3: Market Update: Volatility, AI Stocks, and Portfolio Positioning with Andrew Auerbach

Beyond The Bank

• Introduction:
  
  
  • Andrew provides an update on the current market conditions, emphasizing the rapid changes and key themes affecting the markets.
• Market Volatility and Rate Hikes:
  
  
  • Discussion on historic rate hikes and their delayed impact on the economy, typically felt 12-18 months later.
  • Current signs of economic strain, particularly in consumer behavior and employment levels, reflecting the lagging effects of these rate hikes.
• Geopolitical Tensions and the VIX Spike:
  
  
  • Geopolitical tensions in the Middle East, Russia, and Ukraine have led to increased market volatility.
  • The VIX (volatility index) spiked dramatically, reaching 66, a level not seen since the financial crisis and COVID pandemic.
• Canadian Banks and Financials:
  
  
  • Underweight position in Canadian banks due to their heavy exposure to potential economic slowdowns.
  • Discussion on the risk associated with the $3.9 trillion in outstanding loans by the Canadian banks.
• Performance of Major Indices:
  
  
  • Despite the volatility, major indices like the S&P 500, NASDAQ, and TSX show positive year-to-date performance.
  • The S&P 500 is up 11%, NASDAQ up 11%, and TSX is up 6%.
• Magnificent Seven Stock Analysis:
  
  
  • Detailed analysis of the "Magnificent Seven" stocks, highlighting their strong year-to-date performance but recent pullbacks.
  • Focus on Nvidia's 102.8% YTD performance and recent 20% drop, discussing the importance of valuation and market cycles.
• AI and Market Fervor:
  
  
  • Commentary on the hype around AI and the parallels to the dot-com boom.
  • Reminder of the importance of cautious investment and avoiding momentum-driven decisions.
• Expected Rate Cuts by the Fed:
  
  
  • Universal consensus on significant rate cuts by the Fed, with expectations of three rate cuts by the end of 2024 and a potential fourth in January.
• Gold as a Hedge:
  
  
  • Gold's role as an effective hedge against market recessions, with continued high performance and Delisle’s overweight position in gold.
  • Discussion on global gold accumulation trends, particularly in Eastern countries.
• Delisle Portfolio Positioning:
  
  
  • Overview of Delisle’s portfolio strategy: underweight in equities, underweight in Canadian financials, overweight in utilities and gold, with international exposure in India and Japan.
  • Positive outlook on the continued strategy and its performance through 2024.