{"id":22207,"date":"2020-09-13T20:59:57","date_gmt":"2020-09-14T00:59:57","guid":{"rendered":"https:\/\/capital10x.com\/old\/?p=22207"},"modified":"2020-11-26T09:43:09","modified_gmt":"2020-11-26T14:43:09","slug":"markets-and-metals-navigator-september-13-2020","status":"publish","type":"post","link":"https:\/\/capital10x.com\/old\/markets-and-metals-navigator-september-13-2020\/","title":{"rendered":"Markets and Metals Navigator (September 13, 2020)"},"content":{"rendered":"<h2>Tech Melts Down, Commodities Hang Tough<\/h2>\n<p>Technology stocks endured a rough week in the market with the Nasdaq selling off -3.5%, dragging down the broader market along with it, the S&amp;P 500 was down -2.6%.<\/p>\n<p>Commodities have continued to hang tough in the face of very choppy markets, gold finished the week up +0.5%, silver was down -0.6% and copper was off by -1%.<\/p>\n<p>Typically in these types of &#8216;risk-off&#8217; markets commodities would fall in excess of the market, the market internals are certainly pointing to underlying strong commodity demand by institutional investors.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22208\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart.png\" alt=\"\" width=\"2000\" height=\"1389\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart.png 1474w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-300x208.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-1024x711.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-768x533.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-1536x1067.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-218x150.png 218w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-696x483.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-1392x967.png 1392w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-100x70.png 100w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/GLD_SLV_CPER_SPY_NDAQ_chart-200x140.png 200w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\" \/><\/p>\n<h3>Telsa &#8211; Has the Bubble Popped?<\/h3>\n<p>Telsa has been the poster child for the COVID-19 technology bubble. The stock was off -11% last week bringing it&#8217;s total loss from the peak ($498\/share) to -25%.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22209\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3.png\" alt=\"\" width=\"2000\" height=\"1167\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3.png 1755w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3-300x175.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3-1024x598.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3-768x448.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3-1536x896.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3-696x406.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/TSLA_chart-3-1392x812.png 1392w\" sizes=\"auto, (max-width: 2000px) 100vw, 2000px\" \/><\/p>\n<p>Tesla&#8217;s parabolic rise was driven by valuation multiple re-rating alone, at the start of the year the stock was trading at 2.5x sales and now trades at 11x sales.<\/p>\n<p>One would assume there was a step change in the growth trajectory of the company this year to warrant such a multiple expansion, in fact their operating results suggest the exact opposite &#8211; last quarter sales were down -5% year-over-year.<\/p>\n<p>One of the main trading drivers of the epic run in Telsa stock was call option buying by both retail traders and large institutions (<a href=\"https:\/\/www.reuters.com\/article\/us-usa-stocks-softbank-group\/softbank-option-purchases-raise-eyebrows-as-wall-street-backtracks-idUSKBN25V2DZ\">specifically SoftBank<\/a>).\u00a0 This large call option buying has a leveraged impact on the underlying stock, in some cases $1 of call buying can lead to $150 of stock buying by brokerages to hedge their positions on their calls they underwrote. When the stock begins to fall the unwinding of the options hedges have the same velocity going down.<\/p>\n<h2>Value Stocks Experiencing the Worst Ever Returns vs. Growth Stocks<\/h2>\n<p>It&#8217;s no secret that value investing has been a deeply out of favour strategy for nearly a decade, what the chart below highlights is the degree to which COVID has accelerated the underperformance of this group &#8211; it&#8217;s the worst relative returns ever.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22211\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/value-vs-growth.png\" alt=\"\" width=\"714\" height=\"475\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/value-vs-growth.png 714w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/value-vs-growth-300x200.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/value-vs-growth-696x463.png 696w\" sizes=\"auto, (max-width: 714px) 100vw, 714px\" \/><\/p>\n<p>Many of the companies that are categorized as value have simply been disrupted by technology (ie. JC Penny\/Sears vs. Amazon), the spiral from &#8220;value&#8221; to &#8220;bankrupt&#8221; is swift in these cases.<\/p>\n<h3>Mined Commodities are the Mean Reversion Trade in Value Stocks<\/h3>\n<p>Mined Commodities are the most interesting opportunity in the value bucket as a mean reversion trade, in many instances the commodities are prerequisites for the technology (think lithium for EVs).<\/p>\n<p>Additionally all the central bank money printing has increased the tail risk of runaway inflation, metals (gold, silver &amp; copper) have historically been a strong portfolio hedge in inflationary markets.<\/p>\n<p>We highlighted the opportunity in <a href=\"https:\/\/capital10x.com\/old\/copper-the-catch-up-inflation-trade\/\">copper as the catch-up inflation trade<\/a> on August 7th, highlighting Lundin Mining (TSX:LUN), Freeport (NYSE:FCX), First Quantum (TSX:FM) and Sierra Metals (NYSE:SMTS; TSX:SMT).<\/p>\n<div style=\"width: 696px;\" class=\"wp-video\"><video class=\"wp-video-shortcode\" id=\"video-22207-1\" width=\"696\" height=\"392\" poster=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/08\/copper-catch-up-trade-cover-V02.jpg\" preload=\"metadata\" controls=\"controls\"><source type=\"video\/mp4\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/08\/2020-08-06-Copper-catch-up-trade-FNL_V02.mp4?_=1\" \/><a href=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/08\/2020-08-06-Copper-catch-up-trade-FNL_V02.mp4\">https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/08\/2020-08-06-Copper-catch-up-trade-FNL_V02.mp4<\/a><\/video><\/div>\n<p>&nbsp;<\/p>\n<h2 class=\"entry-title\">Silver: Eric Sprott Bets Big on First Majestic<\/h2>\n<p>After market close on September 10th First Majestic Silver (NYSE:AG, TSX:FR) announced a $78 million dollar bought deal at a price of CDN $15.60 with a sole investor \u2013 billionaire Eric Sprott.<\/p>\n<p>Capital 10X correctly identified First Majestic as an attractive investment opportunity in our\u00a0 <a href=\"https:\/\/capital10x.com\/old\/leverage-silver-stocks-vs-silver-bar\/\">Silver Insights Series<\/a> on July 20th. At that time we identified that First Majestic screened well vs. its peer group, the company had a higher proportion of its revenue coming from silver (60%) with a price-to-cashflow multiple inline with it\u2019s silver peers.<\/p>\n<div style=\"width: 696px;\" class=\"wp-video\"><video class=\"wp-video-shortcode\" id=\"video-22207-2\" width=\"696\" height=\"392\" poster=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/07\/silver-series-cover.jpg\" preload=\"metadata\" controls=\"controls\"><source type=\"video\/mp4\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/07\/silver-stocks-vs-silver-bars-MAIN-FNL.mp4?_=2\" \/><a href=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/07\/silver-stocks-vs-silver-bars-MAIN-FNL.mp4\">https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/07\/silver-stocks-vs-silver-bars-MAIN-FNL.mp4<\/a><\/video><\/div>\n<p>&nbsp;<\/p>\n<h2>Aurora Cannabis Announces New CEO and More Write Offs<\/h2>\n<p>On Tuesday September 8th Aurora Cannabis (TSX:ACB) announced the appointment of new CEO Miguel Martin and \u00a0$1.8 billion worth of goodwill impairment charges.<\/p>\n<p>The stock has been very challenged proposition, the share price has been down over 90% in the last year.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22200\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1.png\" alt=\"\" width=\"1474\" height=\"1024\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1.png 1474w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-300x208.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-1024x711.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-768x533.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-1536x1067.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-218x150.png 218w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-696x483.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-1392x967.png 1392w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-100x70.png 100w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1-200x140.png 200w\" sizes=\"auto, (max-width: 1474px) 100vw, 1474px\" \/><\/p>\n<p>Even with the stock down significantly, Aurora\u2019s forward price-to-sales ratio is higher than Aphria (TSX:APHA) and Organigram (TSX:OGI), two companies that have been far better run on a relative basis.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22201\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart.png\" alt=\"\" width=\"1474\" height=\"1024\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart.png 1474w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-300x208.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1024x711.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-768x533.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1536x1067.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-218x150.png 218w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-696x483.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-1392x967.png 1392w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-100x70.png 100w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2020\/09\/ACB_APHA_CGC_CRON_OGI_chart-200x140.png 200w\" sizes=\"auto, (max-width: 1474px) 100vw, 1474px\" \/><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A weekly review of the most important news impacting the metals and global stock markets. This week: Tech melts down, value stocks worst returns ever, Sprott&#8217;s bet on silver &#038; Aurora&#8217;s challenges continue.<\/p>\n","protected":false},"author":7,"featured_media":18450,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1755,59],"tags":[45,1682,1128,76,1627,212,1698,1683,1684,1165,211,885,1700,846,847,1267,1699,1443],"class_list":{"0":"post-22207","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-growth_navigator","8":"category-metals","9":"tag-acb","10":"tag-ag","11":"tag-aurora","12":"tag-copper","13":"tag-eric-sprott","14":"tag-fcx","15":"tag-first-majestic","16":"tag-first-quantum","17":"tag-fm","18":"tag-fr","19":"tag-freeport-mcmoran","20":"tag-lun","21":"tag-lundin","22":"tag-sierra-metals","23":"tag-smt","24":"tag-smts","25":"tag-telsa","26":"tag-tsla"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Markets and Metals Navigator (September 13, 2020) | Capital 10X<\/title>\n<meta name=\"description\" content=\"A weekly review of the most important news impacting the metals and global stock markets. 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