A Comment -- General Comments From an Expert (A Commentary)
COMMENT
He feels the S&P is at fair value and has another 30% of upside. He feels the Canadian dollar has more weakness to come. He expects the Republicans to win more seats in the House during the Mid-Terms, which would cause a substantial rally in the US markets. October has always been a seasonally weak month, so he expects a quick rebound in markets. Autos, consumer discretionary and other sectors have been recently decimated and are great value if the market is able to side step a major recession in 2019. He believes President Trump is correct in going after China as it pertains to the massive trade surplus with the US.
Brian Acker, CAUnknown
COMMENT
This morning the U.S. wage increase scared the market, because this means the US Fed will likely raise interest rates. ETFs and index funds exacerbate volatility at the end of the day. Add to the Trump, the US Midterms will be Tuesday. If the Dems capture the House, then Wall St. won't benefit as much from deregulation Next April with Q1 earnings, corporations will no longer benefit from the tax cut, when we will likely see reality. He forecasts only 5-10% earnings growth, so he can't justify current high multiples. The Fed wants the interest rate to be 4-5% for wiggle room during a recesssion. The riding USD is pressuring currencies in emerging markets leading to a global slowdown or American companies exposed to EM (i.e. tech stocks) which are getting hit now. We saw this in the 1997 Asian Contagion, then two years later the tech
bubble burst. Investors should be conservative now. We could get anything from a 20-50% correction down the road. Having no more than 20% cash is necessary, giving you downside protection. Remember that dividends will always pay, regardless of the price of the stock. Look for dividend growers.
N/A
Market. He thinks we are still in a long term secular bull market into the mid to late 2020s. We could see lower before we go higher in the current correction. We had two corrective phases in this market, 2011 and, 2015. In both cases it was currency revaluations. It could end up being a 20% correction that we are in now. He thinks there will be further choppiness in the month or two ahead. In looking for a bottom he wants to see the VIX hit a pretty high level. He wants to see pretty significant drops with a higher close and higher volume on a day.
Javed MirzaUnknown
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How long will the bull market last? It will last until the mid-late 2020s. He thinks we are just having a correction. If you have cash right now, it is a great position for the next couple of months. There will be a 3-4 year up leg after that.
Javed MirzaUnknown
COMMENT
Market Outlook Back in October he suggested that an indicator he follows (Bear-o-meter) went to high risk mode. Now it moved to neutral almost close to bullish. We need other factors to enter into bullish territory. He needs three positive days to begin buying. Today is a good day as it is that third day. technical analysts are not market timers as some people believe but rather risk assessment people. We look for references that the market hit bottom. Smart money is starting to buy and retail money is panicking.
Keith RichardsUnknown
COMMENT
Market. With the end of September and into October, the pullback in the NASDAQ became a real correction. The ingredients are not there for a full-fledged bear plunge. He still sees the making for new highs yet be made – but it may take a while. The big trends in technology are 5G deployment and creating “Digital Twins”, data analytics towards AI, and electrification and digitization of technology (like auto-drive technology).
Kim BoltonUnknown
COMMENT
Thankfully October is over. It was ugly. It went down because of Trump, China, rising rates. Why October? Doesn't know. The U.S. Midterms? He has no clue what'll happen. In Q3, the U.S. market went up 7.7%. We were due for a drop. We've seen two corrections in the same year, which is rare. Then again, corporate profits are so damn good, so good that interest rates are rising. But that's hurting the U.S. housing market--and the same effect will happen here. You got to take the good with the bad. The TSX is -7% YTD, which stinks. He's fully invested, owning more stocks outside Canada than inside. Bond returns stinks--he's avoiding them.
COMMENT
Where's the S&P 500 going? Over the last 10 years, the S&P has dropped over 5% 23 times or twice a year. Usually it stabilizes on average in 45 days and goes higher each time. Is this latest correction going to recover? Yes, but nobody knows how long it'll take. Remember: stock prices follow earnings--and Q3 is up 29% so far. Just be comfortable with volatility--that's the price of owning stocks as opposed to, say, bonds.
COMMENT
Are the telcos as bond proxies worth buying? Everybody wants the magic bullet of high yield and no risk. Doesn't exist. But the Canadian telcos are a good investment, and better run--with better balance sheets--than the American ones. Rogers, for example, is disciplined paying down debt and it offers the best suite of assets in its sector. We're all addicted to cell phones and telcos supply them.
COMMENT
Extreme caution in this market? Yes. The way things are shaping up, we’re seeing a monetary shift. We can’t borrow any more. 1930s provides a great parallel to what’s going on now. US election is important. The Republicans will win and consolidate Trump’s power. He needs to devalue the US dollar to make America great. The king in the chess game is gold, as it’s the ultimate form of money when currencies stop working. As soon as rates went over 3.20%, saw market volatility. After November elections, we’ll have greater direction.
COMMENT
Market environment similar to 1930s? We’re in a credit cycle. Since 2000, we’ve had internet and housing bubbles. Fed is continuing to pull money out of the system. When the mechanics stop working, we’re going to get a reversal. The credit analysts are calling for caution because debt is the elephant in the room.
COMMENT
Have REITs seen the worst with rising rates? No. His strategy is to underweight the sectors he owns, and have cash set aside for worse times ahead. Has more foreign REITs, expecting greater yields going forward. Wants to wait and see how rising interest rates will affect them. Rental REITs will benefit.
N/A
Market. The German chancellor resigned. He has been saying Europe has been fragile for years. The real story is that even when we went through the Greek crisis 6-8 years ago, we are now going through the Italian version and he thinks it will be ugly. It is a question of who is going to write a question the next time it is necessary. This is the beginning of the unwinding of the strength of the European block. Interestingly the markets are up today. This is going to get worse before it gets better. He sees 2020 as the biggest recessionary risk. This is a trade at best. As we get close to mid-term US elections, uncertainty reduces and the markets like that. He thinks the market highs might be in and we might be building a top over the next year.
Larry Berman CFA, CMT, CTAUnknown
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