Investment

Mackenzie Investments says it’s time to buy bonds after tech-fuelled rally

Published

1 year ago

July 4, 2023

People walking by the New York Stock Exchange. Photo by Spencer Platt/Getty Images files

Mackenzie Investments, one of Canada’s largest fund managers, is turning less optimistic about stocks and sees better value in bonds after the 13 per cent rally for global equities in the first half.

Central bankers’ campaigns to raise borrowing costs are starting to have an impact on the economy and will eventually force investors into a more defensive mode, Lesley Marks, Mackenzie’s chief investment officer of equities, said in an interview. There’s a 60 per cent chance of a U.S. recession in the next 12 months, according to economists in a recent Bloomberg survey.

“We think that as the data continues to unfold throughout the rest of the year, people will see that the economy is in fact slowing,” crimping corporate earnings, she said. “The relative value exists right now in fixed income.”

The firm’s strategists recommend adding investment grade debt and going underweight stocks.

Mackenzie’s view echoes growing wariness among global managers that the rally in equity benchmarks is out of sync with the economic reality. While a boom in artificial intelligence has powered gains in global tech stocks, masking weakness in other sectors, hawkish central-bank rhetoric is denting optimism about an economic soft landing.

Pacific Investment Management Co. is among those firms warning about the possibility of a recession in some developed markets due to high policy rates, making high-quality government and corporate bonds attractive.Mackenzie, a unit of IGM Financial Inc., has $190 billion under management, including balanced portfolios. The Mackenzie Ivy Global Balanced Fund nudged its fixed income allocation to above 24 per cent as of the end of May, from 21 per cent at the end of last year, while trimming stocks. The vast majority of its bond holdings are investment grade.

Marks said any recession is likely to be mild, but “the slowdown in the economy is going to play a stronger role in the outlook for equities” in the second half of 2023.

Within equities, investors should favour less cyclical sectors that will perform better in a tougher economy, such as health-care and consumer staples stocks, Marks said. She also likes Japanese equities, whose benchmarks are trading near the highest levels in more than three decades.“It’s been an ignored market for a very long time outside of this year,” she said. The Bank of Japan may yet be forced to adjust its policy of yield curve control, which would strengthen the yen, to the benefit of foreign owners of Japanese stocks, Marks added. Mackenzie’s Tokyo-listed holdings include medical equipment maker Terumo Corp. and retailer Seven & I Holdings Co., according to fund disclosures dated May 31.

Source link

Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

Source link

Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link