Market Commentary — Page 440

Market Commentary

COMMENT

Stocks have been flying blind without looking at earnings. All the indices made new record highs today. Use sell-offs, though, as opportunities to buy. Next week, banks kick off earnings seasons. Rates go up, the banks make more money and vice versa. The banks are a microcosm of the recent stock market. After a flat Q2, the banks can resume their climb.

COMMENT

Value stocks going forward. He switches between growth and value, depending on where the most upside is. Since vaccines were announced, value has been running the show. That's slipped in the last month with a lot of the cyclicals being hit hard. Tech has come back, but the recovery trade is still in place. They have better valuations and better earnings growth. Tailwinds of monetary stimulus, massive fiscal stimulus, reopening, capital spending. Stock market's come a long way in 15 months and valuations are extended, so a correction is not surprising.

COMMENT

Is current market action just the pendulum swinging the other way? With the reopening trade, that side of the boat got a bit crowded. Some of the growth data started rolling over. China is slowing down the economy to quell inflation, and the Fed might move earlier than expected to slow down rates. What happens when the fiscal benefits run out? The past 2 quarters have been quite a bounce, but we can't expect this to continue, so this took some froth off the cyclical trade.

COMMENT

The question is whether it's the pause that refreshes, or is it the end of the bigger run? It's a pause, with the caveat that it's an extended market. He's worried that there's not as much cash on the sidelines, bullish sentiment is high, and valuations are stretched. A lot of fast, hot money moved in and you have to shake the tree a little bit and see where the stronger holds are. He has cash and is getting ready to redeploy it in cyclicals like financials and industrials.

COMMENT

US bond market. The advice to sell all equities at 1% would still have a ways to go. Bond market is signalling slower growth ahead, earnings won't be growing as fast as expected. Growth expectations got a bit ahead of themselves. The Fed and money centre banks are still out there buying bonds, so that puts pressure on the yield. Rebalancing at quarter's end also. He's not concerned about the checkback, doesn't think it will last.

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COMMENT

Top 15 Buzzing Stocks this Week This week's TOP15 Trending Social Media Stock Ideas. The TOP15 is available to everyone this week, further weekly updates will be available for Premium subscribers only. Become a Premium member today.

01 - Workhorse Group Inc. (WKHS-Q)
02- AMC Entertainment Holdings Inc. (AMC-N)
03- GameStop Corp. (GME-N)
04- ContextLogic (WISH-Q)
05- BlackBerry (BB-T)
06- Advanced Micro Devices (AMD-Q)
07- Cleveland-Cliffs Inc. (CLF-N)
08- Apple (AAPL-Q)
09- Nvidia Corp (NVDA-Q)
10- PubMatic (PUBM-Q)
11- Regal Beloit (RBC-N)
12- Doordash (DASH-N)
13- Sea Limited (SE-Q)
14- Bank of Montreal (BMO-T)
15- DiDi Global (DIDI-N)

COMMENT

When's the next big correction? Not soon. Investors have been obsessing about this. Lots of newbie investors in the market. Market cycles are long. They don't just die of old age. Usually a bull market is brought to an end by either a cyclical or a structural recession. He sees scant evidence that either of those is imminent.

COMMENT

Aren't cycles compressing? He looked at that. Recoveries from bear markets are inversely proportional to depth and length of the bear market that preceded them. Short, sharp bear markets are typically followed by faster and stronger recoveries. Like an elastic band, the further you stretch it, the faster it snaps back. Today, markets have correctly priced in the rapid snap back in corporate profitability. If analysts are correct, TSX is poised to put up record corporate profits. Not a surprise that markets are at all-time highs. Rapid cycle of interest rate hikes could bring on a cyclical recession, but central banks are not signalling this. Interest rate derivatives market is also pricing in minimal rate hikes this year. Supply chain issues, and warehouses being empty not full, point to no recession.

COMMENT

10-year yield of 1.3%. US treasury rates bounced hard off their lows, and some froth has come off lately. Indicators indicate the economy is growing but decelerating, which shows we're moving from the rapid snap back to more of a steady state growth rate.

COMMENT

ESG. ESG investing affects all the oil explorers and producers. The problematic effect on Canada is like ESG on steroids, given the political climate and green activism here. They own no explorers or producers in Canada or the US, and only one offshore.

COMMENT

TFSA vs. RRSP Best practice is to hold your highest return potential investments in a TFSA rather than an RRSP. TFSA is the most tax-advantaged account we have in Canada. Put GDP-type return stocks in your RRSP. Keep room in your TFSA for other opportunities.

COMMENT

Will it fall to 1%? Even if it approaches 1%, investors will get nervous, but she wouldn't sell everything. She expects financials will do better as tech is split between quality tech like Facebook and Google (good) and the super-high valuation tech stocks which won't do well. That said, she is terrible at trading on macro movements. She trades on micro. She does not trade on interest rate movements. If the economy is slowing, it will pressure rates as well as bank loan books. She remains long the banks. The banks will be good long-term with their attractive valuations.

COMMENT

The U.S. 10-year yield keeps falling Financial will go higher, tech goes lower, if rates keep falling. If rates fall to 1%, then all bets are off -- sell the ENTIRE market.

COMMENT

The U.S. 10-year yield keeps falling We've had lower rates for a long while, so this means the Fed will likely taper, the economy is slowing and this is as good as it gets for growth. Rates saw we won't have a great GDP number coming up in 6-12 months. The Fed will make a mistake if they tape now, because it will slow the economy and need to reverse it at the end of the year. If rates rise, buy cyclicals and commodities, not large-cap tech. But if we see a staglfation scenario, then be in commodities. The trade that covers both scenarios is copper (like FCX) because industrial metals will enjoy demand anyway.

COMMENT

Gambling stocks plunged today Take profits on gambling stocks. We've already seen the reopening trade, so it's as good as these stocks get. Online gambling, the other segment among these stocks, is not a reopening trade anyway, so there's no bounce to come.

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

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

Value stocks going forward.(A Commentary)

Is current market action just the pendulum swinging the other way?(A Commentary)

The question is whether it's the pause that refreshes, or is it the end of the bigger run? (A Commentary)

US bond market.(A Commentary)

🔒 Premium Content Alert – This buzzing stock opinion is accessible only to Stockchase Premium

Top 15 Buzzing Stocks this Week(A Commentary)

When's the next big correction?(A Commentary)

Aren't cycles compressing?(A Commentary)

10-year yield of 1.3%.(A Commentary)

ESG.(A Commentary)

TFSA vs. RRSP(A Commentary)

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

The U.S. 10-year yield keeps falling(A Commentary)

The U.S. 10-year yield keeps falling(A Commentary)

Gambling stocks plunged today(A Commentary)

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