populated suburbs along with a greater shift to online from traditional “in person” education and the likelihood of “Work From Home” as the “new normal” will have political impact as funds are needed to support new programs and restructure old ones as institutions such as universities and commercial properties are faced with crisis while COVID-19 remains uncontained.

 

Assessment: Timing is a fickle thing to call we are reminded again in 2021 as the stock market’s gains were skewed towards the first half of the year (S&P 500 total return in 1H21 +15.25% while 2H21 to date +8.22%) as investors in the back half of the year became concerned about “peak growth” as prior year results comparisons would become more difficult following 2Q21. Little did investors know that S&P 500 earnings for 2021 would end up at $202/share, +20% more than the $169/share forecast at the end of 2020. As to the amount of fiscal stimulus, our call of $900bn in incremental aid was low compared to the $1.9bn provided by the American Rescue Plan Act of 2021 passed by Congress in March. Well, a trillion here, a trillion there, pretty soon we’re talking real money. At least we can say Congress outperformed positively, more than is customary. However, congress still offers up “grid lock” now as with slim majorities in both Houses, the Biden Administration’s “Build Back Better” economic plan remains on the drafting table. Along with that, our thoughts that cannabis might be legalized as a means of providing additional tax revenue went up in smoke as the Biden Administration has not yet decided to pursue that path. However, with the 2022 midterm elections looming on the horizon, we expect more things may be possible than previously thought as issues are sought to rally voting constituencies.

Macro-economy: COVID-19 Containment, Trade Policy & Inflation Are Wild Cards

Assuming vaccines prove effective in containing the COVID-19 pandemic and no significant mutations develop, the global macro-economy should be poised to recover as customer-facing economic sectors that can represent approximately 20% of employment may fully resume operation. Meanwhile, U.S.- China confrontation on a range of fronts including trade policy and the possibility of a hard “Brexit” by the U.K. from the E.U. will serve to depress recovery on the margin. What will be interesting to see over the course of 2021 is whether inflation strengthens as supply chains have been strained during the pandemic. Recent changes in monetary policy by The Federal Reserve Bank have eased guidelines to allow inflation to run on average over a 2% rate. How other central banks known for anti-inflationary policies such as the European Central Bank and the fixed income market are comfortable with this possible development will be a central question in 2021 as Laidlaw expects inflation break-evens to increase from 1.8% currently to 2.3% over the course of the year. In terms of exogenous shock, Laidlaw does not expect oil prices to spike as it trades towards $60/barrel seen before the pandemic, an expected +26% gain which will add to the inflation outlook. With this as back-drop, GDP growth is expected as follows: U.S. +3.6% (vs. -3.6% in 2020), E.U. +4.2% (-7.8%), and World +5.2% (-4.4%). Off the back of easy monetary policy and slower relative economic growth, Laidlaw expects to U.S. Dollar (DXY, 90.016) to weaken -10% over the course of 2021.

Assessment: First, the good news, GDP growth came in better than forecast as 2021 GDP growth is expected to end up as follows: U.S. +5.6% (The Conference Board), E.U. +5.0% (European Commission), and World +5.9% (IMF). Relative to our oil forecast, the price of a barrel of crude reached a high of $83.36 on 10/26/21 as OPEC+ was flexing its pricing muscles prior to the onset of the latest COVID variant, Omicron, whose rapid impact has brought prices to the present $70.86 level. The oil price outperformance of +18% over our $60 forecast, along with snarled supply chains, drove the 5-year inflation breakeven to a high of 3.17% on 11/15/21 before retracing to its present 2.65%. Meanwhile, U.S.-China confrontation continues over Hong Kong, Taiwan and The South China Sea, the main trade problem has become one of snarled supply chains which have added to inflation, but not on the numbers appeared to diminish GDP growth. So, while the levels were clearly off, we did get GDP growth, oil and inflation directionally right in 2021. Now, for the bad news, we should be held out as a reliable contrarian indicator when it comes to forecasting the U.S. Dollar. Rather than weakening the expected -10% off accommodative U.S. monetary policy, the Dollar instead strengthened off the U.S. economy’s better relative economic growth to reach a high of 96.84 on 11/19/21 before backing off to its present 96.50 for a 7.2% gain in 2021 to date. All in all, a better performance than 2020, but still there is definite room for improvement.

Markets: Equities +8% Due To Recovery Trade, Interest Rates Edge Higher

The pace of monetary policy easing and fiscal stimulus drove the markets in 2020 as greater liquidity served to support financial markets as the global economy contracted. At present, there are strong indications that both of these factors will extend forward for the foreseeable future until COVID-19 is contained fully. For 2021, Laidlaw has a 4,000level target for the S&P500, an +8% total return from current levels, with an upside possibility of a +15% return to the 4265 level for the S&P 500. As outlined earlier, equities benefit from the corporate earnings cycle outperforming expectations which along with a resumption in buy-back activity coupled with low interest rates will continue to leave investors in the position of “there is no alternative” to equities. The U.S. Treasury 10-year rate now at 0.95% is expected to rise to 1.50% over the course of 2021 as central banks allow negative real interest policy to support the global economic recovery. Meanwhile, with inflation expected to rise over the course of 2021, this should support alternative asset such as gold (now $1,909/oz, target $2,100/oz) and Bitcoin (now $22,931, target $25,000).

Assessment: In terms of our S&P500 forecast for 2021,our 4,000 price target was surpassed on April Fool’s Day at which time we raised our target to 4,500, still +12.5% over the market then and a level which was reached in late August 2021. Following that we further increased the price target to 4,600 in early October 2021 and 5,000 in late November 2021. This on the expectation that the corporate earnings cycle unfolding from the 2020 Q2 trough would drive earnings estimates higher over the course of 2021. Given that the 2021 S&P 500 earnings forecast has risen +20% to its present $202/share over the course of the year as corporate profit margins have surprised to the upside despite inflationary pressures, our price targets have merely followed S&P 500 earnings outperformance. While the current 2022 Street S&P 500 EPS forecast of $221/share indicates a market trading at 21x next year’s earnings, an elevated multiple, it is our view that 2021 EPS will end up +8% higher at $239/share as earnings outperformance relative to Street estimates will continue. On the higher estimate, the market P/E multiple is unchanged at 21x, still high but supportable based on large cap companies having the economies of scale and pricing power necessary to offset higher inflation. Our call on the U.S. Treasury 10-year rate to be higher over the course of 2021 was correct, with a high of 1.765% reached on 3/29/21 before retracing to the present 1.402%, a surprising development in our view as The Fed has clearly signaled monetary tightening lies ahead in 2022. Relative to alternative assets as a hedge against inflation, our call on gold fell short as its price hit the year high of $1,953/oz on 1/5/21 and is now down – 6% on the year at $1,798/oz. Bitcoin, the new “digital gold,” became the object of animal spirits in 2021 as it blew past our $25,000 price target to reach a high of $68,790 on 11/10/21 with a subsequent retracement to its current $45,864 level, still an eye-popping +58% gain on the year. Clearly, gold’s record as an inflation hedge is beginning to look a bit tarnished following its underwhelming 2021 performance and Bitcoin, along with cryptocurrencies generally, has been established as an asset class likely set to gain more traction in 2022. In sum, while correct on direction, we missed on magnitude yet gladly still made profitable calls on equities and fixed income.

Sectors: Tech Continues To Disrupt, But Value and International Stocks Outperform

COVID-19 has clearly transitioned a greater share of the economy over to the companies who dominate the Tech sector. In 2021, Laidlaw fully expects the disruption-led growth Tech has produced will continue, but for 2021 we fully expect that the economic recovery trade will favor Value stocks from sectors where high fixed cost will lead to high profit margins on the incremental revenues and thereby produce better than expected EPS growth. Sectors that fall into this category include Energy (XLE, $39.40, -30.9% in 2020, -45.7% vs. S&P 500) and Industrials (XLI, $88.84, +10.8% in 2020, -4.0% vs. S&P500). A steepening yield curve should favor the Financials (XLF, $28.49, -5.5% in 2020, -20.4% vs. S&P500). A weaker U.S. Dollar serves to lower the prices of commodities such as oil and industrial metals in foreign currency terms. For 2021, Laidlaw expects that non-U.S. equities will outperform the S&P 500 until such time as market expectations begin to factor in a monetary tightening shift by The Fed. In 2020, the broader Emerging Markets (EEM, $50.99, +15.5% in 2020, +0.7% vs. S&P 500) paced the U.S. market with substantial gains by South Korea (EWY, $81.22, +31.6% in 2020, +16.8% vs. S&P 500) and Taiwan (EWT, $51.57, +27.8% in 2020, +13.0% vs. S&P 500). For 2021, along with the broader Emerging Market and leaders South Korea and Taiwan, we suggest investors consider India (INDA, $39.33, +12.3% in 2020, -2.5% vs. S&P 500) for its growth potential and the U.K. (EWU, $29.38, -11.5% in 2020, -26.3% vs. S&P 500) for a recovery trade as “Brexit” is resolved hopefully for good and COVID-19 is beaten.

Assessment: Relative to our 2021 style and sector calls, the impact of the COVID-19 variants, Delta followed by Omicron, served to sustain the transition to hybrid work arrangements that had already in 2020 driven market share gains for large-cap U.S. Tech companies, as a result large-cap Growth with a +27.1% gain to date is the only style/market cap group to outperform the S&P 500’s +23.0% gain, so our call for Value to outperform in 2021 came up short. Relative to the 11 S&P 500 sectors, only 4 have outperformed – Energy (+43.5%), Financials (+30.9%), Real Estate (+29.8%) and Technology (+29.1%) – of which we had highlighted Energy and Financials going into the year. Relative to Industrials (+15.7%), the chance to outperform was stymied by our abysmally bad U.S. Dollar forecast as it strengthened +7.2% rather than weakening -10%. The strong U.S. Dollar performance similarly knee-capped our call for international stocks to outperform as overseas markets only eked out a modest increase of +3.2% due in large part to China cratering -23.3% as the Communist Party moved to increase oversight of private companies in a range of sectors at the same time as overleveraged developers in China defaulted on debt obligations. Just to hold ourselves to account, our 2022 International picks performed as follows – Taiwan (+21.5%), India (+9.4%), UK (+8.7%) and South Korea (-8.7%) – on average a positive +7.7% year to date return, but far from matching those earned by simply staying closer to home. Meanwhile, perhaps the best global equity pair trade for 2021 would have been to short the China ETF (MCHI $62.09) at its $97.55 2/17/21 high and go long the S&P 500 (2/17/21 high 3,934), a position that between the +17.5% S&P 500 gain and the -36.4% MCHI decline has to date produced a +53.8% unleveraged return. All in all, 2021 was a good year in which positive returns were realized.

Odds & Ends: Random Thoughts To Consider As we are not “all markets, all the time,” we would like to take a moment to offer up random thoughts to consider. One that intrigues us is contemplating how Amazon founder and CEO Jeff Bezos will reallocate the capital he has generated. While it is fascinating to consider how he is developing his own space exploration venture, Blue Origin, and as such has designs perhaps on leaving the planet, we think more terrestrial concerns may occupy his mind. Namely, as Amazon evolves its business model around media offerings, it is possible that Mr. Bezos may consider acquiring multiple professional sports franchises to expand the company’s content offerings. The cross-marketing and sell-through opportunities would be out of this world.

Assessment: Relative to our idle speculation about Amazon founder Jeff Bezos and his increasingly extraterrestrial adventures, we were disappointed that his terrestrial endeavors did not extend to acquiring any professional sports franchise. That said, in 2021 Amazon did enter into an 11-yearlong agreement to pay the NFL $1 billion annually for the exclusive broadcast rights for Thursday Night Football, an arrangement that will kick off in 2022. With Amazon getting into sports entertainment broadcasting, it promises as in other sectors where the company has established a presence to make it a whole new ball game.

2022 “Laidlaw Five”: Will The Fed Move Too Hard, Too Fast And Risk A 2023 Recession?

So, as 2021 winds down to a close, here are the 2022 “Laidlaw Five” forecasts:

Politics: With Midterm Elections Ahead, Modest Expectations For Further Fiscal Stimulus

With the Biden Administration’s efforts to pass the $2.2 trillion Build Back Better Act stalled in the U.S. Senate and the prospect of the campaign season for the 2022 midterm elections fast approaching, the odds are that little further fiscal policy stimulus will be forthcoming from Congress in 2022 as partisan infighting and political posturing will become even more the order of the day than normally is the case. Whether the ongoing ravages from the COVID Omicron variant will serve to bring elected officials’ attention back to acting in a collaborative manner to sustain the country remains to be seen, but by now fatigue in dealing with the pandemic is a matter of concern for 2022.

Past election cycles have shown the incumbent party tends to lose support in midterm elections as voter turnout tends to be lower than in Presidential election years and latent popular frustration tends to be directed at those in power. All told, not a promising set-up for the balance of the current administration’s term in office. Main factors to consider are whether inflation declines during the first half of 2022, in particular retail gasoline prices as they appear to have an outsized influence on consumer confidence levels. Just as important will be the level of food and meat prices which have been increasing at rates not seen since the 1970s.

Away from economic pocketbook matters, issues such as abortion rights, voting rights and COVID vaccination regulations are likely to be areas of focus for voters. Whether GOP efforts to gerrymander election districts off the 2020 Census results and reduce polling hours and access prove successful in making the midterm elections less competitive remains to be seen. Meanwhile, relative to the U.S. Senate, of the 34 Senate races to be decided in 2022 there are 20 presently held by the GOP. For the U.S. House of Representatives, the Democratic majority of 222 is 51% of the 435 seats up for election.

Should inflation not moderate by the end of June 2022, it is likely the Democratic majority in the House is lost, but the Senate may remain in Democratic control. Meanwhile, as COVID-19 has deepened the federal deficit, the government should be looking for new sources of revenue, something that could lead to the legalization of controlled substances such as marijuana. Note that Prohibition was repealed in 1933 to generate new tax revenues during the Great Depression. It is well-known that in election years, anything can happen so we will be open to unexpected possibilities arising in 2022.

Macro-economy: Tightening Monetary Policy, Inflation & COVID – The Wild Cards

At present, based on IMF forecasts, 2022 GDP growth is expected to be robust as follows: U.S. +5.2% (vs.+5.6% in 2021), E.U. +4.3% (+5.0%), and World +4.9% (+5.9%). However, as inflation has spiraled higher as consumer goods demand was met with supply chains snarled by COVID-19 impacts, central banks worldwide have begun to initiate measures to remove monetary accommodation and tighten interest rate policy, although it is important to note that China has moved to ease its monetary policy stance.

That said, the recent December 2021 Federal Reserve Open Market Committee meeting moved up the pace of tapering its quantitative easing program and confirmed market expectations of three increases in the Fed Funds rate over the course of 2022, with the first possibly coming in March. Whether financial markets that have become accustomed to the “Fed Put” can stand on their own without ready monetary accommodation is going to be one of the major tests of 2022.

Quite possibly, a Fed taper may be met with a market tantrum, much as seen in 2013. Also of possible concern is that of a Fed policy mistake in which it overdoes monetary tightening with the effect of pushing the economy into recession in 2023, something that lies behind the decline in 10-year Treasury interest rates as the policy shift to tightening has been signaled since August 2021 Jackson Hole conference. Should there be an inversion of the 2-10 year Treasury spread in 2022, the odds of a 2023 recession will be magnified

Relative to inflation, the continual wave of COVID variants, the latest being Omicron, poses a risk that inflation will not prove to be as transitory as previously thought as supply chains experience continued disruption, something that has been reflected in the latest FOMC press release which backed away from use of the term “transitory.” How the global economy adjusts to COVID until it reaches the point of being endemic will be a further test in the year ahead. One can only hope that sensible minds will prevail when it comes to promoting universal vaccination and the adoption of other necessary public health safety measures.

For 2022, Laidlaw expects that the 5-year inflation breakeven will remain above 2.5% during the first half of the year and decline towards 2.0% during the second half of the year should COVID moderate and supply chains return to normal operations. The call on oil is for prices to stay in the $70-75/barrel range during the first half of 2022 as COVID restrictions serve to moderate energy demand, with an increase to the $80-85/barrel range during the second half of the year should COVID restrictions be relaxed. One thing to note relative to oil is that the investor shift towards ESG principles favoring clean energy may have prompted underinvestment in the energy sector necessary to sustain global energy demand in the transition to a less carbon-intensive economy. While it may not occur in 2022, it is possible that given production issues stemming from underinvestment oil prices might spike to $125/barrel over the next 3-5 years. Meanwhile, the 2-10 year Treasury spread now at 0.78% is expected to rise to 1.50% as 10-year Treasury yields increase to 2.50% from the current 1.402% and the 2-year Treasury yield rises to 1.00% from the current 0.66%. Off the back of strong U.S. GDP growth and rising interest rates, Laidlaw expects the U.S. Dollar (DXY, 96.61) to strengthen 5% further over the course of 2022.

Markets: Equities +8% Due To Large-Cap Pricing Power, Bitcoin Favored As Inflation Hedge

Corporate profit margins were surprisingly strong over the course of 2021 and were sufficient to overcome investor fears of profit margin pressure in the recent 3Q 2021 earnings season. The ability of large companies such as those in the S&P 500 index to achieve economies of scale and gain pricing power offers investors protection against the ravages of inflation as we look ahead to 2022. While the current 2022 Street S&P 500 EPS forecast of $221/share indicates a market trading at 21x next year’s earnings, an elevated multiple, it is our view that 2021 EPS will end up +8% higher at $239/share as earnings outperformance relative to Street estimates will continue. On the higher estimate, we leave the market P/E multiple unchanged at 21x, still high but supportable based on large cap companies having the economies of scale and pricing power necessary to offset higher inflation. Based on these earnings dynamics and valuation considerations, we start 2022 with an S&P 500 price target of 5,000. Relative to alternative assets to consider as possible hedges against inflation, gold is expected to decline -3% to $1,750/oz from its current $1,798/oz level. With its production capped, Bitcoin has proven to be a more attractive inflation hedge. For 2022, Laidlaw expects Bitcoin to gain +10% from its current $45,864 to reach $50,450. In the area of cryptocurrency, the Ethereum (ETH, $4,000) protocol has proven to be of greater utility to developers creating blockchain applications. As such, Ethereum has become the #2 cryptocurrency with a market capitalization of $478 billion behind Bitcoin’s market capitalization of $908 billion. Given its greater utility for developers along with its shift to a “proof of stake” consensus mechanism, Laidlaw views as likely that Ethereum will over time displace Bitcoin as the top-ranked cryptocurrency in market capitalization. Also, in 2022, Laidlaw expects that institutional investors will become a greater factor in the evolution of the cryptocurrency market as they allocate more funds to this emerging asset class

Sectors: Earnings Drive Price, 4 S&P Sectors Highlighted; Overseas, Look For China Rebound

COVID drove substantial global economic shifts as the digital economy accelerated share gains during the pandemic. However, recent indications are consumer interest in such bellwether digital economy products as the Apple iPhone have begun to lag prior year levels, a sign perhaps of saturation in global tech demand. Now, in considering S&P 500 sectors, the table on the next page highlights sectors whose earnings growth from 2019, the peak of the last cycle, to 2022 has not been fully reflected in their valuation. The sectors highlighted are Energy (XLE, $54.37, +43.5% in 2021, +20.4% vs. S&P 500), Materials (XLB, $87.66, +21.1% in 2021, -1.9% vs. S&P 500), Health Care (XLV, $137.92, +21.6% in 2021, – 1.4% vs. S&P 500) & Communication Services (XLC, $76.48, +13.3% in 2021, -9.7% vs. S&P 500) – the Laidlaw sector picks for 2022.

Overseas, monetary tightening cycles prompting higher interest rates and a stronger U.S. Dollar typically lead international markets to underperform the U.S.. As such, we are conservative towards investing internationally in 2022, with one exception – China (MCHI, $62.09, -23.3% in 2021, -46.3% vs. S&P 500), where we expect monetary policy easing will support valuations and the broader economy. Not surprisingly, a more robust China supports our Energy and Materials calls as the country is the leading global importer of both oil and metals.

Odds & Ends: Random Thoughts To Consider

As we are not “all markets, all the time,” we would like to take a moment to offer up random thoughts to consider. The year 2021 saw a sovereign nation, El Salvador, declare Bitcoin to be legal tender and has also seen public companies, MicroStrategy, issue $1.4 billion in debt to raise funds to purchase Bitcoin. For developing countries such as El Salvador the attraction of Bitcoin as legal tender is it serves to cut the time and cost involved in receiving remittances from citizens working abroad. For corporations, the use of Bitcoin as part of an active treasury management strategy is attractive as long as the volatility can be managed cost effectively through the use of derivative instruments such as futures contracts. In 2022, it is highly likely that more public companies, particularly in the tech sector, begin to purchase Bitcoin as a treasury management tool and a public U.S. company will issue a dividend payable to shareholders in Bitcoin. Clearly, there are regulatory hurdles to cross and cybersecurity risks to address, but 2022 is the year where institutional adoption of Bitcoin and cryptocurrency more broadly will reach a tipping point. It is also possible to think that while securities can be tokenized, a move that would enable trading to occur 24/7/365, it is also possible to consider that Distributed Autonomous Organizations (DAOs) may become a new class of Special Purpose Acquisition Corporations (SPACs). Clearly, many unexpected possibilities lie ahead in 2022. Buckle up!

Laidlaw Wealth Management, LLC, is an investment adviser registered with the U.S. Securities and Exchange Commission. A copy of our written disclosure statement is available upon request. This information is provided solely for convenience purposes and all users thereof should be guided accordingly. Further, this information is provided for guidance and information purposes only. Investments involve risk and unless otherwise stated, arenot guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional befor implementing any strategy. This information is not intended to provide investment, tax, or legal advice.