Market Commentary — Page 531

Market Commentary

COMMENT

Can't the market just shut down for a couple of days to give us some respite? The US stop is 15 minutes for a 7% drop, 15 minutes for 13%, and 20% stops it for the day. The stops make people think about things. In 9/11, it was shut for a couple of days. But this is not that type of event.

COMMENT

Market Outlook He thinks the market is still digesting the chance of a global recession. On a PE multiple, you have to look at forward earnings and those seem to falling going forward, this should result in prices falling. Analysts now think we should expect a decline in earnings and the multiple is also coming down. Slower global growth, thanks in part to Coronavirus, is driving forecasts of lower demand around the world. Add to this OPEC and Russia fighting over prices and market share in the oil market. This will impact employment in a lot of industries in North America.

COMMENT

Energy stocks? Right now stick to the large, liquid energy stocks. There is growing concern of counter-party credit exposure within the mid-stream and pipeline space. He recommends ENB-T and TRP-T for pipelines and SU-T and CNQ-T for producers, if you want to own any energy stocks. SU-T yield is 7.2%, while CNQ-T is 8.4%. CNQ-T is probably still showing positive cash flow, even at these oil price levels. You may still lose money, but it will be much less than a smaller player.

COMMENT

After Coronavirus? Once we know we are all clear with the virus, one could look at more cyclical names including financials, energy and industrials. In the meantime look to REIT's, healthcare with dividends, utilities, certain consume staples and some high-quality tech companies.

COMMENT

Gold? He likes gold as a safe haven. He thinks it could head to $2000 per oz, especially if interest rates continue to fall. He prefers owning the GLD ETF -- why take unforseen operational risk? He also holds Kirkland Lake.

COMMENT

How are you doing in these markets? Tough time for investors. We've seen this before. It's different, because of different underlying factors. But the technicals are the same because people are running scared and they don't know where the bottom is.

COMMENT

Are we in for more selloffs tomorrow? Markets are rationing out the chance of a recession. The odds of that are about 60%. The market is priced for reduced earnings, but too soon to tell if it's pricing in negative earnings. The market will overshoot because of the uncertainty. Goldman has a positive outlook. Rates are low, and there's a lot of cash in the system, so we'll probably go a lot higher by the end of the year.

COMMENT

Chance of a recession? Three types of recession: structural, cyclical, event-driven. This one is probably event-driven. They're typically down 29%, and we're down 20%, so we have another 9 to go. Today we were down 6%, so this could be over by Monday or Tuesday.

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COMMENT

Strangely, the 10-year yield today moved higher with the selloff, so is this hinting that pain could be short-lived? The bond market is always ahead of the game. It's a bigger market and smarter. That yields rose today is an encouraging sign, but don't read too much into one day. As low as all the rates are, the curve is not flat. Probably not over yet. If you're waiting for the bottom, you'll probably miss it.

COMMENT

Three things to do in a bear market. One, identify it early and sell well. Hold well, stomach it and collect your dividends. Buy well. If you have a war chest, you can get to work. A lot of the smart money sold at the right time.

WAIT

Are Canadian banks a good long-term hold? Yes, they're a good buy right now. Will they be a better buy in 2-3 weeks? Probably. Net interest margin drives banks. Oil shocks make loan losses concerning. Dividends are great, payout ratios are low, valuations are very enticing. If you have them, hold them. If you have dry powder, wait a bit. Banks will do very well over the next 3-6 months.

COMMENT

Since TD and RBC have a higher US exposure, do you still want to bet on them if the street doesn't like the US stimulus package? For the next quarter or two, no. But for the next 3-5 years, yes you do. Fabulous balance sheets, super-fabulous valuations, low payout ratios, great dividends.

COMMENT

The economy looked like a 2015-16 macro improvement, including Europe, where cyclicals would perform well, but the coronavirus has turned that on its head. A recession, technical or not, is now a possibility. The gameplan has changed. Note there was a ramp-up in stocks before the virus at the same valuations at the peak of the 2000 Dotcom Boom. We were priced to perfection, then the virus and oil shock hit. Interest rate cuts won't solve this, rather governments need a more comprehensive response.

COMMENT

A bank ETF if I invest $3,000 per month. If you need your cash in the short term, don't buy, but if plan to hold longer than two years, this plan is fine. Banks won't go anywhere with or without a recession. You can't go wrong owning the banks which wind up in the middle of valuations. There are more profitable stocks, but nothing wrong with owing a Canadian bank either.

COMMENT

Monday's drop was the biggest he has ever seen in his career. Trump should be able to pass his payroll tax exemption, despite his lack of finesse. It's standard election vote-buying, though there are sound economic reasons. At this stage, it's still reports and rumours, and will take time to finalize. Monday's oil plunge: prices this low cannot sustain, but the forward oil price, not spot oil, is more important--the futures curve didn't go down that much. Really, Saudi Arabia and Russia are playing a game of chicken. The best cure for low commodity prices is low commodity prices. It's jarring for Canadians to see this oil plunge, but these are fleeting prices, but in 12 months, these prices will look attractive.

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We paraphrase the experts by hand, we watch the shows and write down what we understood from the experts’ comments. We are human and can make mistakes, help us fix any errors. If you see something that you know is not right or if there is a problem with the site, feel free to email us at : [email protected].

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

Can't the market just shut down for a couple of days to give us some respite?(A Commentary)

Market Outlook(A Commentary)

Energy stocks?(A Commentary)

After Coronavirus?(A Commentary)

Gold?(A Commentary)

How are you doing in these markets?(A Commentary)

Are we in for more selloffs tomorrow?(A Commentary)

Chance of a recession?(A Commentary)

Strangely, the 10-year yield today moved higher with the selloff, so is this hinting that pain could be short-lived?(A Commentary)

Three things to do in a bear market.(A Commentary)

Are Canadian banks a good long-term hold?(A Commentary)

Since TD and RBC have a higher US exposure, do you still want to bet on them if the street doesn't like the US stimulus package?(A Commentary)

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

A bank ETF if I invest $3,000 per month.(A Commentary)

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

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Malcolm Ethridge, Mgn. partner, Capital Area Planning Group

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