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COMMENT
COMMENT
March 13, 2019
Ottawa has just grounded the Boeing 737. He doesn't own Boeing, but he doesn't know how big this issue will be, so stay away. Avoid it. The grounding has a significant impact. The FAA hasn't grounded the 737 and makes the US another outlier on the world stage. Air Canada is under pressure today. Westjet could take a hit due to this grounding. The trickling down will cost both airlines money. They may have to lease planes from other companies. A big problem. Boeing's competitors have their own issues as well...He's pretty comfortable about the current markets. December 2018 was an aberration, a terrible decline that perplexed many people including him. We've since had a very good earnings season since, with 69% of S&P companies beating the street....China and the US seem to be moving towards a deal. He doesn't see a return to December's pullback. Market valuation is fair at 16x for the S&P.
Ottawa has just grounded the Boeing 737. He doesn't own Boeing, but he doesn't know how big this issue will be, so stay away. Avoid it. The grounding has a significant impact. The FAA hasn't grounded the 737 and makes the US another outlier on the world stage. Air Canada is under pressure today. Westjet could take a hit due to this grounding. The trickling down will cost both airlines money. They may have to lease planes from other companies. A big problem. Boeing's competitors have their own issues as well...He's pretty comfortable about the current markets. December 2018 was an aberration, a terrible decline that perplexed many people including him. We've since had a very good earnings season since, with 69% of S&P companies beating the street....China and the US seem to be moving towards a deal. He doesn't see a return to December's pullback. Market valuation is fair at 16x for the S&P.
Don Lato
President, Padlock Investment Management
COMMENT
COMMENT
March 13, 2019
The S&P 500 hit a new high with a quite a return year to date of 12 after a brutal December. The markets are fairly valued given earnings and inflation, though he's a little cautious. The global economy is slowing, including Canada's, and earnings have rolled over. In 2018, earnings were up over 20%, but he projects only 5-7%. But market valuations are better and interest rates are down. Things are okay, but he doesn't see much upside. He started 2019 holding 10% cash and slowly invested it in defensives in energy, insurance and consumer discretionary; he's usually fully invested. He's not a big tech investor. He looks for dividend growth, which is not FAANG. The Canadian banks are a core holding, instead. He expects them to perform better this year with dividend growth. Yes, he owns energy--three pipelines and four producers; all are modest holdings that pay dividends, including Suncor and CNQ. Companies can make decent money if WTI trades between $ - 65.
The S&P 500 hit a new high with a quite a return year to date of 12 after a brutal December. The markets are fairly valued given earnings and inflation, though he's a little cautious. The global economy is slowing, including Canada's, and earnings have rolled over. In 2018, earnings were up over 20%, but he projects only 5-7%. But market valuations are better and interest rates are down. Things are okay, but he doesn't see much upside. He started 2019 holding 10% cash and slowly invested it in defensives in energy, insurance and consumer discretionary; he's usually fully invested. He's not a big tech investor. He looks for dividend growth, which is not FAANG. The Canadian banks are a core holding, instead. He expects them to perform better this year with dividend growth. Yes, he owns energy--three pipelines and four producers; all are modest holdings that pay dividends, including Suncor and CNQ. Companies can make decent money if WTI trades between $ - 65.
Douglas Kee
Chief Investment Officer, Leon Frazer & Associates