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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (146207)	2/23/2023 4:10:44 PM
From: Goose94	Read Replies (1) \| Respond to of 202700

HUV-T: Interest rates remaining “higher for longer” as well as earnings are the biggest risks for stocks in 2023, much as rising interest rates were the biggest risk last year. The economic data has remained robust, but aggressive rate hikes have yet to show up fully in the economic numbers, primarily because the economy had a lot of momentum going into the rate-hiking period. Business inventories were low and consumers were still relatively flush with cash from all the stimulus offered during the heights of the pandemic. Higher interest rates are taking their toll on housing, auto sales and other interest-sensitive sectors. This is spreading to other sectors of the economy as consumers and businesses roll over existing debts at much higher rates. It is not a matter of “if the slowdown will occur,” it’s only a matter of “when.” So how do we factor also this outlook into a cohesive, low-risk strategy for investing in 2023? Our simplest call is to increase exposure in bonds to at least a market weight (40 per cent for most balanced portfolios). Cash returns have risen and we prefer holding cash over preferred shares at this time since we still see some credit risk from the preferred share sector as economic growth slows. In terms of stocks, it is more of a conundrum. Markets rarely suffer two negative years in succession, so last year’s poor returns may already incorporate much of the bad economic news we see ahead. After January’s rally, we have moved back to an underweight position in stocks (40 per cent in balanced funds, at the low end of our traditional 40-60 per cent range). We reduced technology stock exposure as we want to see how the economic slowdown will impact some of the key growth areas of the past few years, particularly cloud services, phone sales and mobile advertising. We have maintained a strong weight in semiconductors, though, as they have already adjusted to lower estimates and still need to rebuild productive capacity given the ongoing chip shortage in key sectors. We also reduced energy exposure but are still overweight in oil stocks, as we see ongoing supply constraints and exceptionally low historical valuations. We reduced exposure to economically sensitive sectors such as consumers (autos, retail and housing), industrial production (steel, base metals and rails), and remain underweight financials. Gold stocks continue to look like a good contrarian play this year as we expect more U.S. dollar weakness, decades-low valuations and a reversal of the tight interest rate environment later this year. For income-oriented accounts, we continue to like the pipeline and telecom companies for their high dividend yields, stable earnings and moderate valuations. John Zechner on BNN.ca Market Call thirsty Thursday February 23rd @ 1200ET