Ticker Take with Jon Erlichman
A weekly newsletter on investing.
A recap of the week
The S&P 500 continue to lose momentum (modestly) this week, as investors continue to assess a soup bowl of uncertainty — both geopolitical and economic. Buying for the benchmark index has clearly cooled off since it climbed to the 6,000 level, which represents a 20% rally off the April lows.
Gold also cooled off this week — in part, because the U.S. dollar became the new safe haven choice, especially after the U.S. Federal Reserve implied there are no immediate rate cuts coming.
Meanwhile, oil enjoyed its third straight winning week, as the Israel-Iran conflict continues to fuel uncertainty in the crude market.
Rosenberg’s recession worries
David Rosenberg has never shied away from sharing contrarian views. He sat down with me for an extended interview and we discussed why he sees growing signs of a recession in the U.S. and how he’s advising investors to position around that risk. I’ve known David for a long time and while he’s known as a “permabull,” that is an inaccurate description — and he says as much in our discussion.
If you really want to understand the economy and its relationship to investments, I suggest you watch this video! Aside from what it will teach you about economics, David shares his investment case for gold, bonds and a couple of recession-proof stocks. Watch here!
15,000 Youtube subscribers!
Speaking of YouTube, we recently passed 15,000 subscribers! Caroline and I are so appreciative of the support we’ve received. A special thanks to everyone who has helped us in our journey, including our wonderful partners like Global X!
Should you worry about a selloff?
I had a great chat with Brianne Gardner of Velocity Investment Partners at Raymond James. And she felt it was important to share the stats below, which highlight that when war breaks out, markets typically pull back—on average, falling around 14%. And while that may be a scary thought, it’s also worth noting that they typically recover in less than two months!
A reason to mind the season
Speaking of charts…
This chart comes courtesy of Ryan Lewenza from Turner Investments at Raymond James, who expects stocks to pullback over the seasonally weak summer months. As his chart highlights, the S&P 500 tends to be weak — particularly in September and August. Given that, in his opinion, U.S. markets are trading at elevated levels and showing signs of technical resistance, Lewenza has raised client cash levels to take advantage of the pullback and deploy again come the fall.
3 catalysts for new highs in the stock market?
I spoke with Rick Gardner, Chief Investment Officer at RGA Investments. He believes stocks could continue to climb, depending on how three things play out…
1) What happens with China US trade talks?
2) Will the 2017 U.S. tax cuts be extended?
3) Will the prospects for Fed rate rate cuts climb?
Rick is optimistic on all fronts and he would be investing in AI and robotics stocks, as well as cyber security names and the military or aerospace sector.
Stocks to buy in the USA?
What stocks would be worthwhile holds for the long-term? I spoke with Greg Halter, Director of Research at Carnegie Investment Counsel, who remains bullish for the future and unphased by recent uncertainty. In terms of names he likes for one’s portfolio, they include: Amazon, Alphabet, Meta, JPMorgan, Progressive, Chubb, Kinsale Capital, Fiserv, Visa, Mastercard, NextEnergy Energy, Eli Lilly, Novo Nordisk, Stryker, Deere, Uber, Alliant Energy, Eaton Corp, and United Rentals
Stocks to buy in Canada?
I had a good chat with Jeannie LiChong of Waratah Capital Advisors, who believes the recent trend towards investing in Canada will continue. She believes that the new Liberal government’s comment to growth in more areas will be a benefit and she particularly likes infrastructure-related stocks, such as WSP and Stantec, even after the gains they’ve seen. Other names she pointed to include Boralex and Northland Power.
Stocks to buy in Mexico?
Lisa Schreiber of Gradient Investments told me she’s a fan of the Coca Cola Femsa, the dominant Coke bottler in Latin America. She believes the valuation is compelling as the company expands in markets such as Costa Rica. Meanwhile, Lisa is also a fan of shares of U.S. listed retailer Dollar General.
Airline stocks to own?
Steve Trent of Citi Research has been covering the sector for years and he shared with me three names that he likes. Copa Airlines, based on positive traffic trends, as well as United Airlines (in part based on some pricing power) and AerCap, which is Citi’s preferred stock in the area of aircraft leasing companies.
Are defense stocks actually technology stocks?
I had an interesting conversation this week with Seth Merrill of Crewe Advisors, who says yes, defense is indeed a technology industry. Just look at modern warfare, Merrill noted, pointing to the rapid escalation in drone use. While technology is a key part of the story at the biggest defense companies (think Lockheed, Northrop or RTX), Merrill recommends looking at some of the U.S. small and mid-cap names.
Can industrials and utilities keep climbing?
I had a constructive chat this week with Bob Shea, Chief Investment Officer at Dynasty, who believes there is more room to run in these two sectors. For context, they are already the two best performing S&P 500 sub-groups this year. As Bob explains it, a lot of these companies are part of the “industrial renaissance,” with AI (and the related power demands). It’s a mega trend he believes will continue, given we are also going through an energy transformation. That’s not to say chipmakers can’t continue to benefit, but he believes the AI story is continuing to broaden out.
Are you ready for Tesla’s Robotaxis?
Tesla’s robotaxi era is expected to begin in Austin on Sunday, with the launch of roughly 20 Model Y vehicles. It’s expected that Tesla will rollout its service in 25 U.S. cities in the next year. Longtime Tesla bull Dan Ives, an analyst with Wedbush, expects some setbacks along the way, but believes this development will play a key role in pushing up Tesla’s market cap by a whopping $1 trillion by the end of 2026.
Should you be ready for a “shadow” Fed Chair?
The U.S. Federal Reserve, of course, kept interest rates steady in their latest decision, defying President Donald Trump’s demand to lower them. Trump even mused about taking on the job of Fed Chair himself. While that seems unlikely (not to mention unprecedented), an equally unusual situation could emerge if Trump names a successor to Powell before his time at the Fed is up — what some are already calling a “shadow” Fed Chair. And the buzz is getting strong enough that economists can no longer ignore the complications that could accompany such a move, according to Olu Sonola, U.S. Head of Economic Research at Fitch Ratings. He told me it’s one of the things he’ll continue to watch.
Disclaimer: this content is for informational purposes only and does not constitute legal, financial, or professional advice. Always consult a qualified professional regarding your individual situation.