A Comment -- General Comments From an Expert (A Commentary)

The market has retraced 50% from bearish lows. History says the market is now all clear. Maybe. He didn't panic when markets moved down, nor say the market would scream to the upside. Upward moves in the 10-year-yield are far more measured now and less frantic than before, and this is more comfortable for the market. He's been neither strong bull or bear, just sticking with his tech stock. Remember that the Fed has raised rates only 0.25%, but bonds have risen from 1.5% to 2.37%. The bond market has done the heavy lifting, so the Fed hasn't bumped rates by 0.5%, and this is good. Consumer demand remains very high and consumers can weather high gas prices. Nike's latest blow-out numbers show this.

Bullish or bearish? Historically, the third year of a bull market offers fewer possible outcomes. She doesn't expect a blockbuster year like 2021. The economy is slowing down, but that doesn't mean a recession. Watch the 3- and 10-year spreads. Be positioned for the second half of 2022 which looks better.

So much about the market depends on progress in the Ukraine war and no one can predict what will happen. Will Putin escalate or will there be a settlement? Inflation is the other major market driver, some of which is linked to the Russian war, namely grain and oil. Inflation won't magical go away if the war is settled, but prices will relax some. So far in 2022 non-profitable companies have been severely punished, like Peloton, Door Dash and Shopify.

The cost of shipping containers The cost of shipping containers have skyrocketed because of supply shortages. He doesn't know when this will be solved, but the volatility in shipping rates is wild now. The current shipping price is headed to drop. Do not chase these profits, because they won't last.

Effect of rising interest rates on insurers All insurers are in a great position to benefit from rising interest rates. The long-end of the yield curve should rise later this year, so all insurers will benefit.

What to invest in if you're 57 and have maxed out your TFSA and RRSP? Much will depend on the federal budget in April. We'll see if Ottawa increases taxes on capital gains, dividends or both. The most tax-effective thing is to own stocks that pay Canadian dividends, but mix in some quality US names for growth.

Are we seeing a real bounce in U.S. stocks? We'll see a rotation back into US stocks. Many entered 2022 bullish about international EM stocks. Those had a nice rally last week, but there is skittishness over Russia/Ukraine and the potential spillover across Europe's economy, as well as supply shortages. Five rates hikes sounds better than seven. The flattening of the curve in the bond market indicates some concern over a recession, but she feels people are over-concerned about market growth. If we're at 3% growth by end-2022 that's actually not bad compared to pre-Covid. The next two weeks look better. Last week showed slight improvement in PPI and CPI, which is encouraging, perhaps inflation is trending down. We need to see a continuing trend in declining inflation and WTI crude oil falling below $100. If so, there'll be an inflection point in the second half of 2022.

Today, the street is calling for an upswing of US stocks in its outlook. Has the risk profile of the high-PE, high-growth stocks improved? No. If there are a few closes above 4,471, the 200-day moving average on the S&P, this will mean another 75 higher--that's the immediate direction. Has the risk profile of the higher-growth, non-profitable stocks improved just because the market has bounced? No. This a bear market bounce. So, areas to look at are energy, agriculture, some megcap stocks, insurance, asset managers, healthcare and medical devices. Otherwise, there's still too much risk in the high-growth stocks.

Educational Segment. The massive amount of debt in the system already means we can't handle too high interest rates. Also, this is a supply side shock and not demand side. Right now, banks have the lowest net interest margins and profitability. With banks less profitable with lending, they lend less. We tend to then get less loans and less credit expansion.

Margin pressures will be critical for the upcoming earnings season. The Feds have now spoken. War is still going. There are many things affecting the markets and none are really bullish. Gas prices are also huge on consumers. Demand destruction would mean that there is a recession. Needs to rework supply chains. OPEC will be in the drivers seat.

More debt to GDP than ever in history. Massive change in the underlying liquidity. Don't have the tools to control inflation to create a soft landing. We are hearing aggressive tightening from the Feds and we are increasing risk of a policy mistake.

The market has been very volatile - last week was a big flip from the previous two weeks. The Canadian market is set to do well and could beat the U.S. The Federal Reserve has been supporting the market and is now planning regular interest rate increases. This combined with inflation moving higher and some early signs of a slowing economy will hurt the market. With possible softer markets towards the summer, investors should become more conservative or defensive as spring moves along.

In response to a question on oil and gas stocks, the trend is they do well between late February and early May. But it has a seasonal tailwind so the upside could continue. Look at your parameters when buying and consider early May as a point to exit.