August 13, 2020
Catherine Yeung, Investment Director, Fidelity International, takes a close look at rising inequality, geopolitical tensions, policy responses and other key factors affecting the success of Asia’s economic recovery. Catherine believes that if central banks stop pumping liquidity into the market, that could create a tipping point. There was cyclical recovery in July, underpinned by bank and government policies, but it has stopped to some extent. Looking at geopolitical concerns, Catherine believes that over the short term we will likely see an escalation of negative rhetoric about China. This may cause increased volatility, although the markets have been relatively robust. If you move away from trade discussions, many companies that were previously listed in the U.S. are saying they don’t need to go offshore to list.
Recorded on August 6, 2020.
August 12, 2020
Against the backdrop of the U.S. elections, changing investor sentiment and ongoing coronavirus fears, portfolio manager Darren Lekkerkerker shares his market outlook and identifies opportunities for growth. Darren manages Fidelity North American Equity Class, and is positive on the market and the positioning of his funds and stocks he owns. Darren attributes much of the Class’ performance to its mega-cap technology positions, and his investment style puts a focus on high-quality businesses that have the potential to perform better in a market downturn. When making an investment, he adopts an ownership mindset and thinks of it as buying a minority interest in a company. Darren views ESG as a profitable area with a lot of room for growth in North America. He is specifically looking at renewable power, green hydrogen and solar power.
Recorded on August 5, 2020.
August 10, 2020
Jurrien Timmer, Director of Global Macro, provides his weekly market commentary and global macro update. Since the lows in March, we have seen some variation in market leadership. FAANGs have been leading, with power to move the market, but the rally off the lows has actually been quite broad. Jurrien and his team made a deep dive into the top 50 companies in the S&P 500 Index, as opposed to the bottom 450, to profile market leadership from the early and mid-1970s to the late 1990s. There was a massive speculative retail bubble toward the end of the secular bull market of the late 1960s. After that bubble burst, the market was dominated by institutions. The desire to buy companies with “bulletproof” earnings led to the “Nifty Fifty.” Eventually these were destroyed by inflation, and in the late 1990s, the market gave way to a big rotation. Jurrien notes that it is interesting to see what the top 25 names were for each period. Essentially, they were the FAANGs of their times: IBM, AT&T and Exxon in 1972; General Electric, Cisco and Intel in 2000; Apple and Microsoft in 2020. Follow Jurrien on LinkedIn or @TimmerFidelity on Twitter for his detailed research reports and charts.
Recorded on August 4, 2020.
August 9, 2020
In the fifth episode of the Fidelity ETF Exchange - powered by FidelityConnects, co-hosts Mike Riccio and Etienne Bouchard host a very special guest, Patrick McEntyre - Managing director, electronic trading and services at National Bank. National Bank is the largest ETF market maker in Canada and is also a Designated Broker for many of Fidelity’s ETFs. Some of the key topics that were covered by Mike, Etienne and Patrick include: the role of the market maker, key trends to look out for in the Canadian ETF industry as well as best practices when trading ETFs.
Recorded on August 4, 2020.
August 7, 2020
Michelle Munro, Director, Tax and Retirement Research, discusses the mechanics of leveraging Fidelity’s Tax-Smart Withdrawal Program® in a gifting and estate planning strategy, as well as other planning topics. In retirement, a systematic withdrawal plan (SWP) applies the same principles of the accumulation strategy, but in reverse, by selling fixed amounts of investments over equal periods of time. This strategy is essentially the reverse of dollar-cost averaging. Fidelity’s Tax-Smart Withdrawal Program® (T-SWP) provides cash flow without actually disposing of units. Michelle notes that you can adjust between 5% and 8% payouts without triggering capital gains tax, based on your needs. The strategy is flexible, and investors aren’t locked in to either percentage.
Recorded on July 30, 2020.
August 5, 2020
As the coronavirus pandemic puts traditional business models to the test, Fidelity Founders™ Class portfolio manager Dan Kelley shares his perspectives on how entrepreneurs and founder-led companies in tech and other sectors are adapting. He notes that founder-led companies are often incredibly innovative, flexible in adapting to different environments and typically “digital first.” A digital-first approach has helped as online business has accelerated, and founder-led companies also tend to be newer, so they don’t typically have a legacy bureaucracy and are able to pivot easily. There are about 300 companies in the S&P 500 Index that meet the criteria for being founder-led. Dan is less worried about growth vs. value, or about particular sectors, and is focusing instead on where the best options are to establish the direction of the Fund. Dan notes that Fidelity’s strength in research has allowed him to find opportunities all around the world, and being colleagues with portfolio managers Will Danoff and Joel Tillinghast has helped him get in on many founder-led companies early in their life cycle.
Recorded on July 29, 2020.
August 4, 2020
Portfolio manager and President of Fidelity's High Income and Alternatives division, Harley Lank, shares his insights on current market conditions, what the significant forces moving the high-yield market globally are, and how to navigate uncertainty as investors try to find their footing. Harley believes high yield is a great portfolio diversifier and one of the most attractive asset classes over time. For Canadian investors, Harley manages Fidelity American High Yield Fund, which is currently composed slightly more defensively than the broad market; less than the benchmark in energy and greater than the benchmark in information technology. Harley is staying disciplined in his approach and looking for opportunities that offer less fundamental risk but still offer potential for yield. Looking at inflation, Harley thinks inflation expectations are being hyped in a muted demand environment. He also believes the market has a renewed sense of confidence as a result of the Federal Reserve and administration using a ‘do whatever we must’ approach to prop it up in advance of the election.
Recorded on July 28, 2020.
July 31, 2020
Jurrien Timmer, Director of Global Macro, provides his weekly market commentary and global macro update. Jurrien believes the Federal Reserve has learned from the past. The nominal ten-year yield in the U.S. has flatlined at about 10%, and he doesn’t think we should expect a rate increase for several years. He notes that real yields are falling, which he is bullish on. It appears that investors like what they see in terms of nominal policy response. That is the opposite of what happened in the early 30s. It’s earnings season, and Jurrien continues to express a positive outlook on earnings, despite projections flatlining because companies are unable to make accurate predictions. He notes that future earnings will likely depend on the progression of COVID-19. Reflecting on the recovery, Jurrien thinks it is unlikely that we will recover to pre–COVID-19 levels without a vaccine, and that the longer this goes on, the more likely we’ll have an insolvency issue, and that things will start to look more like 2009. If we continue to experience waves of the virus, then it is possible the recovery will not rebound to its full potential.
Recorded on July 27, 2020.
July 30, 2020
Markets expert Tom Stevenson discusses geopolitical changes and what recovery looks like from across the pond. Tom is an Investment Director at Fidelity International, and shares his in-depth analysis of current investment trends and themes. Tom notes that pre-pandemic, there was a focus on trade and interest rates. Right now, the pandemic has redirected the focus and accelerated other trends that we were beginning to see, for example, working from home and a shift in retail from bricks-and-mortar to online. However, he thinks that in a post-pandemic world, the focus could return to where it was before. Looking at geopolitical events, Tom notes that three things come to mind: that COVID-19 moved around the world quickly, and Europe is in a better position right now, while the U.S. still seems to be facing challenges in containing the virus. Tensions have intensified over the past week in the relationship between the U.S. and China. Also, we are beginning to get a sense of how the lockdown has impacted the economy.
Recorded on July 24, 2020.
July 29, 2020
Sector strategist Denise Chisholm looks closely at the how the unique effects brought on by the pandemic have affected different sectors in the short term and potentially set them up for accelerated growth in the long run as economies reopen. Denise Chisholm thinks we may be nearing the end of this recession. She calls it atypical, noting that most recessions feel like a roller coaster, while this one feels more like an elevator that got stuck midway up, forcing us to take the stairs. If it’s over in the next two to three months, it may be the shortest recession since 1930. Denise believes that based on market history, the odds of an equity market advance in the six months after a recession is declared over are 100%. In most recessions, the market begins to outpace the economy. Denise notes that we should be looking at what the market has discounted, and specifically the valuation spreads. Despite rallying 40% from the bottom, we are still seeing large valuation spreads.
Recorded on July 22, 2020.