Full episode: Market Call for Wednesday, February 24, 2021
Kim Bolton, president and portfolio manager of Black Swan Dexteritas
FOCUS: Technology stocks
Global equities have sold off as real yields continued their march higher in the past couple of weeks. A series of disappointing weekly jobless claims and recent monthly jobs reports have pointed to a U.S. labour market that’s still under considerable strain due to the pandemic. That has led the Federal Reserve to emphasize robust stimulus measures, which would typically be embraced by investors. However, many market participants are now painting the Fed’s situation as caught between a rock and a hard place. If bond yields continue to rise in response, the Fed might be forced to tighten policy too quickly, while a complacent Fed could pose overheating risks that may destabilize the economy over the longer term.
The global reflation trade continues with outperformance by energy, financials, industrials, and materials sectors. The stay-at-home trade that boosted much of the technology arena has been on the back foot given hopes of a return-to-normal due to a broader vaccine rollout. That’s seeing more money flow into cyclicals, reflecting pent-up expectations for a reopening of global economies.
The recent stock market weakness presents a buying opportunity as we see the next catalysts as:
1. The U.S. fiscal bill is coming to fruition and stimulus checks being delivered 1-2 weeks after the bill passes; keep an eye on retail purchases as another leg higher in the U.S. stock markets.
2. Johnson & Johnson emergency use authorization on Friday; this is widely expected but adds another 20 million doses to the U.S. supply by the end of March.
We’re all hoping for a quick return to normalcy, but if the last year has taught us anything, things often only seem to get more unpredictable by the day. We have therefore positioned the BSD Global Tech Hedge Fund with the expectation of more market volatility; the fund is 94 per cent invested across a couple dozen tech vendors and tech end-users, with a 62 per cent short equity indice hedge on the invested portfolio that will incrementally grow if the market deteriorates.
The Black Swan Dexteritas credo – prosperously navigating unexpected events with great skill and agility – defines our ability to outperform in these uncertain markets.
Samsung Electronics (SMSN LSE)
PAST PICKS: February 14, 2020
Applied Materials (AMAT NASD)
- Then: $66.85
- Now: $116.66
- Return: 76%
- Total Return: 77%
Taiwan Semiconductor (TSM NYSE)
- Then: $58.19
- Now: $129.44
- Return: 122%
- Total Return: 128%
Walt Disney (DIS NYSE)
- Then: $139.54
- Now: $196.39
- Return: 41%
- Total Return: 41%
Total Return Average: 82%
BSD website: www.blackswandexteritas.com