Tuesday Taper Tantrum

Does anyone recall the taper tantrum from a couple of years ago? In the midst of the massive Fed money printing, there was a brief period where the markets really struggled from fear of the Fed ending quantitative easing. Fast forward to today, markets are near all-time highs and the Fed has stopped expanding its balance sheet and is now closing in on its first rate rise.

Once again, markets are in fear of tighter monetary policy. Today, we had the tiniest hint of inflation with a small uptick in CPI. One month does not a trend make. However, stocks reacted negatively to the news. The Fed hasn’t even started raising rates and people are starting to call for the next recession in 2015.

Cannabis stocks traded with slightly better volume today than yesterday. Press releases kicked up a notch from yesterday, most of which are not going to result in more than a pop in stock price. The market is begging for legitimacy from the sector. There is real interest in cannabis. Let’s capitalize on a massive potential audience with real information such as legitimate revenue producing events.

Daily Positive: The New York Times posted an interesting article on a doctor out of Canada who made a strong case for medical cannabis and the need for continued research. It is good to hear educated people who are taking the patients’ testimonies seriously and seeking to provide more support with research.

Today we are attending the Water Conservation Showcase in San Francisco. It is being held by the U.S. Green Building Council, which has also focused on hemp recently. They seem to have a true desire to explore alternatives for the existing process that is inefficient, especially around use of water.

We have spoken about the opportunities to explore and understand more sustainable cultivation in cannabis and this is really something to be applied across all aspects of life. We were pleased to hear how many of these providers are interested in cannabis. We heard things like “that industry is long overdue to be accepted” and “we have been wondering how to get involved in that area,” which shows that people in other industries are watching this space.

As an investor, we like to consider all angles of the industry and efficient water usage is just one place to look. After all, this could be one area that the opposition may leverage against legalization. Our answer to that is that when legalized and regulated, there is far more control over the methods employed by cultivators. When left up to the cartels, any number of dangerous pesticides and wasteful practices are put to use.

 

The discussion above is provided for informational purposes only and does not constitute an offer of, or solicitation for, any investment services or products offered by the author. The author is not making any investment recommendations and the opinions above do not constitute investment advice. Reference to above indices [and companies] is based on information provided by sources the author believes to be credible. Investing in the cannabis industry, as with other industries, presents certain risks including the risk of loss on an investment.

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