A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Inflation He fears that inflation down the road will spike, a real doozy, and that US Fed Powell may have to raise interest rates sooner than later. He points to the sharp demand in steel and, hence, rise in steel prices. Lumber is also surging. Until the US strikes a deal with Canada, tariffs will make it expensive to build houses in the U.S. The shortage in semiconductors is putting the kiebosh on the hot car market. In turn, used car prices are shooting up. Oil is also up which means plastic products which will jump in price and ripple through the economy. Some of these shortage may be temporary, but we have limited time and Powell may be forced to raise rates.
COMMENT
Markets. Very extended heading into March. Now seeing rotation. Pullback off the highs, especially in the US with the Russell and NASDAQ. TSX, heavily financial weighted, has done quite well. Financials and energy have started to accelerate. He's closely watching moves in utilities and staples, which are signs of defensiveness.
COMMENT
Is it tough to find appealing stocks reasonably priced? Not at all. He gets excited about the volatility. The American rescue plan should bridge the gap as businesses open up and employment comes back. The S&P 500 is outpacing the NASDAQ this year, as the market focuses on more mature business models and reopening plays. No recovery can take place without the cost of inflation and higher rates. This macro is very supportive of cyclicals like banks, energy, and auto insurer names. Inflation isn't a real problem and is supportive of equity markets overall.
COMMENT
Good time to buy FANGs in USD? CAD is fairly valued here. Loves the FANG stocks. Super highly cash generative businesses. Super high ROIC. Not really that expensive. FB and GOOG trade at 24-28x forward earnings, when the market's at 22x. No matter what your outlook on the CAD is, you could be buying these names.
COMMENT
Discuss your investing approach using your MWG Global Equity Growth Fund as an example. One-stop shop for investors with 80% exposure to global equities, and a small Canadian component of 20%. Concentrated portfolio, with 30-45 companies. Consumer services, discretionary, and healthcare sectors, with names like Facebook, UnitedHealth, and Aritzia. He looks for superior revenue, cashflow and profitability prospects. Chooses undervalued companies whose growth or stock price is not reflected in the market. Last year provided some great long-term buying opportunities. Takes a bottom-up approach to stock picking.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Central banks can only do so much to control rates. Market rates can still rise. Central banks want low rates to allow for recovery to take hold. Savings rates are high and there is an anything but cash mentality. Limited supply assets become more valuable when governments prints more money. Unlock Premium - Try 5i Free
COMMENT
He focuses on infrastructure stocks for dividends. You can't rely on fixed income, but he avoids high-volatility stocks. In infrastructure, he seeks electricity and power demand; he predicts an inflection higher. He's talking about renewable energy in particular. We'll return to a normalized world in the next year to 5 years which will see more energy demand. He's pretty positive about Canadian natural gas infrastructure, too. Shell leads in global LNG. The world is shifting away from old energy, such as coal.
COMMENT
Buy stocks under TFSA or not? You should max out your TFSA, the best investment vehicle around. What stocks to buy for a TFSA? That can be tricky. If you lose, you come up empty and your TFSA may actually decline. Instead, pick the safest stocks, whether they pay dividends or not. The more years you have, the better. His clients' TFSA grind higher now pushing into six digits. Look at names like Enbridge. He also prefers investing in an RRSP than a non-sheltered account.
COMMENT
Market outlook. The Fed's message was to anchor short term rates, and they want some inflation. The yield curve is steepening, which is positive for banks. As yields fall, it helps tech so this market rotation is important to watch. They will probably institute some yield curve control. The treasury is issuing $200B in debt. Flow of funds will impact bonds and Feds as well as stocks.
COMMENT
Canadian Dollar. We are running massive deficits. We have a current account, and capital account deficit. In this environment, the CAD should be weaker at around $0.75. We should head back into this territory later in the year. It seems that in the recovery trade with the supply-demand imbalance, it will show strength for a bit.
'%20fill='%23ffffff'%3e%3cg%20id='Pager'%20transform='translate(423.000000,%201755.000000)'%3e%3cpath%20d='M243.295367,17.286474%20C243.68919,16.9045087%20244.327703,16.9045087%20244.721525,17.286474%20L249,21.4361302%20L253.278475,17.286474%20C253.672297,16.9045087%20254.31081,16.9045087%20254.704633,17.286474%20C255.098456,17.6684393%20255.098456,18.2877274%20254.704633,18.6696927%20L249.35654,23.856763%20C249.159628,24.0477457%20248.840372,24.0477457%20248.64346,23.856763%20L243.295367,18.6696927%20C242.901544,18.2877274%20242.901544,17.6684393%20243.295367,17.286474%20Z'%20id='Path'%20transform='translate(249.000000,%2020.500000)%20scale(-1,%201)%20rotate(-90.000000)%20translate(-249.000000,%20-20.500000)%20'%3e%3c/path%3e%3c/g%3e%3c/g%3e%3c/g%3e%3c/svg%3e)
'%20fill='%23ffffff'%3e%3cg%20id='Pager'%20transform='translate(423.000000,%201755.000000)'%3e%3cpath%20d='M243.295367,17.286474%20C243.68919,16.9045087%20244.327703,16.9045087%20244.721525,17.286474%20L249,21.4361302%20L253.278475,17.286474%20C253.672297,16.9045087%20254.31081,16.9045087%20254.704633,17.286474%20C255.098456,17.6684393%20255.098456,18.2877274%20254.704633,18.6696927%20L249.35654,23.856763%20C249.159628,24.0477457%20248.840372,24.0477457%20248.64346,23.856763%20L243.295367,18.6696927%20C242.901544,18.2877274%20242.901544,17.6684393%20243.295367,17.286474%20Z'%20id='Path'%20transform='translate(249.000000,%2020.500000)%20rotate(-90.000000)%20translate(-249.000000,%20-20.500000)%20'%3e%3c/path%3e%3c/g%3e%3c/g%3e%3c/g%3e%3c/svg%3e)
