Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

I was catching up on financial podcasts this weekend and found a great one.

In an extended interview on Bloomberg’s Odd Lots program, Macquarie strategist Viktor Shvets explained why predictions of 1970s-style inflation are based on outdated economic models. Not only will we not see runaway inflation in the shorter term, he believes deflationary forces will take hold once again in the coming years.

Inflation is the result of supply constraints – shortages of labour and products that result in bidding wars and higher prices. Mr. Shvets believes these are a thing of the past as developed world economies move away from basic manufacturing.

Story continues below advertisement

The strategist notes that 60 per cent of the U.S. private sector economy is now made up of intangible assets. Unlike plant equipment and machinery that made up the bulk of wealth in the past, intangible assets are intellectual properties like software, patents, trademarks, brand equity, databases and yes, vaccines.

In the old assembly line economy, demand that exceeded supply and caused price increases could only be solved slowly, with huge investments in constructing new factories and hiring workers. Intangible assets like software and pharmaceuticals do not require this investment and therefore price increases - at least those caused by demand - are rare.

The labour force is also far more flexible now. Between 20 and 25 per cent of the labour force is now employed by the gig economy and Mr. Shvets sees this preventing sustained wage inflation. In the modern economy the workers that drive for Uber, for instance, will gravitate easily to sectors requiring increased production. This will make labour shortages, and the worker bargaining power to create sharply higher wages, more rare than in times past.

The strategist also notes that the benefits of intangible assets spread throughout the economy. Not only will software companies never experience supply constraints, the products they sell are used on factory floors, making production more efficient and less dependent on human labour.

Current government fiscal spending is expected to cause inflation, according to some pundits, but Mr. Shvets believes it will result in the reverse: deflation. As an example, he notes that investment in renewable power will eventually result in lower crude demand and a lower commodity price.

The interview features a host of interesting observations and, agree with the conclusions or not, I highly recommend listening in full.

-- Scott Barlow, Globe and Mail market strategist

Story continues below advertisement

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

Stocks to ponder

Freehold Royalties Ltd. (FRU-T) For cautious investors, this security may represent a defensive way to play the energy rally. The stock offers investors a 5.3-per-cent dividend yield along with a forecast price return, based on consensus analyst estimates, of 16 per cent. Management has announced dividend increases with the release of its quarterly earnings results for the past three consecutive quarters, yet the payout ratio remains quite low. Jennifer Dowty has this profile of the royalty firm.

Emera Inc. (EMA-T) Gordon Pape says he considers this dividend-paying stock a bond substitute. Its business is primarily in regulated electricity generation and electricity and gas transmission and distribution. It’s not exciting stuff but the company is about as stable a stock as you’ll find. Check out his investment case for the stock here.

The Rundown

The Bull’s big test: Can rally resume amid inflation worries?

Story continues below advertisement

Rising prices are an inevitable by-product of the times, as the global economy reawakens from the stupor brought on by the COVID-19 pandemic. But at closer look, the spike in prices is concentrated in industries hardest hit by the pandemic, like travel and hospitality. That makes the growing inflation pressure look less like a bear-market killer and more like the temporary side effect of a one-time, post-COVID reopening, according to some market pros. Tim Shufelt reports.

The loonie’s flying, but look before you leap into hedged ETFs

For the 12 months to April 30, the hedged S&P 500 ETFs from iShares (XSP) and Bank of Montreal (ZUE) posted total returns of 44.2 per cent and 43.8 per cent, respectively – close behind the S&P 500′s return of 46 per cent. The unhedged versions of these ETFs didn’t perform nearly as well, posting returns of 28.8 per cent (XUS) and 28.4 per cent (ZSP). This isn’t surprising given that the loonie gained about 10 US cents during that period – an exceptionally steep rise that caused the value of U.S. assets to weaken when priced in Canadian dollars. So does that mean hedged ETFs are the way to go? Not necessarily, says our John Heinzl.

Musk’s bitcoin turnaround pleases some Tesla investors

Elon Musk’s decision to stop accepting bitcoin as payment over environmental concerns has been well-received by some of Tesla Inc’s investors, offering a warning to corporate peers mulling a dabble with the cryptocurrency.

Others (for subscribers)

Story continues below advertisement

The most oversold and overbought stocks on the TSX

Monday’s analyst upgrades and downgrades

Monday’s Insider Report: CEO invests over $400,000 in this dividend stock that’s rallied 88% in 2021

Power Corp. shares hit record as company refocuses

Globe Advisor

U.S. day trading frenzy eases as investors ‘move on to other things’

Story continues below advertisement

Are you a financial advisor? Register for Globe Advisor ( for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.

Ask Globe Investor

Question: I hold Berkshire Hathaway Inc. (BRK.B-N) in my tax-free savings account. I purchased the shares when the Canadian dollar was trading at 93 US cents during the financial crisis of 2008. Now that our dollar is trading at more than 81 US cents, what are the tax implications if I withdraw the shares from my TFSA?

Answer: There are no tax implications – TFSA withdrawals are tax-free. The exchange rate in effect when you purchased BRK.B is therefore irrelevant, as is the price you paid for the shares.

What is relevant, however, is the exchange rate at the time you withdraw the shares from your TFSA. Your broker will apply its in-house exchange rate to calculate the value, in Canadian dollars, of the withdrawal; the amount will be added to your TFSA contribution room on Jan. 1 of the year following the withdrawal. The dollar value of the withdrawal will also be the new cost base of the shares, which you will use to determine your capital gain or loss when you eventually sell.

--Gordon Pape

Story continues below advertisement

What’s up in the days ahead

Rob Carrick will present five need-to-know points for all the investors flocking to robo-advisers.

U.S. retailers set for earnings stage after inflation-sparked market turbulence

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

For more Globe Investor stories, follow us on Twitter @globeinvestor

You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.

Compiled by Globe Investor Staff

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies