Ryan Bushell's Top Picks: January 26, 2022
BNN Bloomberg
Top picks from Ryan Bushell, president and portfolio manager, Newhaven Asset Management
Ryan Bushell, president and portfolio manager, Newhaven Asset Management
FOCUS: Canadian dividend stocks
MARKET OUTLOOK:
I expect volatility for equities broadly, especially in the first half of 2022, but I remain cautiously optimistic on the prospect of another solid year for our portfolios. Central banks, led by the U.S. Federal Reserve, have turned more cautious on inflation and are likely to increase interest rates and reduce other stimulus measures earlier in 2022 than most expected. These actions are likely to be front-end loaded unless economic growth and inflation surpass expectations. The question will be: How markets react to this anticipated paradigm shift? So far, we are seeing an orderly rebalance from richly valued growth companies toward more reasonably valued companies without much overall volatility. There is potential for a broader market downturn in the first half of 2022, much the same as late 2018, when economic growth was slowing, and interest rates were rising. The pandemic is likely to be a swing factor for policy in 2022. If Omicron restrictions expand in both scope and timeline then the global economy will slow and interest rate increases may be delayed, pleasing most investors. However, if Omicron cases quickly peak and recede with widespread immunity from both increased transmission and vaccinations, then economic growth could reignite. Another upswing in economic growth and resulting inflation in mid-2022 is likely to cause central banks to tighten monetary conditions quicker and more forcefully than the market would like. This creates downside potential for stocks in general and especially for the more speculative (overvalued) areas of the market.
TOP PICKS:
Brookfield Renewable Partners (BEP-U TSX) – Last bought at $41.00
