A Comment -- General Comments From an Expert (A Commentary)
COMMENT
What about the cyclicals such as materials, chemicals, and transport, which traditionally benefit from an economic uptick? He has exposure to these areas, as well as to Canadian real estate. Fundamentals will improve. Hitting fresh all-time highs is a good sign. But how much has already been priced in? When some of the more rate-sensitives sell off, he's seeing some good opportunities, such as in utilities and renewables.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Although the market rotation was quite violent, it is normal market action following big gains. Markets tend to be fine with higher interest rates when there is growth. Having both value and growth stocks is the preferred strategy. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
$1.9 trillion stimulus relief passes into law. Consumers may splurge after saving so much and now with this stimulus. Travel has been completely shut down, so this is a big area for spending. The airlines are priced in, so no comeback here. This rotation continues as tech high-flyers are really not bouncing back, though sort of yesterday. Even with stimulus, today's interest rates didn't move, so she's surprised by the reaction to stimulus. We knew the reopening trade was going to happen. This could be Buy The Rumour and Sell The News.
COMMENT
He doesn't get too fussed with the markets on any given day, but how long will recovery take to kick in and how long will it last? A lot of people remain unemployed and businesses closed. The bounce-back won't be sharp as people expect. Longer-term, utilities offer solid dividend growth, based on contracted revenues; utilities remains safe as well as financials. Nice to see the banks return to former levels.
COMMENT
Today's 4% rally in tech Bond yields had to decline today after a massive February surge. It's very likely the 10-year treausury yield consolidates around 1.5%. After so much optimism from vaccine news, this is a pause before we go another leg lower. Tech will lose steam as rates creep higher. Be cautious as they approach 1.75%. The second half of the year will be challenging, since the recovery is already baked into stocks.
N/A
Market. He looks for companies in the markets that have really well established businesses and competitive positioning. Value stocks have been outperforming Growth recently. This reversal was expected, but he is not doing anything differently. It is difficult to find attractively priced securities. Hong Kong and the UK have pockets of value. He also likes those that raced up at the start of the pandemic and are selling off now.
Jason Del VicarioUnknown
COMMENT
Inflation. There was an expectation that the Fed would talk about twisting the yield curve or supporting yield. The weakness we are seeing in equities over the last week so far, due to the stress from bond yields, is not upsetting the Feds. The March 17 meeting is a big focus. Investors expect talks about more liquidity to account for the stimulus. The debt needs to be paid, but the economy can't afford more yield. They might twist the yield curve and monetize the debt.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Gold. The story is about real interest rates. As the nominal yields go down, it signifies slower economy. Then there is a real aspect, which is the inflation side. The real driving factor is negative real yield. In the last couple months, nominal yields have been rising and inflation expectations have not kept up. Real inflation has been rising and has been a knock against gold. With additional debt, governments need negative real yields. Bitcoin has also taken away money that would have gone to gold bullion.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Educational Segment. There is a lot of talk about interest rates going up. According to the congressional budget office, 86% of ever tax dollar goes towards mandatory costs in 2021. The deficits are getting worse. The percentage of interest cost as percentage of GDP is 1.38%. In 2031, it will be 2.43%. The central banks are buying the debt and monetizing. This will be a permanent feature. When inflation comes up, it will put stress on the system. Central banks cannot have higher interest rates.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Hard assets generally do better when governments print money to pay off the debt. Metals, oil, gold and silver tend to hold their value better. Bitcoin may serve this purpose but it’s not proven yet. Gold and silver would be the best performers in extreme scenarios. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Bond yields. You gotta think about levels and rate of change. Bond yields are moving up, and this is validation that the economy is showing broad based recovery. At these levels, bonds are not competing for capital compared to stocks.
Brian MaddenUnknown
COMMENT
Promising sectors. It is a target rich environment. Positioning for economic recovery and their Canadian portfolio is over-weight in basic materials, metals, financials, and consumer discretionary stocks. Success in 2021 will hinge on what stocks are chosen not to own.
Brian MaddenUnknown
COMMENT
Canadian banks. There is value in the Canadian banks. They are great businesses in a well-managed oligopoly. Specifically this year, they offer good value and wealth management will see tailwind. Their net interest margins are still under pressure, but they should get back by end of this year.
Brian MaddenUnknown
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