Last summer my team saw considerable interest in GICs. One cannot blame the attraction to 4-5% GIC rates, which we had not seen in decades. But history shows that record cash levels are a bullish sign. In almost every case where investors clamor to cash - strong market returns are around the corner. The record level of assets in cash and cash alternatives could represent a catalyst for further market gains. History shows that money market assets have peaked at or near past market bottoms. During the depths of the COVID pandemic in May 2020, money market fund totals peaked just weeks after the S&P 500 troughed in March. Asset flows followed a similar pattern during the global financial crisis, when money market fund assets peaked two months before the S&P 500 bottomed on March 9, 2009. The stock market recorded a 40% return over the subsequent three months and a 55% return over the following six months. As inflation peaks and the Federal Reserve and Bank of Canada eventually end their rate tightening cycle, cash is likely going to be looking for a home, and there is a ton of it on the sidelines - potentially driving returns for stocks and bonds.

Should you have any questions or concerns, please feel free to reach out.

Portfolio Notes

(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral

(~) Chipotle Mexican Grill (CMG-US) is working with the robotics company Vebu to test a device it developed known as Autocado, which will cut, core and peel avocados destined to become guacamole in the restaurant. As it stands, it takes an average of 50 minutes to make a batch of guac, and it’s a labor-intensive process given the fundamental nature of the avocado. Should the device work as intended, it could cut guac prep time by 50%. Shares are up almost 48% this year. Owned in US Portfolio.

(++) Coinbase (COIN-US) In late 2020, the SEC sued Ripple for raising $1.3 billion through "an unregistered, ongoing digital asset securities offering." The lawsuit sparked a big debate over whether or not cryptocurrencies are securities or currencies. The SEC believes many are securities and therefore must be registered with the SEC and fall under the SEC's regulatory regime. In the ruling, U.S. District Court Judge Analisa Torres concluded that XRP tokens did not classify as investment contracts when sold on exchanges and algorithms, as the SEC claims, and therefore did not violate securities laws. Despite a seemingly mixed decision, crypto advocates are hailing it as a win, largely because if cryptocurrencies are not deemed as securities when sold on exchanges or algorithms, then exchanges are free to sell them without worrying about violating the law. This is clearly good news for Coinbase, and it surged over 25% after the landmark ruling. Owned in Opportunity Portfolio.

(~) Disney (DIS-US) Bob Iger, CEO of Walt Disney Co, announced a significant reduction in the production of Marvel Studios and Lucasfilm franchises, as part of the company’s cost containment initiative. This decision comes amidst a period of underwhelming box office performances from the company’s recent films. This move is part of a broader reorganization plan that Disney rolled out earlier this year, which included a $5.5 billion cost-cutting initiative. A significant portion of these cuts, $3 billion, will be made from content excluding sports. Iger emphasized that many of these decisions were made to bolster Disney’s flagship streaming service, Disney+, and attract more customers. Owned in US Portfolio.

(+) JPMorgan Chase (JPM-US) Good news. The bank stock climbed after reporting better-than-expected earnings due to higher interest rates and strong bond trading from the investment bank side. The company reported an adjusted $4.37 per share and $42.4 billion in revenue. Owned in US Portfolio.

(-) Palo Alto Networks (PANW-US) Shares traded lower amid competition concerns from Microsoft - the concerns stem from news of Microsoft Entra Internet Access and Microsoft Entra Private Access, two new products which are part of Microsoft's effort to expand further into protecting identities and access. Other features of the Microsoft Entra portfolio meant to fortify defenses against attackers include real-time prevention of identity takeover. ID Protection leverages the capabilities of advanced machine learning to detect irregularities in sign-in patterns and user behavior, promptly taking action to restrict, challenge, or reduce access in real-time. Owned in Opportunity Portfolio.

(+) Plug Power (PLUG-US) announced an order for 100 MW of proton exchange membrane electrolyzers from an unnamed company. It is the largest announced project in the oil and gas sector in Europe," but it did not provide financial terms or identify the purchaser. The electrolyzers, to be delivered and installed in 2024, will be powered by 100% renewable energy and generate ~43 tons/day of green hydrogen, allowing for the elimination of 516 tons/day of carbon dioxide, the company said. The PEM stacks for the system will be manufactured at its Rochester, New York, gigafactory. Owned in Core ESG+ Portfolio.

(+) Shopify (SHOP-T) rallied following the release of a video highlighting the release of a new AI chatbot assistant to help merchants with questions. The AI-enabled tool called Sidekick can complete tasks for merchants and answer specific questions about their business, including queries on sales and order trends within a store. CEO Tobias Lütke said the new Shopify AI feature will be coming soon. Weighing in on the development, JMP analyst Andrew Boone said the new Shopify tool can once again lower the barriers to entry for entrepreneurs, as well as provide even better analytics and easier website building for SHOP customers. Owned in Core Portfolio.

(+) The Trade Desk (TTD-US) shares rose after the Nasdaq announced that the digital marketing company will join the Nasdaq-100 Index prior to market open on July 17, 2023. It will replace Activision Blizzard in the indices, which is also leaving the Nasdaq-100 ESG Index. Activision is currently in the process of being acquired by Microsoft. Shares are up 94% this year. Owned in Opportunity portfolio.

(+) UnitedHealth Group (UNH-US) The healthcare stock climbed 3.4% after beating on earnings. The company reported an adjusted $6.14 per share and $92.9 billion in revenue. This large Dow component has been a surprising drag so far in 2023 with shares down 15%. Maybe this is the pivot? Owned in US Portfolio.

(~) ExxonMobil (XOM-US) is doubling down on its carbon management business, announcing an almost $5bn deal for Denbury Resources that would give the oil supermajor access to the biggest pipeline network in the US for transporting and storing greenhouse gas. Denbury — which was among the dozens of US oil producers to succumb to bankruptcy during the 2020 price collapse — is a specialist in carbon management, in which emissions are transported and stored or used to pump more oil. Texas-based Denbury has also emerged as a big beneficiary of the generous carbon capture tax credits on offer in President Joe Biden’s sweeping climate bill. Owned in Opportunity Portfolio.

Weekend Reading

Interest rates to stay higher for longer Cracks in the economic backdrop not big enough to prevent further central bank rate hikes but Inflation is (mostly) moving in the right direction, but slowly. RBC

Shopify Shames Employees With Cost Calculator for Pointless Meetings The company’s new internal tool is part of a push to boost productivity by removing a projected 322,000 hours of meetings this year. BLOOMBERG

Liberal tax promise tracker, Summer 2023 edition. Here’s the status of tax proposals that matter. INVESTMENT EXECUTIVE

How The $2.3 Billion Sphere In Las Vegas Plans To Become A Global Brand The inside of the MSG Sphere has a 250-foot high screen with 360° views all the way around. There are 168,000 speakers, promising to deliver the same pristine sound to every seat. And U2 is opening. HUDDLE UP

Retail reset: A new playbook for retail leaders In light of unprecedented industry disruption, a retailer’s actions today could determine whether it spends the next 20 years as a leader or a laggard. Here are four must-dos for retail executives. MCKINSEY