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

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The growth selling may be over and the rally may have begun after today's huge move. This month has been a nightmare for growth investors after Jay Powell turned hawkish. The turning point may have been Netflix's earnings report on Jan. 20; shares tanked. Another was on Jan. 26 Servicenow reported a tremendous quarter and mentioned labour costs and other issues that weren't tied to rising rates. The day before, Microsoft reported a strong quarter, which rallied. Last Thursday, Apple reported that it had overcome supply shortages; they and Mastercard reported blockbuster quarters and no factory shortages. That said, Robinhood reported a bad quarter, but still popped. Today, Netflix's CEO reported he bought a lot of shares. He's never believed in the growth vs. value dichotomy. If you want a value stock, pick one without supply and labour shortages.

Carly Garner, technical analyst, predictions--some contrary Even though the FEs is reducing bond purchases, we've had two years of massive QE. That overhang (history says) will last years, not months. Why? Because QE enlraged the suppl of money. QE is relatively new, sreally started in the Great Recession. Now feels a lot like 2010-11 when the Fed injected a lot of QE which pushed stocks higher. In that period, we saw a boom in commodities just like now. Corn could head to another boom. Crude oil is near overbought status, so the upside could be limited with a strong ceiling around $90/barrel, then could fall back as low as $62, but the bottom is cushioned by the overhang of QE. A decline in oil prices could reduce the number of interest rate hikes. Gold and silver could see a lot of upside, just like in 2010-11. The market is very bearish bonds, but Garner detects a long-term bull market in metals. If Powell takes a Janet Yellin approach, his rate hikes could span years, not months. In short, the momentum of recent years will push assets higher.

Can Jay Powell engineer a soft landing by tapering and raising rates. Critics say Powell is behind the curve--not raising rates fast enough, so now he's sounding more hawkish and accelerating hikes. Some say he will hikes seven times this year. He disagrees, because Powell learned a lesson in late 2018 when he hiked rates quickly. This time, Powell has succeeded in navigating Covid and in allowing full employment happen before he makes a move.

Believes oil will hit $100/barrel by 2023. Fundamentals support continued strength in energy prices. Biggest mistake shareholders can make is selling too early. Normalization of oil demand, end of US shale hyper-growth and low investment will raise oil prices.

Average Canadian energy company can privatize + pay off debt in under 3 years using cash flow at $100/barrel. Remains bullish on oil prices. Sees Canadian energy as a 5-6 year investment thesis. Average Canadian energy company has 133% potential upside at $100/barrel.

Markets. Tech selloff means some opportunities. Despite talk of rate increases, 30-year US treasuries still yielding only 2.1%, which suggests supply chain issues are transitory, and inflation will fall back sooner rather than later. Supply issues are starting to abate, and semiconductor issues will be resolved in the next 12-18 months. High bond yields won't be much of an issue to stop equity markets.

Does Fed have scope to raise rates? Yes. Healthy that interest rates get lifted a number of times. One, to make clear that the Fed won't let inflation get out of control. Two, gives them more tools down the road when the next recession comes along. Rates won't get to levels seen over the past several years anytime soon, but they will most certainly be higher than they are today.

Streaming competition. There will only be a few companies left at the end of the day, and NFLX should be one of them. He owns BCE, DISCA, and DIS. Prices will probably go up as the field narrows, underpinning profitability.

Share buybacks. He doesn't worry about fewer shares outstanding. He'd be worried if a company was buying them back at higher valuations. Makes sense for long-term shareholders for a company, like BRK.B, to buy back stock when it's cheap.

Has the pandemic caused the travel industry permanent damage? This may be correct. Doesn't know what the new world will like, and what changes there will be to human behaviours. He prefers companies that are more diversified than doing just travel. For example, DIS is more diversified than CCL.

Upside of market selloffs. He welcomes them, as not everything sells off in the same amount. This time around, tech has sold off in a huge way, but other things not at all. Gives him a chance to sell something that's done well, and replace it with something where he sees more upside.

Bond ETF vs. an actual bond. If you're talking about high yield bonds, never buy a single high yield bond because there is a high default rate. There's just way too much risk in a single bond, even in corporate bonds, though government bonds are not a problem. You need to own a basket. Rather than an ETF, you're better off owning a high yield bond fund, so your price moves with the NAV and not with the market, so you're at least protected that way. With bonds, if you win you get your money back and a small return, but if you lose you take a bath. So you need some diversification.

Best Canadian banks right now? He owns several. CM is the cheapest and most attractive. Also owns TD, RY, and BNS. Exited BMO on valuation. Canadian banking sector has been a great place to be, oligopoly. "Hates" being a customer, but loves being an owner. All in excellent shape. The sector is a core holding in his Canadian strategy.