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COMMENT
Markets and volatility. Fed has said it has to deal with inflation, whether it's 25 or 50 bps, and whether the world is growing and what that looks like over the next few months. But what's going on with Ukraine is putting a wrench in what the Fed needs to do. Ukraine will add volatility until we have some kind of peace or negotiation that reduces the bombing. Plus, the bond market says the world is slowing down. Fed needs to figure out if it deals with inflation or with growth. At today's upcoming 2 pm meeting, he's assuming rates will be raised 25 bps, not 50. The market really needs to know the direction of rates. Will the Fed do this through the normalization of moving the Fed funds rate up, through the balance sheet, or both? The market would have a tougher time if the Fed took a "wait and see" approach. Fed is usually really good at giving guidance.
COMMENT
Sectors with upside. Healthcare, healthcare technology, and technology. Financials will do well, not because of the yield curve, but because of their ability to increase dividends and buy back shares. In investing, volatility has to be your friend, though it's scary. Opportunity to buy great companies at good valuations. Step away from all the noise, look at the companies you own, and if you like them see if you want to add to them.
WEAK BUY
Brazilian. One of the largest in the world. Not expensive at 17x earnings, nice dividend yield. Large producer of iron ore. If you believe in the resource boom, you want to own a large cap, as it will protect you with earnings and dividends if the market moves around a lot. Cyclical, so not a great business overall.
other mines
BUY
Great company, well run, not expensive at 11x earnings, 1.2x book, yield around 2%. Net interest margins are stabilizing. Volatility helps on the trading side, though IPOs are down. Asset management and credit card business will continue to grow. Massively overcapitalized. Payout ratio around 25%.
banks
HOLD
Really benefited from pandemic, and earnings met expectations, but poor guidance going forward. High analyst expectations have hurt. High multiple stock. Good products on the runway. Benefits from digitization in businesses. He expects a difficult couple of quarters. Long term, a very good company.
computer software
processing
COMMENT
EV industry and China. Rules were relaxed for Chinese firms to list on the NYSE. Now the rules are changing, and China is reluctant to comply, since personal data and technology are accessible. Hard to compete with TSLA, as it's a beautifully designed computer on the road, and the company has already collected lots of driver data. The traditional car companies are in disarray as they try to mix combustion engines with EV. The valuation is another matter, but TSLA is the one you want to own.
BUY ON WEAKNESS
Hard to compete with TSLA, as it's a beautifully designed computer on the road, and the company has already collected lots of driver data. The traditional car companies are in disarray as they try to mix combustion engines with EV. The valuation is another matter, but TSLA is the one you want to own.
Consumer Products
DON'T BUY
Rules were relaxed for Chinese firms to list on the NYSE. Now the rules are changing, and China is reluctant to comply, since personal data and technology are accessible. Hard to compete with TSLA, as it's a beautifully designed computer on the road, and the company has already collected lots of driver data. The valuation is another matter, but TSLA is the one you want to own.
Automotive
PAST TOP PICK
(A Top Pick Mar 04/21, Up 34%) Great business that will continue to grow. Animal healthcare. Tough recently, but will get back to previous levels in next couple of years. No generic drugs to compete, and they're easier to bring to market. 2B in free cashflow, great balance sheet. Great products in pipeline. He's buying here.
Consumer Products
PAST TOP PICK
