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BUY ON WEAKNESS
BUY ON WEAKNESS
He's buying nothing now, but would add to Twilio or PayPal (owns both), and would add in Q1 on pullbacks. First, he wants to see how interest rates move (or not) in Q1. He expects rates to slowly march higher. Also, he needs to see what happens to Covid to see if they knock down the cyclicals. He's a market seller, not a buyer now.
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BUY ON WEAKNESS
He's buying nothing now, but would add to Twilio or PayPal (owns both), and would add in Q1 on pullbacks. First, he wants to see how interest rates move (or not) in Q1. He expects rates to slowly march higher. Also, he needs to see what happens to Covid to see if they knock down the cyclicals. He's a market seller, not a buyer now.
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COMMENT
He's raising a cash. The S&P hasn't fallen more than 6% in the past year, because the Fed keeps buying bonds which keeps pumping cash into the financial system, which in turn buys every dip. BUT this will stop on Q1. He loves this! It's opportunity. There'll be more volatility. He'll buy then. The US 10-year will surpass 2% because of economic activity and the end of the Fed's bond-buying. Be ready.
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STRONG BUY
His favourite stock for 2022. Shares are down since its all-time high in October, because steel prices declined a little, but remain high. Gross margins and volumes remain high and will stay so, because car production is rising and people are being major appliances as they buy new houses. PLus, infrastructure spending is coming. All tailwinds. $2.5 billion free cash flow projected for 2022 or 25% free cash flow yield. Stick with it.
steel
COMMENT
US interest rates There'll be more volatility in 2022 and the US 10-year will pass 2% without inverting the yield curve. The Fed did the right thing to raise rates. A wild card could be China will scare Taiwan after the Olympics. China could sell American paper to rattle American markets. He's fully invested now, but will pare positions in Q1-2022 to buy dips. Raising rates in the near term won't tamp down inflation.
