Market Commentary — Page 467

Market Commentary

COMMENT

Educational Segment. Yellen came back from G7 meetings and was able to get buy in for a global minimum tax rate. One of the narratives that Yellen put forward was to level the playing field. Raising taxes on corporations to pay for the debt is a big deal. Companies have 3 things they can do with income: invest, increase dividends, and buy backs. Buy backs exacerbates inequality as it only benefits senior executives with options and shareholders. The focus on ESG and fixing inequality will become a big part going forward. Buybacks will be seen under a new lens.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. By sector, there are opportunities in energy, financials, industrials and materials. Look for companies with good balance sheets. Low debt and more cash. Also search for a track record of profitability. Unlock Premium - Try 5i Free

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Market. The market is very good at pricing things in, and in this case inflation. The market did not react to hearing there was inflation. Anyone looking to allocate capital has to make bets a long way down the road. There are values on some value stocks that are still pretty low.

COMMENT

The U.S. market is selling industrials and bank stocks to rotate into growth stocks, as the market eyes Wednesday's US Fed meeting. He expects the US Fed Chief, Jerome Powell, will keep rates low to allow the poor to find decent jobs. Powell has been upfront about his plan, so pick up bargains. He agrees that inflation will run its course. There are senior growth (FAANG) and junior growth stocks (Twilio, Roku, Etsy, Docusign). See comments about Caterpillar.

COMMENT

Technical analyst Larry Williams sees the late-June Swoop, a modest dip to a deep dive. So, sell the S&P in mid-June then buy it back after that dip. Sell on the 8th or 9th-last trading day of the month, meaning the 18th or 21st this year. This is based on strong gains over the last 22 years. Therefore, next week the market will be ugly. He doesn't know why this is so, but he accepts it as reality.

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.

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

Educational Segment. (A Commentary)

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

Market. (A Commentary)

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

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)

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