Market Commentary — Page 459

Market Commentary

DON'T BUY

Movie Theater Stocks. It will probably be longer in Canada before we get back into the theatres. He would recommend streaming media stocks. He also would recommend DIS-N. LOGI (Logitech) would leverage on work-at-home.

BUY

Invest now in Industrials? If inflation is going to be persistent as we proceed to a reopening then he expects industrials to be a good investment. You might take advantage of the stronger loonie and convert into USD. The US industrial offerings are much more diverse. He would recommend using an ETF.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Value stocks are seeing a big boost with financials greatly up at 12% year to date. There has been a significant correction in certain sectors. Fears of higher interest rates compressed growth stock multiples. Revenues and earnings growth has been solid. Markets have done well when rates rise slowly. Unlock Premium - Try 5i Free

COMMENT

A large hedge fund, Archegos, was forced to sell $20 billion of stocks which pressured some sectors of the U.S. market today. This and a stern CDC warning about Covid cases and for Americans to keep their guard up. The reopening trade took a breather today. He thinks Archegos will have limited impact. The fear of new Covid restrains is appropriate and some states have jumped the gun, even though there is progress on vaccinations. That said, he thinks it's unlikely the US will regress to a lockdown and recession like Germany.

COMMENT

We have a stock glut and not enough buyers. IPOs, SPACs, secondary offering and insider selling are the causes. The glut is dangerous, because ir can push down stock prices. This was the biggest IPO quarter ever. Some of these deals have started to fizzle, breaking below their IPO prices. DOCN, for example. Others: DSEY, ZH, ALHC. We're also seeing lots of substandard Chinese IPOs, which he has been avoiding for a long time. COIN, a crypto exchange IPO, is another to avoid. There've been over 300 IPOs YTD, which is more than all of 2020. There are too many SPACs and those prices are sagging, some below $10/share which is an ominous sign. Secondary offerings: ViacomCBS was a big, recent example. Insider selling refers to the end of lock-up periods of IPOs, which adds even more stocks in the market. Be careful this spring.

COMMENT

Oil. Year to date, oil had a big move. There is a lot of noise right now, like the ship stuck in the Suez. Normalization of oil inventories, post-US shale world, OPEC spare capacity, and chronic under investment are the key 4 elements for oil prices. Oil stocks are still extremely undervalued.

COMMENT

Virus resurgence. We have seen global air travel recover, which is now down 30% instead of 99% like during the first wave. Road transportation is also recovering. Economies that are not under lockdown like China and India, demand in regions are higher than before covid. We are entering into a supply crisis and that is what counts.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Sector diversification is more important than worrying about the tech sell-off. Tech names will recover with time. It makes sense to add to cyclical and materials. Consumer cyclicals should see more strength than materials. Unlock Premium - Try 5i Free

COMMENT

An accelerated vaccine schedule (Moderna will pump millions of shots into the system next week), will raise all boats in the economy from drug stocks to housing. After days of selling, today saw a ton of buying across the board. It's all about vaccines to drive the reopening.

COMMENT

Inflation He fears that inflation down the road will spike, a real doozy, and that US Fed Powell may have to raise interest rates sooner than later. He points to the sharp demand in steel and, hence, rise in steel prices. Lumber is also surging. Until the US strikes a deal with Canada, tariffs will make it expensive to build houses in the U.S. The shortage in semiconductors is putting the kiebosh on the hot car market. In turn, used car prices are shooting up. Oil is also up which means plastic products which will jump in price and ripple through the economy. Some of these shortage may be temporary, but we have limited time and Powell may be forced to raise rates.

COMMENT

Markets. Very extended heading into March. Now seeing rotation. Pullback off the highs, especially in the US with the Russell and NASDAQ. TSX, heavily financial weighted, has done quite well. Financials and energy have started to accelerate. He's closely watching moves in utilities and staples, which are signs of defensiveness.

COMMENT

Where will we be a year from now? The new bull market started in March 2020. Stats on second year returns tend to be fairly strong. He anticipates markets will be higher than where they are right now.

COMMENT

Is it tough to find appealing stocks reasonably priced? Not at all. He gets excited about the volatility. The American rescue plan should bridge the gap as businesses open up and employment comes back. The S&P 500 is outpacing the NASDAQ this year, as the market focuses on more mature business models and reopening plays. No recovery can take place without the cost of inflation and higher rates. This macro is very supportive of cyclicals like banks, energy, and auto insurer names. Inflation isn't a real problem and is supportive of equity markets overall.

COMMENT

Alternative payment systems to Visa and Mastercard. There could be opportunities for them as everyone moves to a cashless society. But V and MA are the rails that all the alternative payment systems have to go on. He owns MA.

COMMENT

Good time to buy FANGs in USD? CAD is fairly valued here. Loves the FANG stocks. Super highly cash generative businesses. Super high ROIC. Not really that expensive. FB and GOOG trade at 24-28x forward earnings, when the market's at 22x. No matter what your outlook on the CAD is, you could be buying these names.

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

Movie Theater Stocks. (A Commentary)

Invest now in Industrials?(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)

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

Oil.(A Commentary)

Virus resurgence.(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)

Inflation(A Commentary)

Markets.(A Commentary)

Where will we be a year from now?(A Commentary)

Is it tough to find appealing stocks reasonably priced?(A Commentary)

Alternative payment systems to Visa and Mastercard.(A Commentary)

Good time to buy FANGs in USD?(A Commentary)

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