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June 6, 2019
Market. Portfolio management changes every day. There is always risk but that is where discipline comes in. Regarding talks with Mexico, there is no direction and people are looking for any headline to drive the market. There has been no deal all year and we have been just treading water on a deal all year. If we look at the global PMI index we are seeing weakness. We have seen the global economy slow down but it is not at recession levels. He is not avoiding economically sensitive stocks but is going a little more defensive as of late. We will see the bottom this summer in industrials. Resolving of the tariffs into the election should let us see rebounding in the fall. The US dollar has stayed strong all of this year but he does not see it as a huge headwind.
Market. Portfolio management changes every day. There is always risk but that is where discipline comes in. Regarding talks with Mexico, there is no direction and people are looking for any headline to drive the market. There has been no deal all year and we have been just treading water on a deal all year. If we look at the global PMI index we are seeing weakness. We have seen the global economy slow down but it is not at recession levels. He is not avoiding economically sensitive stocks but is going a little more defensive as of late. We will see the bottom this summer in industrials. Resolving of the tariffs into the election should let us see rebounding in the fall. The US dollar has stayed strong all of this year but he does not see it as a huge headwind.
Ian Fung
Vice-president and portfolio manager, Davis Rea
COMMENT
COMMENT
June 6, 2019
We've had a spectacular bounce since December, but based on what? Not much is happening with the economy, really. The hype in U.S. early this year was a shame--it wasn't based on fundamental growth. Powell is being "patient." However, things aren't as good as the US Fed's Powell lets on. A rate hike is out of the picture for now. Rather, he expects a rate cut and the stock will have a Pavlovian reaction. In America, Trump threatens Mexico with tariffs, then pulls back and the market bounces up and down--it's noise. Noise doesn't effect the fundamentals. What we need are earnings, and the fair market value of earnings lately are flat. No growth. What will drive markets? He doesn't know. The FAANGs were the big leaders of the last few years, but not anymore.
We've had a spectacular bounce since December, but based on what? Not much is happening with the economy, really. The hype in U.S. early this year was a shame--it wasn't based on fundamental growth. Powell is being "patient." However, things aren't as good as the US Fed's Powell lets on. A rate hike is out of the picture for now. Rather, he expects a rate cut and the stock will have a Pavlovian reaction. In America, Trump threatens Mexico with tariffs, then pulls back and the market bounces up and down--it's noise. Noise doesn't effect the fundamentals. What we need are earnings, and the fair market value of earnings lately are flat. No growth. What will drive markets? He doesn't know. The FAANGs were the big leaders of the last few years, but not anymore.
Ross Healy
Chairman, Strategic Analysis Corp
COMMENT
COMMENT
June 6, 2019
Preferred shares worth buying? Almost all preferreds are resets, which means every 5 years the dividend rate is adjusted according to interest rates. So, when the latter fall, then resets pay lower dividends. This is why preferreds are falling. Not a good outlook.
Preferred shares worth buying? Almost all preferreds are resets, which means every 5 years the dividend rate is adjusted according to interest rates. So, when the latter fall, then resets pay lower dividends. This is why preferreds are falling. Not a good outlook.
Ross Healy
Chairman, Strategic Analysis Corp
COMMENT
COMMENT
June 6, 2019
Gold The market rally is getting long in the tooth and we're starting to see weakness in Japan, spreading to Europe and the US Fed fears that may spread here. The US is carrying huge, expanding debts--fiscal stupidity. Gold could go a long way and he's waiting for it to break out as the world's central banks buy it. Once gold goes, it can really take off. Gold is so disliked as an investment that the junior gold companies have been ridiculously sold off.
Gold The market rally is getting long in the tooth and we're starting to see weakness in Japan, spreading to Europe and the US Fed fears that may spread here. The US is carrying huge, expanding debts--fiscal stupidity. Gold could go a long way and he's waiting for it to break out as the world's central banks buy it. Once gold goes, it can really take off. Gold is so disliked as an investment that the junior gold companies have been ridiculously sold off.
Ross Healy
Chairman, Strategic Analysis Corp
COMMENT
COMMENT
June 6, 2019
S&P 500: more upside to come or is it overvalued? 3,080 is the current fair market value of the S&P, but the S&P almost never reaches above its FMV--its iron ceiling. The last time it nearly did, it took a deep dive. Earnings are flat, going nowhere. Meanwhile, Trump threatens tariffs. The markets could then fall. We could see Uber, Lyft and Beyond Meat slide first, and they could plunge hard.
S&P 500: more upside to come or is it overvalued? 3,080 is the current fair market value of the S&P, but the S&P almost never reaches above its FMV--its iron ceiling. The last time it nearly did, it took a deep dive. Earnings are flat, going nowhere. Meanwhile, Trump threatens tariffs. The markets could then fall. We could see Uber, Lyft and Beyond Meat slide first, and they could plunge hard.
Ross Healy
Chairman, Strategic Analysis Corp
COMMENT
COMMENT
June 6, 2019
Oil or lumber picks? No thanks to both. Will oil prices stabilize? Lumber: housing is falling out of bed and he won't even guess a bottom in housing. He started his career analyzing pulp and paper, so he knows how volatile (low) these stocks can get.
Oil or lumber picks? No thanks to both. Will oil prices stabilize? Lumber: housing is falling out of bed and he won't even guess a bottom in housing. He started his career analyzing pulp and paper, so he knows how volatile (low) these stocks can get.
Ross Healy
Chairman, Strategic Analysis Corp