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

There are 2 FANGs: the old one like Facebook, and new one including Diamondback Energy an excellent operator with low costs. When oil names like DE rally, the old FAANG gets hammered. It's either or. Tech or reopenings. You need to buy high-quality cyclicals in weakness.

SPACs There are good SPACs and bad SPACs, and SPACs are falling out of favour. Careful. We've reached SPAC saturation. Beware of new SPACs.

He focuses on infrastructure stocks for dividends. You can't rely on fixed income, but he avoids high-volatility stocks. In infrastructure, he seeks electricity and power demand; he predicts an inflection higher. He's talking about renewable energy in particular. We'll return to a normalized world in the next year to 5 years which will see more energy demand. He's pretty positive about Canadian natural gas infrastructure, too. Shell leads in global LNG. The world is shifting away from old energy, such as coal.

Buy stocks under TFSA or not? You should max out your TFSA, the best investment vehicle around. What stocks to buy for a TFSA? That can be tricky. If you lose, you come up empty and your TFSA may actually decline. Instead, pick the safest stocks, whether they pay dividends or not. The more years you have, the better. His clients' TFSA grind higher now pushing into six digits. Look at names like Enbridge. He also prefers investing in an RRSP than a non-sheltered account.

Market outlook. The Fed's message was to anchor short term rates, and they want some inflation. The yield curve is steepening, which is positive for banks. As yields fall, it helps tech so this market rotation is important to watch. They will probably institute some yield curve control. The treasury is issuing $200B in debt. Flow of funds will impact bonds and Feds as well as stocks.

Railway stocks. CP wants to buy Kansas City Southern. Railways are very economically sensitive. They are currently at the high end of ranges. Based on where we are today, compared to pre-covid, where are we? How good is the economy relative to before covid? That is the question.

Canadian Dollar. We are running massive deficits. We have a current account, and capital account deficit. In this environment, the CAD should be weaker at around $0.75. We should head back into this territory later in the year. It seems that in the recovery trade with the supply-demand imbalance, it will show strength for a bit.

Educational Segment. Some times seasonality works, and other times it doesn't work, but it provides a baseline. You always need a catalyst which is stimulus this year. We are seeing upgrades to economic growth from it. Q1 earnings will have upward guidance. Markets will like it. You don't have to worry about negative seasonality until the third quarter. On average, the next few months are good and markets should go higher. Average revenue is $175 for the S&P right now, and this should go up. We are seeing that the average stock is up 10% this year, whereas the S&P500 is only up 5%, and Nasdaq at 2%. If earnings are good, we have to pay for the stimulus, which will be a pressure on interest rates. We will start seeing this in July onwards. Feds are buying about a trillion dollars of debt. Large cap tech will see pressure because they are seen as over leveraged to low interest rates. Okay for the next few weeks.

Last year was Shopify and gold, but now energy infrastructure is a real bargain with high yields and safe dividends. Also, telecoms are cheap, defensive and offer growth. Renewable energy has plunged, so it's a great time to buy Boralex, Innergex and Algonquin which were getting ahead of themselves in January but have since corrected and good to hold long term. Agrowth is another solid, sustainable business that's overlooked now. Asset manages are now cheap like Fiera, and consumer staples like Loblaw are also worth buying now. There's a lot of good value in the market, but momentum chases only certain stocks to an even high point. In contrast, he's a long-term investor and sees many great opportunities.

For the last 7 weeks, tech has been hammered while financials and industrials have rallied. Today reversed that in a counter-trend relief rally. If inflation turns out to be under control, then tech has a lot of room to run. Meanwhile, with industrials today saw a buying opportunity.

Market outlook. You have to pay attention since this market is not a moment you can invest passively. Active investors will likely be rewarded. The differentials for haves and have nots will be wider than before.

Rising interest rates. Half of it is a good thing since it points to the economy going strong, and that's what we want. The bond market gets stressed since rising rates are a signal that inflation is coming to the markets and the Feds will put on the breaks. That is not the case here though. Not fussed by the 10-year moving higher. Continues to find great opportunities. Banks, base metals and value plays are still attractive.

Either tech or the banks/industrials are winning, not together. Like today, when the yield flattens, tech gains, and the cyclicals slide. When the yield rises, the opposite happens. It's been 7 weeks of rising yields and falling tech. Today's pause won't last, because stimulus will propel spending. Powell, though, says that persistently high unemployment among African-Americans and Hispanics are more dangerous than rising inflation--and he (Cramer) agrees. Powell feels that inflation won't last. The yield could rise for another week; he wouldn't be surprised. But one day, the rise will overshoot, and THAT is the time to buy tech.