A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Fed meeting. It's not a surprise that the amount of stimulus is behind the support for the markets. The fiscal policy must be financed since there is only so much the Feds can do. Will the Feds provide the support? A year ago, the supplementary leverage ratio was suspended last year so banks could buy treasuries without capital cost hit. It will probably be extended. If they do not extend this, there is a risk to the bond market that will extend to the equity market.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Rising yield. Central banks around the world want more inflation. Bond vigilantes are coming back. The amount of debt in the world at all levels is colossal. The cost of servicing the debt is a big stress on the system. They cannot let interest rates rise before it becomes a massive headwind for growth.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Canadian Housing Market. The bubble talk in the housing market is related to the low rates and how stretched people are. If interest rates go up by 100-150 basis points and mortgage rates go up, there will be less money for discretionary spending. It will matter for those who are really stretched.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
What to put in a TFSA. You want to make speculative plays since if you hit a home run you don't have to pay taxes on it. Things like long term innovation, tech, medical marijuana. However, the valuations are quite high in these sectors right now. He would look at gold, silver, base metals that have a couple years of run room left.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Oil. Long term, based on the fundamentals, $50-$60 oil is on the higher end for him. Investment demands points to oil going higher in the shorter term. It seems that the market is set up for oil to shoot up. However, high price on oil is bad for growth. There is more upside. XEG for market cap, ZEO for equal weight in Canada, or XLG for the US. Look at the producers that are under valued relative to price.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Educational Segment. Birth rates have gone down due to covid. Aging demographic and all the debt in the world will also be a headwind for growth. The demographics continues to suggests that the world will continue to have growth problems. There will be a lot of challenges in aging countries like Italy, especially with their poor fiscal situation. Today, 2/3 of the world's population lives in Asia. In the next century, Africa will see the most growth. The growth area will be emerging markets. There is an ETF for Nigeria, NGE, which is quite interesting.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Market. We moved into the re-flation trade. There are adjustments in long interest rates and a bond rally. The discount rates for large cap tech growth names has changed and they will suffer. When they don’t pay any yield it offers a challenging environment. There are other sectors where you have seen that change in leadership. The question is if the inflation we are experiencing is transient or permanent. Grains and energies are increasing in costs. Energy has been on fire the last six months. It does not look like we are going to have a bear market. You may want to increase your exposure to the inflationary trade. It won't be permanent because deflationary forces will always be present. Q3/Q4 we will get more insight into this.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Considering the current market and inflationary pressure, an allocation in Materials is fine. A benchmark allocation should be around 10%. The sector is looking fine these days. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Since September, the value trade is where the growth will be coming from. As earnings are getting brighter, lots of these names are getting cheaper so you can continue to hold them. Trimmed tech stocks but with spiking yields, FANG names are getting a little cheaper with the bond levitation.
Greg NewmanUnknown
COMMENT
The work-from-home names like Zoom and Pelaton, be careful of them. They may do well in the near-term but they need some consolidation to happen. The market was carried away by the few, and now it is broadening out.
Greg NewmanUnknown
RISKY
Bitcoin. An asset class that drives people nuts. It could go up a lot from here and establish itself, or it could drop down. There is a fear of missing out however. It is looking like it will become an established asset class. You need insurance just in case it keeps going up. Decide upfront how much you want to own, and buy in stages. He would buy it and put it away. Own in a taxable account since it is binary.
Greg NewmanOwned
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Key market indicators are increasing. Interest rates and earnings are going up and this could be beneficial for sectors like oil. However, investors should have a three year time horizon and should not pre-guess sector shifts. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Is the tech rally over? The best days are behind tech. Don't buy growth in a rising-rate environment. But human nature only buys what it knows. So if you know only Salesforce, you'll buy back into it, like rushing back into a burning house to get burned again and again. The Russell, industrials and chemical names will continue to outperform.
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