Christine Poole, CEO and managing director of GlobeInvest Capital Management

Focus: North American large cap stocks

MARKET OUTLOOK:

Global equity markets continued their upward assent with many broad indices reaching new highs during the quarter. Many countries are experiencing above trend growth as their economies rebound from pandemic-driven shutdowns last year. So far, growth has been led by China where the initial containment of COVID-19 was highly successful and the United States due to a swift rollout of vaccinations across the country. Vaccination rates in developed countries are rising as supply availability increases, resulting in an easing of pandemic restrictions. Lower income developing countries are lagging and securing vaccines to them is critical to not only ensure the health of their citizens but also allow for the full elimination of border restrictions

Amidst a backdrop of strong GDP growth and elevated inflation, the reaction from the bond market is somewhat unexpected. The 10-year U.S. Treasury bond yield has retraced to 1.38 per cent from the peak of 1.74 per cent at the end of March, when inflation concerns were just starting to stir. The decline in the bond yield suggests the validity of the “base effects” and that the upward spike in inflation and economic growth rate from economies reopening is not sustainable.

Consumer and corporate spending will drive economic growth. Canadian and U.S. consumer confidence are back to pre-pandemic levels. Corporations invested in software and technology last year to enable remote work and digital processes and have continued to do so to improve overall productivity. Manufacturing activity is ramping up and capital investment is rising to meet reopening demand and replenish depleted inventories.

Further upside is expected for equities driven by the robust earnings recovery combined with accommodative monetary policy by the major central banks and fiscal support programs. While growth rates in the economy and corporate profits will moderate in the back half of the year and next year, they will remain positive and supportive for stocks. 

TOP PICKS:

Walt Disney (DIS NYSE) recent purchase price US$172 range in July 2021

Disney is a media conglomerate and premier content provider, comprised of media networks, parks & resorts, studio entertainment, consumer products and direct to consumer. Its strong global brand portfolio including Disney, ESPN, Pixar, Marvel, and Lucas Film supports a multi-platform strategy to exploit content and intellectual property across Disney’s business segments. The acquisition of 21st Century Fox significantly enhanced Disney’s content offering. The successful November 2019 launch of Disney+, its direct-to-consumer streaming service, marks a new growth path for the company and provides optionality to its distribution capabilities. 

JPMorgan Chase & Co. (JPM NYSE) recent purchase price US$152 range in July 2021

JPMorgan is a leading financial institution in the U.S. engaged in consumer & corporate banking services, investment banking and asset management. The bank has a solid track record of successfully navigating to outperform through the cycle. JPMorgan offers a dividend yield of 2.4 per cent,

Linde plc (LIN NYSE) recent purchase US$286 range in July 2021

Linde plc is the largest industrial gas company worldwide, serving a diverse group of industries and geographies. Linde is positioned to benefit from an improving global economy and its leading positions in attractive secular growth end markets including healthcare, electronics, and clean energy. Linde provides a dividend yield of 1.7 per cent.

PAST PICKS: July 16, 2020

Brookfield Renewable Partners (BEP-U TSX)

• Then: $38.55
• Now: $47.42
• Return: 23%
• Total Return: 27%

Mondelez (MDLZ NYSE)

• Then: $53.04
• Now: $63.50
• Return: 20%
• Total Return: 22%

WSP Global (WSP TSX)

• Then: $85.02
• Now: $150.91
• Return: 77%
• Total Return: 80%

Total Return Average: 43%

Twitter Handle: @christine_globe

Company Website: www.globe-invest.com