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

Welcome to the counter-trend rally. Today, the battered growth tech stocks rebounded (about 1.5%). A trend or a short reprieve? Apple, Amazon and Adobe shares have been hammered, despite strong quarters, because Q1 was all about the Great Reopening, driven by vaccinations.

When rates rise higher because of inflation, that's good for real estate. We're seeing pent-up demand, which bodes well for real estate long term. true, borrowing costs would rise, but in real estate everything is priced off a spread and interest rates are still at generational lows. Also, the yield on publicly available real estate investments remains attractive compared to corporate bond yields. Finally, the US sunbelt still looks good enjoying strong demand (i.e. Tennessee, Florida) based on Americans migrating to cheaper housing prices.

Market oulook. Expects strong economic rebound. The stimulus will generate economic growth. The numbers will get better for a couple months with earnings upgrades. This should buoy the markets. The Feds have promised support for years to come.

Bond yields. In the short run, the bond seasonal are good. We have to pay for the stimulus, and the bond supply will dwarf the amount by the Feds through QE. Next quarter is good, the quarter after could be a challenge for fixed income investments. The natural rate of economic growth is anemic. We will not be able to create a type of economic growth without stimulus.

Monetizing debt. It means quantitative easing, where the interest payments just goes back to the government. It is the same as printing currency.

Educational Segment. Focusing on the ETF KWEB, Chinese tech stocks. The volatility in Chinese tech stocks has occurred since the ANT group IPO was cancelled following the Jack Ma comments. There has since been some sanctions and fines levied against big name tech companies in China. We are seeing a divergence in BABA stocks since then with it losing a third of its value. Amazon has been sideways. The anti-trust saga is much broader. Would not touch KWEB until it is 10-15% lower. Long term, you do have to like these companies but there will be more shakeout.

Gold. US dollars has been strong and real returns are a big part of it. Feds need negative real yields for years. Gold will have its day again but the last 6 months have not been great. Was bullish around $1,200 so still likes it.

Market. Risk is high across the market and it is up. There is the hedge fund story today. People are taking advantage of the volatility and low interest rates. There is speculator froth in the markets. You have to try not to play the market. It is all about risk management. Equities will see growth over the years but you have to have fixed income in the portfolio to offset inflation if we see it come. With the right strategy you can have a little bit of everything and protect yourself. We are in uncharted territory in with the amount of stimulus now being injected. You have to be diversified.

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.

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.

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.

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.

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.

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.