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A Comment -- General Comments From an Expert (A Commentary)
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Educational Segment. He is worried about guidance given by central banks. What they don't get is that the flat yield curve and negative interest rates is causing all kinds of missed allocations of capital. We should not need all these supports from central banks for economies to function. He fears that all the money printing in Canada is going have us go the way of Japan. Low interest rates are not bullish. It is a reason to be very concerned that the system we have build is very fragile.
Larry Berman CFA, CMT, CTAUnknown
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Market. Markets are overbought after the lows of March. It has been a pretty breathless and relentless rally. He would not be surprised to see a pullback or pause here but it should be understood that we are not going back to the depths of the March lows. There is unprecedented fiscal stimulus from the federal government. The primary driver of the buoyancy we have seen has been the rapid and coordinated and unprecedented response from governments and central bankers around the world. He thinks it is not likely that these will be withdrawn. This is just the sharpest and shortest recession of our lifetimes, not a depression. Trump will likely do whatever it takes to get re-elected and might play the China card. COVID-19 is no longer the primary risk to markets, but rather central banks stepping away, the election and the overbought nature of the markets are the primary risks.
Brian MaddenUnknown
COMMENT
Market Outlook Everyone knows that the optimism of a vaccine and the opening of regional markets is driving the market higher. He is skeptical, but there is no sense fighting the tape, he says. He is 92% fully invested, with a 67% hedge overlayed with short index futures and some puts. He participates in the market "melt-up", but is somewhat protected when the market goes lower. He has 8% in cash. He sees five trends driving the technology space in the market. Cloud based producer and consumer services splits the space. Cyber-security plays a key role as well. Gaming and e-commerce and streaming round things out.
Kim BoltonUnknown
COMMENT
COMMENT
Tele-medicine? This is an interesting space. His internal investment committee is researching the space and it will take a couple of months. There are not that many publicly traded stocks in the tele-medicine space. He would prefer to answer in July or August. There will be key infrastructure, software and security issues making this space almost its own tech eco-system.
Kim BoltonUnknown
COMMENT
Network stock? Trying to pick a stock is all about the entry level and price target. He would recommend buying into the tech space through an active manager -- like himself. You can't just play this from the long side as the recent plunge showed. Sometimes going to a cash position is the right thing to do. He is not quite sure that dividends, earnings and guidance are going to warrant buying in right now.
Kim BoltonUnknown
COMMENT
Not surprised with today's selling after a rip-roaring move from March's bottom. A bit of a consolidation is inevitable. He likes the travel and leisure space as long as you hold defence as well. He still likes tech, because tech will remain important in a low-contact world. Also likes select consumer staples stocks. The market is technically overbought, based on the relative-strength index which is high around 70. He doesn't expect a return to the mid-March trough given rapid progress in Covid treatments and vaccines, while May job numbers indicate we are in the recovery phase. The market may pause, but not plunge back.
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Market. US tech stocks are hitting fresh record highs. They are more represented by the NASDAQ and are lagging the S&P-500 and Dow. It is being overshadowed by Boeing. The top five stocks in the S&P represent over 20% of the S&P index. If you look at an equal-weighted S&P index, it is now outperforming. The stock markets are disconnected from what is going on in front of people. The bond market is now showing signs that it expects a recovery to begin. The yield curve has become positive and it is a positive economic factor. He thinks there is more bad news in the bank shares. He lightened up on them. He is using this as an opportunity to upgrade his bank holdings, especially in the US.
Norman LevineUnknown
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Banks. The pullback in banks is inevitable, both in Canada and the US. A number are approaching their 200 day moving averages. If a bank breaks through it would be a buy.
Norman LevineUnknown
BUY
Petroleum (Crude Oil). There was the lock-down on the world economy and then you had the price war between Saudi Arabia and Russia. You are starting to get economic activity around the world that is upping demand for crude. He owns SU-T and CVE-T. He prefers to be in quality companies.
Norman LevineOwned
COMMENT
Market Outlook He believes today's jobs numbers add fuel to a euphoric market. What will be the path of the pandemic? The number of US cases don't seem to be dropping off like European countries. What is being under-reported is the number of unemployed. The first few million jobs to come back are the easiest, the rest will be harder. Job numbers are prone to revisions. Into the fall, US civil unrest may impact the upcoming Presidential election.
Ryan BushellUnknown
WEAK BUY
Canadian banks? Going through reporting, he was surprised how small the loss provisions were. This makes him think there may be more to come. He thought TD too an adequate level. He thinks Tier I capital is sufficient to maintain the dividends. There seems to be a growing rush to put money back in the market by Central banks and he wonders what might happen when that stimulus is reduced. If you don't own any banks, now would be a good time to buy, especially with dividends over 4%.
Ryan BushellUnknown
COMMENT
Current yield vs growth? Both dividend yield and growth are important. The longer a company has been around, it really depends on the commitment to that dividend. He considers the yield as part of his client's total return. Since fixed income does not provide enough return, he looks for companies that are committed to paying a material dividend.
Ryan BushellUnknown
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Market. He does not like the market here from a valuation perspective. The market is seeing something he is not seeing. He thinks there is a lot more economic damage to come. Today there were numbers suggesting quite a bit of job recovery. He does not see the US dollar selling off a whole lot more. The Canadian dollar is trading along side the US dollar and he does not see it getting a whole lot stronger.
Larry Berman CFA, CMT, CTAUnknown
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