Darren Sissons' Top Picks: December 7, 2021
BNN Bloomberg
Top picks from Darren Sissons, vice-president and partner at Campbell, Lee & Ross
MARKET OUTLOOK:
Policy error is a rising market threat. The flood of fiscal and monetary COVID stimulus drove asset bubbles in real estate and growth stocks. More worrying, is rising wage inflation. We, along with many other market observers, are concerned central banks moved too slow on higher interest rates, so expect accelerating inflation moving forward. Interest rates are expected to rise in 2022, which will increase the pain on high consumer, corporate and government debt.
Inflation, as a means to deflate record debt across consumer, corporate and government segments, is also a pending headwind. Given the U.S. central bank provides global interest rate leadership all eyes remain firmly fixated on the U.S. Federal Reserve.
Investors should take a view on Omicron but initial data suggests it’s more contagious but less deadly. In any event, the general populace now has limited appetite for further lockdowns so investors would be advised to position their portfolios to view COVID as a persistent near term challenge the pharmaceutical industry will eventually conquer.
Investors looking for new opportunities would be advised to take advantage of December profit taking and tax loss selling to acquire high quality companies trading at a discount to their trading history. Financials and sectors benefitting from rising interest rates and inflation are worthy investment choices.
Thematically, ESG is a growing opportunity albeit an underperformer this year. Oil & Gas is still attractive despite its strong 2021 run. COVID recovery trades will work but may require patience. Canadians, as mentioned in prior appearances, should use our strong petrocurrency to buy inexpensive quality names in foreign markets.
