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The stock got ahead of itself and has pulled back to a reasonable level. He's more positive about gold now for the frist time in a while, because the US dollar has peaked and he thinks it will roll over. The US government will become a massive borrower, and commodity prices will benefit from this. He's getting negative about the USD.
What sectors to become defensive now? Cash. Nothing more defensive than that. Histroically, defensive sectors have been consumer staples, utilities, telecoms--they all have little earnings variability. But these sectors also benefit from near-zero interest rates, so they are sensitive to a rise. Energy stocks are really defensive, because you get good valuation support here than from other sectors.
Buy the dip strategy on tech stocks still works? He likes tech long-term, but the big tech stocks lately concern him. Facebook's earnings growth is slipping. Apple is still an iPhone company, so they can't continue to sell high-end products. Money is starting to leak out of tech. Netflix for example. Valuations are excessive in this space.
A short report from Muddy Waters came out today. He's always liked MFC. Universal life policies and the way they were funded is what got them in trouble in 2008. He thought they'd walked away from this problem, and now he is not 100% sure they have. He needs to read this short report closely. Don't short or sell it, but he expects this to underperform for a while.
There was hawkish talk from the US Fed about how agressive they'd be on the fund rate. They say they want to move to the neutral rate, but they don't know what that is. Remember that the February dip was triggered by a bond rate rise and it took us a while to recover from that. We're at the end of the cycle and it won't last for much longer. He remembers a decade ago when the US Fed didn't recognize a housing crisis even though the street already knew, so the Fed is sometimes the last one to know--or they don't want to publicly say and to spark a downturn. Emerging markets have rolled over. China is down 25% and Germany down 12% from the January peak. Canada has underperformed. Only the U.S. has done well, but they are late in the game with high valuations and rising rates. The Fed must normalize rates now.
It's been hammered but he's sticking with it. The Digital Globe purchases added risk to the balance sheet, but he thinks that will generate a lot of free cash flow and pay down the debt. At 8x forward earnings. They're building a digital satellite system now. Data from outer space will feed a need for this information. (3.5% dividend, Analysts' price target: $78.32)
Not a buy. Its last earnings showed slower growth, but valuation hasn't gone down enough. Mid-20x forward earnings.
Cheap is below 20x. They are also facing pressure from buying products overseas and with rising labour costs. Overall, he is concerned with the Canadian consumer/retail sector because of high levels of debt.