April 2021: When the Rubber Hits the Road

Painting: Fire and Ice
Anam Feerasta

We built Inukshuk Capital Management to serve the needs of clients looking for a unique approach – void of conflicts of interest, commission sales and pushed products. We began by putting our own money where our mouth is. With low fees and active risk management, we help families achieve financial longevity, that’s the bottom line.

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April 2021- When the Rubber Hits the Road

In this issue:

  • Equity Markets
  • Stocks and Stuff
  • Where the Rubber Hits the Road
  • Fun Facts
  • Health is Wealth
  • Our Team is Growing


Emerging Markets (EM) are the Rodney Dangerfield of equity indexes and continue to get no respect from Mister Market. After making a comeback from an early loss, being up over three percent by April 28, the last two trading days of the month were not kind, with the index suffering a two percent loss. Even though all four major global indexes were up, EM lagged the S&P 500 by four percent.

Our systems remain very cautious in both EM and MSCI EAFE (Europe, Australasia and the Far East). Our active risk management program has had no position in MSCI EAFE since mid-February and the smallest long position our systems allow in EM, since the first week of April.  We continue to hold 100% long allocations in the TSX and S&P 500, this year’s top performers. With choppy markets, having a systematic approach serves our clients well.

If you would like to stay current on our measures of trend and momentum in the markets we follow, please click here.


Over the past 12 months, commodities along with many other assets have rallied sharply from the Pandemic Panic Low (PPL™). The Commodity Research Bureau (CRB) Index has returned 70% over this period, while oil is up 160%, corn 130% and copper 95%.

Thanks to concerted efforts globally by central banks, the amount of liquidity sloshing around the system is close to record highs. The Bank of Canada’s balance sheet grew more than 400% between February 2020 and the end of April 2021 from $119 billion to $500 billion. With the added liquidity, inflation has become a going concern – bought a steak lately?

Emerging markets are typically thought to benefit from rising commodities prices. In January, JP Morgan Wealth Management published a very bullish report on EM with the expectation of “resilient” commodities prices. At the time, it looked like a decent idea, as EM stock markets hit all-time highs. But an interesting development has occurred: EM has underperformed the CRB Index by 25% since mid -February.

Oil and corn have been the two top-performing commodities over the past year. Forty percent of the corn crop in the United States is used to produce fuel. If we classify corn as a hybrid of energy plus food and then look at the ‘bronze medalist’ copper, there might be something that needs paying attention to other than the fact bronze is mostly copper.


Copper broke to all-time highs in April, surpassing the prior high in 2011 of $4.62/lb. Much of this demand is predicated on the expectation that future consumption will increase due to the electrification of transportation and other green industries. Ironically, copper mining is not exactly in the realm of ‘green’ industries.

According to the Copper Development Association Inc., the US industry association for copper producers:

“…conventional cars have 18-49lbs of copper, hybrid electric vehicles (HEV) contain approximately 85lbs, plug-in hybrid electric vehicles (PHEV) use 132lbs, battery electric vehicles (BEVs) contain 183lbs, a hybrid electric bus contains 196lbs, and a battery electric bus contains 814lbs, most of which is used in the battery.”

Using those numbers, a good guess suggests the average Tesla uses four times as much copper as a traditional internal combustion engine automobile. Add in the build-out of the infrastructure required to deliver electricity to charging stations, as well as the generators of that electricity (wind and solar farms require huge amounts of copper), and this could be described as: innovation driving new demand.

Rubber has been used in various applications for thousands of years, just like copper. But it wasn’t until 1839 when Charles Goodyear invented vulcanized rubber, which proved more stable and waterproof, that it became broadly commercially useful. In the late 1800s, a bicycle craze hinted what was to come in the early 1900s with the mass-production of cars. The rubber speculation is an historical record of how market participants can go wild. Rubber was the newest hot commodity because of the innovation of the automobile.

In a very good paper, titled The Factor Archives: Momentum, discussing momentum investing, Jamie Catherwood describes the history of the rubber bubble. Here is a quote from The Economist, 1910:

“If you take two of the industries which are practically the largest users of rubber, like electricity and motor traction, I do not think that anyone can come to any other conclusion than that both these industries, large as they may be to-day, as yet are only in their infancy.”

Sounds familiar. Catherwood states very succinctly in his conclusion:

“There are no certainties in investing, but one can be very confident that human nature will not be changing any time soon. Since shares first traded on the stock market in the 17th century, market participants and pundits recognized the fact that behavioral biases often cloud our investment decisions.” 

From the same, here is the chart of the rubber price from the early 1900s.


In no way are we predicting. Our process is in price. We use price history to build systems that capture behaviour and from that come trends. Stay tuned as copper might have some room to run.

Fun fact: copper is an efficient anti-microbial material. Maybe there is more to this than investment bank analysts -who predict 50% to 100% gains in copper – think, based on near-future green innovation. In a paper published by the US National Institute for Health (NIH) in 2011:

“Bacteria, yeasts, and viruses are rapidly killed on metallic copper surfaces, and the term “contact killing” has been coined for this process. While the phenomenon was already known in ancient times, it is currently receiving renewed attention.”

Apparently, as this decade-old paper reveals, this knowledge has been around for at least 8,000 years. Go figure.


The following are simply facts that are interesting. However, they are all related and worth paying attention to.

  • The total value of Bitcoin is 1.1 trillion – that is 50% of the total value of all US bank notes in circulation.
  • A Canadian company, Geometric Energy, is paying SpaceX to send a satellite to the moon with… dogecoin.
  • In 2020, it cost 1.76 cents to produce a U.S. penny and 6.2 cents to manufacture a U.S. dollar.
  • The cost of mining one Bitcoin is currently estimated to be between USD $8,000 to $12,000. Note: there are many variables involved in this estimate, but one significant cost of production is the price of electricity.
  • According to a Cambridge Centre for Alternative Finance estimate, the Bitcoin network consumes an annualized 148-terawatt hours of electricity, which is more than the annual electricity consumption of Sweden and almost as much as Poland.

Radiohead frontman Thom Yorke hinted at the connection between the real world and technology when he wrote Airbag from the band’s epic album OK Computer. It’s about a car crash he survived.

In a fast German car

I’m amazed that I survived

An airbag saved my life

In an interstellar burst

I am back to save the universe

All, or none, or some, of these observations could mean doom or a future full of unicorns and rainbows. Our guess is some important things are happening in the meeting of technology, and money, and our lives. That’s it. Maybe it’s fire or ice, or a bit of both.


‘To sustain it, you must maintain it.’

Victoria Bannister, ICM Health Ambassador

May is designated Mental Health Awareness Month.

Mental health, as defined by the World Health Organization (WHO), is “a state of well-being in which the individual realizes his or her own abilities, can cope with the normal stresses of life, can work productively and fruitfully, and is able to make a contribution to his or her community.”

The last 14 months, amid a global pandemic, have tested our mental health beyond the normal stresses in our lives.

The Centre for Addiction and Mental Health (CAMH) provides effective strategies and personal assessment tools to help us manage stress and anxiety as we move through the pandemic and adapt to the next normal.

CAMH- Coping with Stress and Anxiety-Covid 19 

Here are my personal ‘go-tos’ when coping with stress and anxiety.

  1. SLEEP. Sleep is my No. 1 priority for overall health and wellness. We all know how we feel after a poor night’s sleep: easily irritated, less focused, hungrier, and unable to effectively problem solve. Aim for a minimum of 6.5 hours sleep per night to feel adequately rested.
  2. EXERCISE/MOVEMENT. Exercise is proven to decrease stress and improve self-esteem. Aim for a minimum of 30 minutes a day, even if it’s just a walk around the block.
  3. NUTRITION. Our brains function best when fueled with the quality, nutritious food. Those high in antioxidants, minerals and vitamins are best. Simply put, what we eat directly affects our mood and productivity.
  4. SOCIAL LIFE. COVID-19 has made socializing more challenging than ever and, more than a year in, we all feel the effects. Yet human connection is a fundamental need, with studies showing that people with strong social connections have lower rates of depression and higher self-esteem. Prioritize connecting with family and friends, via a weekly Zoom video conference or even a phone call.
  5. NATURE WALKS. A walk in a forest, ravine, or park  allows you to shut off your brain off, get your daily exercise, while providing peace of mind as you take in the smells and sounds of nature. Nature walks feed my physical, mental and spiritual health.

My walking buddy, Gordie-


At Inukshuk Capital Management, we are firm believers in the connection between Health (physical, mental and spiritual) and Wealth.
Our ICM Health Ambassador is available to our clients for complimentary consultations.  Contact us  for more information.


At Inukshuk Capital Management, we embrace the opportunity to help mentor the next generation by offering summer internships.

Introducing Inukshuk Capital 2021 Summer Interns


Have a question?  Contact us here.

Challenging the status quo of the Canadian investment industry.


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