The Highlights
Global equities gave back most of last week’s gains, with the MSCI World Index ending the week -1.42% and the S&P 500 -1.26%. The NASDAQ finished the four-day stretch -1.93%, while small caps were hit hardest, down 3.60%. Losses were fueled by mid-week economic reports that signaled inflation could pick up again. Cannabis stocks bucked the trend and booked another winning week. The US cannabis MSOS ETF finished +21.88%, while the global YOLO ETF gained 12.26%. US cannabis has been outperforming because the catalysts driving the gains (rescheduling and SAFE Banking) benefit US operators the most. YTD, cannabis stocks have remained uncorrelated to the S&P 500. The MSOS ETF’s daily correlation to the S&P 500 was just 0.11. While the S&P 500 returns have been driven primarily by earnings and inflation data, political progress is pushing cannabis stocks higher. Blending uncorrelated investments is the best way to increase risk-adjusted returns. Positive performance in cannabis this week was caused by continued enthusiasm around rescheduling and progress with SAFE Banking. Specifically, we’ve heard from multiple sources that the Senate Banking Committee will vote on SAFE Banking the week of September 18. If passed, the next step would be a Senate floor vote later this fall. AYR (CSE: AYR, OTCQX: AYRWF) once again had the strongest return this week, +89.90% over the four days and +233.70% since the open on August 30. Columbia Care (NEO: CCHW, OTCQX: CCHWF) continued to surge, +52.62% last week and +173.81% since the August 30. TerrAscend (TSX: TSND, OTCQX: TSNDF) was up just 7.92%, but is one of the strongest YTD performers at +92.92%. Money flows and investor interest are on the rise. The MSOS ETF has seen 10 straight days of inflows and AUM has grown by $305 million, a 96% increase. This week, we had more investors ask to be added to our cannabis distribution list than in the last three months combined. On Friday, we co-hosted a Twitter Spaces with The Chart Guys and The Dales Report. We reviewed recent moves from technical and fundamental perspectives. Dan McDermitt from the Chart Guys has been through several cannabis cycles and offered a valuable perspective. The Dales Report shared valuable market insights. Here’s a link to the recording.
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