Market Outlook Operating earnings for the S&P500 companies have been revised down for each of the last four quarters. This means analyst estimates are falling looking forward over time. It does not mean the end of the world. He would say the market is mixed with Brexit, being offset by better trade issues with China. He would build your portfolio from a place of conservatism. He is about 55% equities. He likes global medical devices and US software and mobile payments. He also thinks emerging markets are okay. The Fed Reserve is not full fledged dove, so he would be cautious.
He remains out of the staples sector. It has gone into a consolidation trading pattern. At 22 times earnings, it is not cheap. He would stay away for now.
Inventory is critical in this sector. He is staying away from retail in general -- especially this late in the cycle. This can be a very volatile space, which brings aggressive short term investors and does not lend well to a long term investor.
A good short? He is not a short trader as a rule. The odds are against you as a short as much of the politics have already played out. He would stay away, but would not short it. He would suggest they have a real problem on their hands, but their business is also made of defense assets as well.
A value trap. It has been punished lately on its stock price and is a political punching bag that both Republicans and Democrats are beating up on. He would stay away. (Analysts’ price target is $75.00)
Continues to do well and is the industry leader. The move to 5G will not likely prompt as much upgrade opportunity as with 4G. Their push into services will be key to watch. He thinks they are leading in augmented technology as well. As a mature company, you will not see the same punch as in the past.
He would stay away from this space. He sees deposit rates coming up and the flat yield curve making it difficult for this space to make money. Not a good time for banks. He would stay away.
Short Canadian Banks? The Big Short theorist is showing concern for Canadian banks, and he thinks you should pay attention to this. However, he believes Canada's oligopoly in the Canadian bank space makes it difficult for the same credit cycle melt down to happen here. It is difficult to short this.
If not BAC, what else? He has rolled over into ETFs instead of hard recommendations on an individual stock. He would recommend taking profits on BAC-N.
(A Top Pick Apr 11/18, Up 25%) It is high quality with a 1.0 beta. He would stick with it as the fundamental still hold true -- aging population, diabetes, etc. There are 29 million US adults with Type 2 diabetes and another 84 million are pre-diabetic -- almost 1 in 3 adults.
(A Top Pick Apr 11/18, Down 5%) Exchanges have good ongoing revenues. They make money on deposit balances, but have been impacted by rising short term rates. It was time to move on and he no longer holds it.
PEG ratio? This is the industry PE ratio expressed as a ratio the industry growth rate. You can't trade on it though. It helps justify higher PE ratios for high growth sectors.
It is a corporate restructuring story that he expects to see trade as three separate companies. The components have not benefited from improving fundamental factors. There will eventually be better value and may take three years to accomplish their goals. Basic materials may be getting its footing, but the other components are slow to come about right now. He would look elsewhere.
He stays away from single stock exposure and would prefer an ETF instead. Transports are not looking good right now. (Analysts’ price target is $209.00)