Breaking Records Again - Your Money April 9th 2021

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Well this week started out with a record setting trend thanks to the strong jobs data released last Friday when markets were closed, and they were book ended today with the 303,000 jobs Canada created last month too. What is more telling is the evidence of pent up demand from consumers who feel like they have been trapped in a snow bound log cabin for the last 12  months. The pent up demand showed up in none other than movie theater goers heading out to see King Kong Versus Godzilla raking in $285 million in the first week. But here’s the thing, HBO was showing it for free at the same time. Covid or no covid, those with at least one vaccine wanted out of the house!

Combine that with ongoing discussions on a multi trillion dollar infrastructure spending bill and an ongoing zero interest rate policy by the Fed and why not put money into the stock market? The 1st of April saw the S&P500 hitting 4000 for the first time in history and as of today it’s at 4129. If we look at this week’s winners it includes Norwegian Cruise Lines, Carnival, Ceasars Entertainment and Alaska Airlines.  Sure these companies have been bleeding out their balance sheets but with herd immunity just around the corner and cash in their pockets, these former “long shots” are now looking like a sure thing. Personally it looks like irrational exuberance is once again creeping back into investor psyche. Remember earnings expectations are at a fever pitch and earnings season kicks off next week.

Stocks that are priced to perfection could face a sell off much like the last quarter after the Uber PE growth stocks from last Fall succumbed to gravity. I would say keep some powder dry as there may be some buying opportunities appearing ahead of our seasonal selling period that begins in May. Having said that we still have a number of blue chip stocks in negative territory for 2021. Merck is trading at 11 times forward earnings and pays a 3.4% dividend. Coke and Walmart are trading in the low 20’s PE and the Telcos on both sides of the border are unloved and ignored. As most of you know I am a value investor and love picking up unloved stocks.

Happy trading.

Stay Safe.

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Steve Bokor

Steve Bokor

Portfolio Manager