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A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Stocks are rallying for the second straight day. Have we bottomed? She wants to say the bottom is in, but doesn't see it...yet. Valuations are better and fine, but not compelling like March 2020 when she was buying at 2,700 on the S&P. Today, it's at 4,300. The market is still expensive. It could go down more. She doesn't see technology and growth stocks being the place to be, going forward, until inflation is under control.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Hard to say if the markets have capitulated. The VIX has not spiked as in other times of crisis. Much of the uncertainty is gone with Fed rate hikes, corporate earnings being positive and inflation seeing a possible slow down. The war is the only uncertainty. Sentiment was exceptionally negative, now you can spend some money that was on the sidelines. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Higher food and energy costs will erode growth and reduce consumer spending power. North American consumers can weather this better; our economies and jobs situations are currently good though. Europe is more vulnerable, given they rely on Russian energy. However, there will still be economic growth and she doesn't see a recession. We need to see how long this war goes. The jobs picture here is very strong. Hold quality and growth stocks, balanced and diverse, so you enjoy dividend increases to buffer rising interest rates. Look for strong balance sheets and pricing power.
COMMENT
Educational Segment. Looking at the Fed rate hike cycles, markets are typically higher following rate hikes and so there is generally less to worry about. In the 70s, there was stagflation. Doesn't think there will be a repeat of the 70s, but he is worried about the Fed's ability to correct the supply-demand inbalance. The best of globalization is probably in the rearview mirror now.
COMMENT
Inflation. Inflation has been made worse by the war. The Feds have a real challenge to bring down inflation. When oil comes down, you get some relief from inflation. The Feds do not have the tools to fight the supply side issues. Typically, if the market is caught off guard to rates, then it could suffer. However, usually after a year, markets are usually almost higher.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Oil. Sold all exposure to energy sector in the rally. Oil should stay elevated, but this spike from the Russia-Ukraine war is temporary. When oil settles, it should be around $70-$80. Russia will sell oil at a discount. The world will adjust to supply-demand challenges.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Focus on quality companies. Quality means financial leverage, profitability and consistency of profitability. Use accounting measures of credit quality, etc. Look for companies that are good in times of rising interest rates and tightening financial conditions. Avoid companies with lots of debt because of higher interest rates and higher funding costs. More economic volatility can slow the market before it accelerates.
COMMENT
Probability of recession is below average for next 12 months. Economy will continue to grow although probably at a slower pace than in 2021. Also yield curve indicates probability of recession is low. Is watching gasoline prices since rising costs could indicate recession, but there is strong income growth in the U.S. and strong household balance sheets. Recession indications of course change with the data. Transition to capital spending and business re-investment. Look to defense contracts. There are higher commodity prices and investment in those companies. Also defensive businesses like health care which was down last year but has good long term prospects.
COMMENT
Another sell-off today, and market outlook Today we saw the death cross in addition to Russia' bloody invasion, higher interest rates, supply chain woes and inflation. It's a terrible market, but he is looking at the positive. Health, energy and consumer products are sectors to buy. He can see energy doubling its 4% slice of the S&P. Also look at time: be patient and look past this very troubling time; the bottom could come sooner than you think.
COMMENT
With inflation coming in at 7.9% yesterday, he's cautious about the market. Near-term, there's more volatility. But once QT gets underway, there's more clarity about the future and we get some grasp on inflation, then his outlook will improve. But's now he's cautious, not terribly excited about the market.
COMMENT
The market has already priced in a lot of the current bad news. The market is a coiled spring; positive news out of Ukraine could unleash a powerful relief rally. But what if oil and wheat prices stay this high and rising wages don't keep up with inflation? The global economy is already slowing. She doesn't see a screaming buy in the market, at least not yet.
COMMENT
Oil stocks She would not exit energy. Crude oil prices are around fair value today. Demand is rebounding strongly and supplies are a big question. American oil companies are making lots of money and are trying to ramp up production all bodes well for energy shares. Also, oil stocks pay good dividends and you need dividend payers now. She's rather hold a cash-flowing asset than sell it.
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