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

Will That Takeover Go Through? Most investors are happy when one of their companies receives a takeover bid. But any bid has uncertainty. As we like to say, no deal is really done until you receive your cash. All takeover bids require shareholder approval, but many require varying levels of government, regulatory or antitrust approval as well.

Microsoft Corp. has been working on getting approval for its proposed takeover of Activision Publishing Inc. for 14 months now. Magnet Forensics Inc. shareholders are fighting its proposed privatization, as are shareholders of Canaccord Genuity Group Inc., where several directors have already resigned.

Toronto-Dominion Bank announced the acquisition of First Horizon Corp. more than a year ago, and now finds its target company caught up in the U.S. banking crisis. First Horizon shares are about US$16 today, well below TD’s bid price of US$25 in February 2022, indicating many do not expect this deal to close as is.

$2 is not the floor, but $1.75 is. We need a real hot summer to get nat gas back to $3.

Growth stocks offer the best opportunities in what will soon be in a secular growth market. The Nasdaq wants to get going, but is held back by rising interest rates. But we're seeing green shoots from companies reporting not-good earnings, but then reporting more positive announcements. Growth is the place to be in the coming 2-3 years after value did well. We're seeing a changing of the guard. He sees the S&P at 3,700 at the bottom and 4,125 at the top (resistance). So, if the S&P cracks that resistance, we could see a 10% move up. The S&P is hitting resistance right now. Interest rates need to hit 5.75%-6.00% to vanquish inflation. But oil's move upwards (caused by OPEC+) and China's reopening could fuel inflation.

Believes US Fed policy is most important aspect of the market right now (interest rate direction).
Bank turmoil in the USA also affecting markets in a major way.
Less money in lending (higher interest rates), will reduce capital available in the markets.
Expecting a recession with higher interest rates. 
US Fed pivot (reduction in rates), would suggest downward pressure on stock market.

Should I Buy This Stock That is Down? Some investors sense opportunity whenever the market declines. But they often need a second opinion, or maybe someone to blame if things don’t work out so well. Many questions are about whether investors should average down on losing positions. Our answer is almost always no. However, we will make exceptions when the entire market is down for some reason.

Many times, as has been the case in the past year, investors have been selling the so-called good stocks just as fast as they are selling the bad stocks. This can create opportunities. The key is to look for companies whose fundamentals are going the opposite way of their stock price (for example, earnings are accelerating, but the stock is declining). It’s not a perfect methodology, but everything gets cheaper in bear markets, and smart investors should look for opportunities amongst the carnage.
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One positive thing he will say about the financials is that they screwed up so badly that the Fed became circumspect in raiding rates and encouraged investors to pour money into tech stocks. We need to see wages come down for the Fed to truly change course....OPEC+ slashed production today, sending oil stocks up, but that alone won't sustain oil prices, because there isn't enough demand, including China (maybe).

The Fed will likely tighten too far and go the other way, but the Fed will respond in early May to today's core inflation (PCE) data of February which edged down, cooling slightly.

When the year began, she noted that the positive thing about the market was how negative sentiment was. Three months later, the Nasdaq and tech is up 15-19%. Who expected that when many expected new lows first. This is the effect of all previous rate hikes, and maybe there are 25 basis points left before the Fed likely pauses. Inflation is clearly going in the right direction. Tech was smothered last year when their multiples fell lower than the market. So, their current comeback makes sense to see some reversal now in leadership. Also, the market has handled this banking crisis unexpectedly (well).

"Resilient" & "uptrend" best words to describe current markets.
S&P 500 up ~17% from October lows. Past 6 months have seen upward moves.
8 consecutive months of lower inflation, will lead to dovish policy from US Fed.
China re-opening will also help industries around the world.
Record level amounts of money market funds being held with higher interest rates.
Still looking for high quality & value oriented stocks.

How Come the Market is Rallying with All the Bad News Out There? We have high-interest rates, inflation, war, pandemics and a financial crisis, amongst other problems. So how come the markets are so resilient? Well, as they say, markets climb a wall of worry.

If you want to worry, there are plenty to choose from. But keep in mind two things. First, valuations might be lower as fearful sellers exit positions. Lower valuations can set up better investment returns for those brave enough to step in.

Second, when all the news is bad, any actual positive developments can have a larger influence. If investors are worried about eight-per-cent inflation and it comes in at six per cent, there can be some relief buying. If you expect your company to report lower earnings and it reports flat earnings, even that so-so report can spark a sudden rally since no one was expecting anything, anyway.
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Canadian REITs are down 15-20% in the last 12 months, US REITs down 25%. Public real estate world has experienced quite a bit of volatility with the volatility in markets and interest rates. Reality is quite different in the private real estate markets in those sectors that have positive supply/demand fundamentals. He's more focused than ever on defensive sectors, those that have growth, and companies with great balance sheets. The sectors that make sense today include manufactured housing, single-family rental houses, industrial warehouse, and grocery-anchored shopping centres.

In 2022, private REITs were up by high single digits. In the publicly traded world, real estate was down 20% last year. Who's right, or are we somewhere in the middle? It all comes down to the asset class and the balance sheet. Today there's a wonderful opportunity in publicly traded real estate. Typically, public trades at a premium to NAV compared to private, but today the discount is 20-30% to NAV. Over time, that leads to increased M&A activity. That environment should come back once we have a bit more stability in financing.

Regional banks have 5x the exposure to commercial real estate as the large US banks. Credit has always been open for those borrowers with good credit and great relationships. He's not concerned at all about the publicly traded REITs. He'd be more concerned about private landlords in the wrong asset class, such as office buildings, as they're going to have trouble refinancing their mortgages. This will translate into great opportunities for well-capitalized owners, and hopefully some of the REITs can take advantage of that.

Trapped between the 50- and 200-day moving averages. Though, this morning, it broke above the 50-day. But it's done that before, and it's quite an inflection point right now. It looks as though we're going to have a decent month.