Market Commentary — Page 215

Market Commentary

COMMENT

The S&P has been on a juggernaut rally, hitting 48 record highs this year so far and has doubled from the pandemic low of March 23, 2020. Any worries ahead? The tide isn't lifting all boats. The S&P is up, but the Russell index and transportation and financials have not made highs for the last 4-5 months, so you need to pick certain sectors. It comes down to picking. Only some stocks are lifting the S&P to new highs.

COMMENT

Market push and pull. Still constructive on markets, driven by corporate profits much stronger than expected. Case rates are going up, but hospitalizations aren't. Doesn't see severe lockdowns of a year ago, because the remedy of a vaccine is out there. Valuation multiples are the same as in January based on 2021 earnings. This tells her that what's driven the markets up is not multiple expansion, but corporate profits, and this is encouraging.

COMMENT

Use for corporate profits. Companies will spend. Capex is going up and quite strongly, especially in the areas that serve commodity, energy, and mining sectors. Spending on automation and the cloud. Government is also spending on infrastructure and renewables. Utilities, too, might need to expand their reach. A lot of catalysts for corporate spending. As companies get more confident, they'll loosen the purse strings. Important, as one company's spending is another company's revenue. It's all interrelated.

COMMENT

Where are we as the sectors rotate to grind the markets higher? Last month or two, back to growth stocks. Back in February, when interest rates shot up, the reopening trade was positively impacted. Now that interest rates have backed off, resurgence back to growth names, as in secular growth and not cyclical growth. You must assess the valuations you're paying. Pick your points. On a pullback, that's an opportunity for an investor to start building a position in a company they've been looking at.

COMMENT

Takeovers. Ultimately, you have to trust that management has done its due diligence and is paying an appropriate price for the target company. Look at the fundamentals and take a long-term perspective. If you agree with the strategic reasons for the takeover, just hold the company. If there's a pullback on the news, you may take the opportunity to increase your position.

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COMMENT

Canadian banks today. Likes the Canadian banks on any day that ends in "y". Owns 3 of them as core holdings, and expects they will be for years to come. Stable oligopoly, great governance, great franchises diversified by geography and line of business, probably another year of record profits. Continue to own and buy.

COMMENT

Markets - worry vs. moving higher. It's true. A lot of people spend time chasing their tails worrying about the next crash. Corporate profits grow alongside the economy, and so markets make new highs. The pandemic recession was nasty and broad, but short, followed by a swift recovery with strong housing, record sales, strong industrial production, employment gains. Stocks aren't really that expensive. One of the most stable metrics of value is book value. TSX trades at 2.2x book value, a bit of a premium to 35-year historical average of 1.9x. But you have to look at what you're getting in ROE, which is pretty strong right now with the TSX cranking out about 11% of ROE. Market is fairly valued, so we should have returns in line with long-term averages, which are high single digits. His job is to try to beat the average by identifying stocks, sectors or themes that the market is mispricing.

COMMENT

OSFI restrictions being lifted? Tough call to say when handcuffs will come off. Probably after October, but a chance that it will be pushed out to 2022. When you buy quality businesses, you're not renting them for a day or a week. You own them for the long term. So whether the dividend increase comes in November, or not until January, is neither here nor there.

COMMENT

Financial planning for your TFSA. Look at portfolio construction, risk management, asset allocation, and income planning. TFSA is the most tax advantaged form of account that exists in Canada. Put your highest expected return securities in that portfolio. Don't let cash just sit in your TFSA, as those dollars should be working hard for you. Flipside of return is risk, and the two go hand in hand. Do your homework, and buy if you have conviction. CURLF is an example of an equity that would fit a TFSA. See today's Top Picks for 3 more suggestions.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Best not to try to manage short term volatility through changes in strategy. Could think of using some bonds and cash as well as gold. Gold gives some diversification away from slow-growth bonds. Tech, consumer staples and healthcare will hold up well in difficult times. Unlock Premium - Try 5i Free

COMMENT

The fear-mongering inflationistas were wrong today: July's inflation number was lower than expected, so there's no need to fear a hike in interest rates. Those naysayers are wrong and the Fed's Jay Powell is right. The lower inflation number lifted markets to fresh highs today...As for the Delta variant, it will likely dampen the outlook of airlines, hotels and others in the travel sector. However, the rise in hospitalizations is not as high as cases...Oil and used car prices--bellwethers of inflation--are stabilizing.

COMMENT

A great risk to stock investors is government (globally) is becoming more active in regulation, namely anti-trust and privacy. He's paying attention to payment systems. The pandemic may be a catalyst for long-term change. How are companies investing their cash in innovating techniques. The next phase of innovation is how to apply A.I. and A.R. into banking, medical, education and industrial companies. He looks for businesses actively investing in the future, into technology. Google, Microsoft, Apple and Amazon are morphing into greater vertical operations. Keep an eye on them. Canadian banks will keep up with tech; they are very well run and are the leaders in digital tech. Rather, the big risk is how to grow their Canadian franchises while competing in the U.S.

COMMENT

Question on GLXY-T He won't comment on GLXY itself. He will say in general that global governments will regulate digital currencies. We're in the wild west now where brokers make big returns, because the business is opaque. As transparency rises and big companies enter, it'll be harder to earn the same high returns. The wild west will end.

COMMENT

He's sick of pinning the current rally on the Fed's so-called easy money policies. This is idiocy. Rather, business is good in America--retailers making money from child tax credits, retailers prospering, and the infrastructure bill that will become law sooner than you think.

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

The S&P has been on a juggernaut rally, hitting 48 record highs this year so far and has doubled from the pandemic low of March 23, 2020. Any worries ahead?(A Commentary)

Market push and pull.(A Commentary)

Use for corporate profits. (A Commentary)

Where are we as the sectors rotate to grind the markets higher?(A Commentary)

Takeovers.(A Commentary)

🔒 Premium Content Alert – This buzzing stock opinion is accessible only to Stockchase Premium

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

Canadian banks today.(A Commentary)

Markets - worry vs. moving higher.(A Commentary)

OSFI restrictions being lifted?(A Commentary)

Financial planning for your TFSA.(A Commentary)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research.(A Commentary)

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

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

Question on GLXY-T(A Commentary)

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

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