Plus some stock picks for those with a value bent
Last December, the head of the International Monetary Fund warned to buckle up for a rough ride. Kristalina Georgieva said 2023 would be “a tough year, tougher than the one we leave behind.” At least one-third of the global economy would be in recession by year-end, she forecast.
Stocks have had a mixed response to these developments. The better-than-expected economic news has raised concerns that the Federal Reserve Board and the Bank of Canada may push rates higher than originally anticipated. It’s the old “good news is bad news” stock market story. It was the same with the S&P. The S&P 500 Information Technology Index was ahead about 40 per cent in the first half. According to a report on CNBC, the seven largest companies in the S&P, all tech, were up 86 per cent in the first half. The other 493 stocks more or less broke even.
In that sense, we’re back in 1999-2000 territory, where any company that had a credible internet story could make millions on an IPO. Except that this time around, we’re not dealing with start-ups but giant international corporations with market caps north of a trillion dollars in some cases. One sector to consider is energy. After surging last year, the big oil companies have been market pariahs in 2023. The S&P/TSX Capped Energy Index down about 7 per cent since the end of December and some oil stocks have posted double-digit losses this year. That’s left some great companies looking very attractive.
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