Andrew Pyle, senior wealth advisor and portfolio manager at The Pyle Group, Scotia Wealth Management

FOCUS: North American stocks

MARKET OUTLOOK:

I still believe we are in the middle of a bull market, though the pace of advance in the broader markets in the second half is unlikely to match what we saw in the first. That’s not to say that the easy trade is done as we still have a decent runway ahead before we face major headwinds, like rising rates and higher default risk for over-leveraged businesses and individuals. I do think, however, that we are in the middle a baton pass – where markets are going to shift focus from the virus to traditional fundamentals like growth, policy direction, and geopolitical considerations.

Against this backdrop, investors should be prepared for ‘normal’ setbacks, with stocks correcting 5-10 per cent one or two times before the end of the year. Assuming the fundamental outlook remains positive, these pullbacks would be buying opportunities, just as we saw in the bull market following the financial crisis. A more substantial correction would have to come from either a variant that defies the vaccines or a policy blunder by central banks. Even in 2010, when we shed some 20 per cent, this required something has heavy as the Greece/euro crisis.

Right now, investors are getting confusing signals from the bond market. 

The breakdown in yields has nothing to do with fundamentals, nor any shift in monetary policy, other than central banks willing to let things run hot. This was more a technical move as short positions in Treasuries were getting squeezed through the second quarter and then we got capitulation on the break in the 10yr below 1.40 per cent (which represented a 25 per cent retracement of the sell-off from August to start of April). I expect yields to retrace higher as tapering calls are only going to get louder, which should be supportive of US bank stocks.

TOP PICKS:

Andrew Pyle Top Picks

Andrew Pyle, senior wealth advisor and portfolio manager at The Pyle Group, Scotia Wealth Management, discusses top picks: Ballard Power Systems, Teck Resources, and Barrick Gold.

Ballard Power Systems (BLDP TSX)

Teck Resources (TECK/B TSX)

Barrick Gold (ABX TSX)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 BLDP TSX N  N  Y 
 TECK/B TSX N  N  Y 
 ABX TSX N  N  Y 

 

PAST PICKS: May 25, 2020

Andrew Pyle's Past Picks

Andrew Pyle, senior wealth advisor and portfolio manager at The Pyle Group, Scotia Wealth Management, discusses his past picks: Brookfield Infrastructure Partners, Bank of Montreal, and Loblaw.

Brookfield Infrastructure Partners (BIP-U TSX)

  • Then: $56.10
  • Now: $69.40
  • Return: 24%
  • Total Return: 30%

Bank of Montreal (BMO TSX)

  • Then: $65.25
  • Now: $126.47
  • Return: 94%
  • Total Return: 103%

Loblaw (L TSX)

  • Then: $66.84
  • Now: $78.30
  • Return: 17%
  • Total Return: 20%

Total Return Average: 51%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 BIP-U TSX N  N   Y
BMO TSX  N  N   Y
 L TSX N  N    N