A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Educational Segment. Over the last year, we have seen dramatic moves up and down in the markets. In a recession, you get multiple waves of selling. This time, we did not get this. Looking at the sentiment of the market, the standard deviation for those who are bulls is quite significant. He thinks we will see a side-ways consolidation for the next couple months. Good news is already priced in.
N/A
Market. We've seen a surge in the recovery stocks, companies that were most impacted by COVID-19. He thinks these companies will fully recover over the next 2 to 3 years. There is a little bit of excitement in the markets now but there is room for these company share prices to move higher. He likes to invest in strong companies overall. He does not worry so much about the short term. He is still in the mega caps in the tech space. E-commerce still has penetration. He still sees great things longer term.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. In terms of a seasonal rally, tech tends to do well in Q4. There could be a shift from growth to value with the anticipation of covid ending in the next 18 months. This would mean industrials and consumer discretionary may outperform. Unlock Premium - Try 5i Free
COMMENT
After the third vaccine results today (positive) shows the future and the future is good. If we don't botch the vaccine roll-out in 6 months, markets look very good. The Return-To-Normalcy names include aerospace, marginal retailers (i.e. Macy's), financials (credit cards), and travel (cruiselines).
COMMENT
The (U.S.) Thanksgiving Trade, now through Christmas It's the best time to have retailer exposure. He won't recommend an ETF, because some of those stocks in that basket are weak. However, look for retailers with a sound online operation or at least extensive safety measures in their stores. Of course, e-commerce has taken the world by storm during Covid. E-commerce has surged to 16% of US retail sales currently. In 2001, it was 1%. The top picks here are Amazon, Walmart, eBay, Apple and Home Depot in that order.
COMMENT
We can finally look towards a post-covid world. The market is looking through the lockdown and induced demand loss. The structural loss of US shale and capital investment moving to renewables also points to a positive outlook on crude oil. We see a tightening of supply. He is still confident we will see $50 oil early next year and $60 later that year. Energy companies have enormous free cashflow right now.
COMMENT
Future of oil. The global population in 2050 will be at 2B people. Mass EV adoption is very challenging due to economics. Just from a base metal perspective, it would consume 85% of lithium and 105% of cobalt reserves in the world. Hydrogen would displace 4% of oil demands in 2050. The notion of peak demand is a fallacy but the reality is that this will lead to peak supply which will be very real.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A balanced approach is overall better in terms of portfolio construction. Tech will probably not slow down because of the vaccine. Of course, industrial and consumer companies might do better now. Health should remain positive as well. Fourth quarter is usually good for tech. Unlock Premium - Try 5i Free
COMMENT
The virus vs. the vaccine, and Biden vs. Trump. These are forces are broiling the market, which sold off today. The rising number of cases will impact markets, despite the V-shaped recovery. Covid is impacting sales. Without stimulus, it'll be a tough winter for some businesses. Also, we need a vaccine plan; so far, there are talks. Ultimately, he feels that the vaccine(s) will win, though. Trump keeps fighting the election results, which creates uncertainty for markets. Also, he suggest buying the market before Thanksgiving on Thursday. After that, seasonality points to a rally.
COMMENT
The last few weeks have been very eventful. There has been a decline in US political uncertainty and promising results from vaccines. There has been targeted lockdowns across the world as well. Looking further out, vaccines are coming and this will help the economy return to something like normal. Logistics will still be a problem short term.
COMMENT
Is there too much euphoria over the potential vaccines? Market was already in a transition away from momentum stocks. Starting to move into value. The Pfizer announcement created a big jump in stocks that were already starting to move. Stocks aren't necessarily too much ahead of themselves, but we're going to have a rough patch or two before it's all done.
COMMENT
Longer term, sobering thoughts on US debt to GDP? The long downtrend of US GDP dropped in 2008 to less than $3 of debt to $1 of GDP for the first time, and we had the worst recession since the Great Depression. It held tight at the 3.5:1 ratio until we got to 2020. Now we're back in the same condition as 2008, and along came Covid. GDP plunged as indebtedness went up. Can't tell if it's a Covid effect or something else. The economy won't bounce back in 2021 the way people are expecting. Covid isn't over yet, despite the vaccines.
COMMENT
Time to take profits from gold and silver? No. Outlook for inflation is perking up. Historically, upwards pressure on interest rates plus upwards pressure on commodity prices. Stay the course in the golds, and add some of the other commodities including copper. Not the time to bail, just because they're in a temporary hiatus.
BUY
Canadian banks vs. BAC Prefers the Canadian banks. They over-reserved on Covid losses, so there should be some earnings recovery in 2021-22. This hasn't happened with the US banks. Regulators still hate the US banks because of 2008. Canada is a cleaner environment for banks, and any of them would do.
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