Brendan Caldwell's Top Picks: December 21, 2021
BNN Bloomberg
Top picks from Brendan Caldwell, president and CEO, Caldwell Investment Management
MARKET OUTLOOK:
For over 30 years, the chairman of our firm has said that interest rates are the determining factor. We believe that to be especially true as we look towards 2022.
Facing a scenario of strong demand, record inflation and continuing supply chain pressures, the U.S. Federal Reserve has signaled a more aggressive timeline to its tapering program and the market is pricing in rising rates as early as next spring.
As a result, volatility has spiked in recent weeks and we believe it will remain elevated as higher discount rates would adversely impact currently unprofitable companies with expected cash flows far in the future.
Since a disproportionate share of these companies lie within the information technology sector, and its more than 25 per cent weight in the S&P 500, we see this as a major headwind to the S&P moving higher next year.
Despite these challenges, we continue to look for companies with strong management teams that can successfully navigate challenging environments while positioning themselves to emerge as stronger companies on the other side.
