Market Commentary — Page 453

Market Commentary

COMMENT

Market rotation. Still going on and very natural. A broadening of the economy. As the base of vaccinated people grows across the globe, we will see sectors that had not been doing well get a boost.

COMMENT

Inflation. Central banks have not done anything positive to help with increasing housing prices. There are big concerns or no concerns depending where you stand. Those who believe the central banks will manage the excess liquidity and so are not concerned. Seeing central banks in NA taking steps to remove liquidity. We will see interest rates go up in the medium term. Those who are concerned believe the central banks are making policy errors and the record level of debt will be problematic. Inflation will not come this year.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. If you zoom out two to five years, the inflation and price levels are largely in the range of historic lines. A lot of inflationary pressure is in areas that would be expected such as travel, leisure or car rental rates. The concern is if control is lost. Unlock Premium - Try 5i Free

COMMENT

Stocks keep edging up. Some say it's the calm before the storm, but he's learned not to short a hot market. People are buying growth vs. value. Forget Wall Street gibberish. Buy quality stocks cheaply. If we see red-hot inflation numbers, Fed Chair Powell may have to raise interest rates. We'll see if he mentions "transitory inflation" or not in Wednesday's Fed minutes. He expects Powell to stay on course and not surprise.

COMMENT

Bitcoin - calling a bottom Bitcoin has no fundamentals, no earnings, no business to analyze. This trade is based on emotions and headlines. Tech analyst Tom DeMark is looking for a bottom in Bitcoin. It peaked on April 14. He expects intraday dips below the $24,705 bottom of May 19; will trade sideways for the next 3-4 weeks, then making a new low after that. DeMark compares the market patterns of 1987 including that crash. Also, DeMark thinks the S&P will peak very soon, maybe next week.

COMMENT

Picking stocks. When so many people are focused on so many extraneous events such as Bitcoin, meme stocks, Covid, and the Fed, great companies continue to be great companies. They'll trade at reasonable valuations. Trading around is a risky proposition, expensive, and at the end of the day the conclusion is to just own great companies. His firm focuses on industry-leading companies that produce good products or services, run by strong management.

COMMENT

Ignore the noise. In the end, the businesses he invests in are just focused on building their products and services. If interest rates go from 0.25 to 0.5, that's not going to upset the apple cart. When people said you have to sell growth when interest rates rise, he says for a company flush with cash, higher rates are not a negative. Higher rates won't stop people from buying MSFT or AAPL products, or from using FB or GOOG. Focus on the fundamentals, and ask yourself why you own a company and if anything's really changed. Ignore the talking heads on TV trying to convince you they have a better formula than owning good quality companies.

COMMENT

When to sell? Sell decisions are always difficult. If it becomes an outsize percentage of your portfolio, that's a driving force for you to sell.

COMMENT

Top dividend-yielding companies. Canadian bank stocks have great dividends. If you want dividend growth plus earnings growth, look to US bank stocks for the next 2-3 years. With the strength of the CAD, those stocks are on sale for Canadians. Look at BAC, JPM, PNC, or Citi. In Canada, try KEY. Also APR.UN, a bit less liquid but with a yield of around 6.6%, good growth opportunities, very well managed, and a slow and steady player.

COMMENT

New twists to the markets. When you throw liquidity at the market, interesting aspects emerge. Enticing to follow, but a lot of this is just noise. The types of names he looks at are not too impacted.

COMMENT

Cyclicals still relevant? Estimates for inflation print tomorrow are ratcheting up. Cyclicals are still a big part of the recovery story. Commodities to industrials. Not too late to add some exposure to your portfolio, at least for the short term. Record commodity prices should flow through to corporate earnings. Some more secular, high growth names have sold off as a result, so he's been picking away at opportunities there. It's a barbell approach, getting into position for when there's a switch back to growth.

COMMENT

US tech stocks vs. value and yield stocks. You have to own the FANGs, as they generate so much cash. He'd absolutely choose a basket of those, which will generate returns in excess of GDP, rather than value names that are playing catch-up and likely won't exceed the expectations of the FANGs.

COMMENT

The CAD. CAD has been on a tear. Not inconceivable that oil and commodities will continue to rally, as inflation has been persistent. In that environment, the CAD will continue to outperform. If we get a miss on inflation, things could move the other way quite dramatically on both commodity prices and the CAD.

COMMENT

Utilities. Be cautious putting money into utilities right now, unless you need the income. As rates move higher, typically those stocks sell off. With the call on cyclicals, you might get some better opportunities to add to those names.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Green movement is already affecting some valuations of non-green sectors. Cost of capital may increase over time which could lead to competitive disadvantages. However, this will create other new opportunities for different companies. Unlock Premium - Try 5i Free

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Summer Sale

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

Market rotation.(A Commentary)

Inflation.(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)

Bitcoin - calling a bottom(A Commentary)

Picking stocks.(A Commentary)

Ignore the noise.(A Commentary)

When to sell?(A Commentary)

Top dividend-yielding companies.(A Commentary)

New twists to the markets.(A Commentary)

Cyclicals still relevant?(A Commentary)

US tech stocks vs. value and yield stocks.(A Commentary)

The CAD.(A Commentary)

Utilities.(A Commentary)

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

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