Ross Healy, chairman of Strategic Analysis Corporation and portfolio manager at MacNicol & Associates Asset Management
Focus: North American large caps

MARKET OUTLOOK

This is a tough market to call. When I was on Market Call a few weeks ago, I forecast that the low for the S&P would be 2,175 points and indeed the futures fell to 2,173 before the market reversed. I expected the market to rebound, and it has. There was some technical resistance at 2,680-2,700, but the market has momentarily brushed that aside and looks to be heading (with luck) to its intrinsic value, which currently stands at about 3,000. At this point, we run into an interesting challenge: the point at which “value” runs out but “stimulus” is still running strong.

Not surprisingly, the general run of market commentary sits in two camps: the fundamentalist and the technicians, or value versus stimulus. This is the game that is now playing out.

The recovery issue now comes into focus. At $3.50 of debt per dollar of GDP, the ability of additional debt to grow GDP falls to zero. The U.S. is now through that level. COVID-19 can take the blame for this decline, but the increase in indebtedness coupled with the collapse in GDP call into question the fundamental ability of the U.S. economy to actually rebound with much ability to follow through into a strong 2021, which many expect. I don’t see it and that may well mean a lot more stimulus is coming, which unfortunately only makes this problem worse.

Why the Canadian dollar remains strong in the face of collapsing oil? Are we not a "petro-currency"? The answer is it isn’t, but it’s tied into my last point in my commentary: the relative solvency condition of Canada versus the U.S.

TOP PICKS

Ross Healy's Top Picks

Ross Healy of Strategic Analysis Corp shares his top picks: Cash, Fortuna Silver and Amazon.

CASH

FORTUNA SILVER (FVI TSX)

AMAZON (AMZN NASD)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
FVI Y Y Y
AMZN N N N

 

PAST PICKS: MAY 3, 2019

Ross Healy's Past Picks

Ross Healy of Strategic Analysis Corp reviews his past picks: CVS Health, HUV and cash.

CVS HEALTH (CVS NYSE)

  • Then: $56.66     
  • Now: $61.74
  • Return: 9%
  • Total return: 12%

BETAPRO S&P 500 VIX SHORT-TERM FUTURES ETF (HUV TSX)

  • Then: $4.48
  • Now: $76.59
  • Return: 71%
  • Total return: 71%

CASH

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
CVS Y Y Y
HUV N N N

 

Total return average: 28%

TWITTER: @SVAInsights
WEBSITE: strategicanalysis.ca