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

Is there room to run in the 2nd half of 2021? Any summer sees leisure and travel stocks benefiting, plus we're reopening after Covid-19 so masks are coming off as theme parks are opening up, for example. We'll be hitting the roads, which will revive oil prices and energy stocks. Cryptos had such a huge run, but the price has somewhat stabilized now. They may get a second life and go to the moon in the second half of 2021. We've seen huge tech innovations and investors have become savvier. This isn't your granddad's stock market. We haven't seen a 10% correction since Covid hit. The recession we had saw the fastest recovery in history. Risks are inflation rising again; we could see a surprise--or signal of a--rate hike. There are also cybersecurity risks from abroad. Remember that August is seasonally a slow month. We've seen six months of unemployment gains, which could trigger the Fed to change monetary policy. All this could effect the second half of 2021.

Is there still room to run in the 2nd half of 2021? In coming months, she expects the cyclicals to resume leadership because US 10-year to move higher. Also, excess consumer savings will boost earnings in cyclicals. She guesses surprises to the upside to be significant. She is bullish. She likes materials, driven by global economic recovery, like oil. Valuations of both classes remain attractive despite the stock run-up. She also likes banks which have passed the stress test and buyback shares. She sees the 10-year yield steepening, which favours banks.

No show today, due to the Canada Day holiday.

Markets in the summer. We'll see if sell in May and go away comes true this year. Optimistic on the economic outlook. Canada has lagged the broader reopening, but now starting to see things open up. Consumers have high savings rates and want to get out and spend money. Equity markets already have the good news built in. More of a stock-pickers market, not everything is going to work. More challenging to make money going forward. Investors will have to be more selective.

Gambling mentality. Speculative activity is one of the risks to the outlook. Currently contained to areas such as SPACs, crypto and hot IPOs. Meme stocks such as AMC are concerning. These times of speculative activity usually don't end well and someone is left holding the bag. Investors need to be wary. Ask what's driving a stock, fundamentals or speculation?

US homebuilders. US homebuilders have done very well, with increased demand, housing starts and prices. Not clear how persistent the trend to move out of the cities will be. But overall, the trend to more single family homes will play well for them. If there were a pullback, he'd look at companies like TOL and LEN.

He specializes in cannabis, small and mid-cap stocks. Of the latter, they've gone sideways or corrected a bit in the last 3 months, so he's excited about the future. He sees opportunity in growth and value as investor flip-flop on any given week. Whenever the U.S. Fed is accommodative, they lower rates and drop bank reserves. As the economy picks up, they adjust, but that hasn't happened yet. Rates remain low and the taps are still on for liquidity.

How do you know that the dividends of a pipeline stock will be safe? It's a more volatile industry than others, but he looks at free cash flow, the catalysts in the business and the individual company.

Rising case counts. Britain is seeing more cases with the delta variant. There is also good news that the mRNA vaccine's efficacy is still high. The bulk of those who were going to get the vaccine has gotten one. It will be an overhang for a while and it will have influence on markets and policy.

Federal reserve. They have been walking back talks of removing stimulus. It's clear that when the market is upset about something, the moves get walked back.

Gold. Still bullish on gold, but has modified upside expectations. Was looking at 2300-2500 for spot gold over the next couple years. Less confident on the call now with the negative rate policy is in the market. However, gold has not moved. Debt monetization will continue.

Bonds. The whole category of fixed income is now broken. Interest rates need to stay low because of debt. The safety and balance aspect is broken now. Must look at alternatives now. This will be a theme for the next 10 or 20 years.

Educational Segment. Michael Burry said that the hype and speculation around crypto and such is sucking in retail investors. When it falls, there are billions that get wiped out. We are seeing a divergence where markets are moving higher but a lot of stocks are under their 50-day moving average. The last time we saw these divergences, it was in 2007. We are in a high risk market with dislocation of what's happening. This is a cautionary sign.