Market Commentary — Page 259

Market Commentary

COMMENT

Canadian bank outlook He likes the Canadian banks here. Mid-2020 he added to them, hopeful about vaccines which would open the economy. Maybe he was a little early, but banks are now doing well. The equity markets are performing now. Banks are breaking out now and he'd buy. BMO just put out a great quarter. These are dividend payers and are long-term investments, not for day trading. Always good for income and growth.

COMMENT

Market outlook. Powell has justified valuation of equities with low interest rates. Now that rates are picking up, it will be interesting to see what he says about inflation and what the Feds are going to do. Technology particularly has been inflated due to low interest rates. The yield is going up to around 1.5%. Oil prices are also expected to go up.

COMMENT

Educational Segment. PRO-Eyes index is something he has created. It has 20 different factors with 4 valuation factors. The index shows you when there is opportunity or when to be cautious. The index is currently telling us we are at the high end of the market and caution is warranted. There is a high probability of a 5-10% correction in the next few months. The index is updated weekly on the Berman's Call website.

N/A

Market. She aims to participate in what is working in the market. You saw these massive rotations last year. Investors shifted where they were willing to take risk from valuation risk to earnings risk. There is a lot of interest in names coming off cyclical bottoms. The market has been driven by early recovery stories. She looks at stocks on a case by case basis. Some lumber names will do well and some tech names won't. Companies that rely on acquisition for growth, are having to pay higher and higher multiples.

BUY

Electric Vehicle Infrastructure. This is a huge secular theme in the markets. It is a place where a lot of capital has been flowing. MG-T is one of her top holdings.

BUY

5G – How to play. Some of the semi conductor names are a way to play it and particularly KEYS-N. We are still in the very early stages of that build-out.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. There are opportunities in both the US and Canadian markets. Currency variability is also a risk for Canadians. In terms of geographic allocations, a balanced approach would be favoured. If the majority of your expenses are in Canadian dollars, it makes sense to have some exposure to some Canadian equity. Unlock Premium - Try 5i Free

COMMENT

Today's sell-off in tech and modest rise in S&P is what is expected before an economic reopening, a boom-time like the Roaring Twenties. You're not early getting into these reopening names, like Caterpillar and the airlines, but not late either. Growth and tech names will suffer until this rotation ends, but don't give up. Growth and value stocks always come back, but there will be pain until then.

COMMENT

Technical analysis to forecast the next few months Tech analyst Larry Williams has been predicting markets accurately during this pandemic. Williams expects the current bull market in cyclicals (and rotating out of tech stocks) has room to run and that the Dow will peak in late April or early May, then we start going down. Past Dow charts show that we get a strong buying opportunity every 240 days. There'll be selling pressure around April, which paves the wave for a strong buying opportunity in mid July. There'll be pain, but it will lead to gain. Further, oil is a leading indicator of the stock market 3.5 years down the line; it takes time for strong oil prices to translate into strong stock prices. Charts from 2014 and 2018 prove this historically. So, the Dow has more upside. Lastly, a historic link between crude oil prices and airline stocks indicates that airline stocks will soar from now through late April. The, there'll be a consolidation then a strong rally at the end of the year. He considers these forecasts spot on, but not: we're talking about reopening stocks, not tech stocks, rallying.

COMMENT

Market Outlook. Looking back one year, that's when the TSX peaked, right before the March sell-off. The markets have decided to give a pass for 2020. Central banks have eased dramatically and interest rates are near zeros. Markets are reflecting the thinking that things will continue to improve this year.

COMMENT

S&P 500 companies' earnings season for the fourth quarter is nearly over and they have surprised on the upside. Q4 earnings were 4% higher than the previous year. Companies are starting to be more comfortable giving guidance. Demand is coming back in areas that have start reopening. The earnings need to continue to come in to support the market as these highs.

COMMENT

Rising bond yields. The market was a bit nervous this week, but the US 10-year bond yields are below what they were a year ago. Real interest rates are still negative. When the 10-year bond yields get to 3-3.5%, that's when you start to get a little nervous. Inflation needs to be watched. Feds have committed to low interest rates for the near future. If inflation gets up to 2-2.5% for a sustained period, markets can see more volatility.

COMMENT

U.S. 10 year yield. The US yield is 1.3%, and 1.1% in Canada. Very low interest rates. When interest rates start to go up in terms of the yield curve, it is a good thing since it means the growth outlook is improving. Cyclical stocks are doing better because of this. We must evaluate the discount on future earnings with higher interest rates for growth names and this is what is hampering their performance right now.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. There’s a lot of worry in the market, but this is a perennial issue. The broader markets should return around 10% this year. Earnings have been good and interest rates are accommodating. Unlock Premium - Try 5i Free

COMMENT

Are you still finding reasonably priced equities? We are. You can't look just at valuations. You have to look at the surrounding environment. Historically low interest rates, which naturally lead to higher valuations. Lower cost of capital, as well as competing asset classes. On top of that, the Fed has the market's back. Big cap has really been leading, driving markets higher. A lot of companies under the hood have good valuations, in different sectors, more value oriented, more cyclical, and that's where the economy is going.

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

Canadian bank outlook(A Commentary)

Market outlook.(A Commentary)

Educational Segment. (A Commentary)

Market. (A Commentary)

Electric Vehicle Infrastructure. (A Commentary)

5G – How to play. (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)

Technical analysis to forecast the next few months(A Commentary)

Market Outlook.(A Commentary)

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

Rising bond yields.(A Commentary)

U.S. 10 year yield.(A Commentary)

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

Are you still finding reasonably priced equities?(A Commentary)

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