Berkshire Hathaway pulls out of $7B LNG project in Canada

BRK.B: Berkshire Hathaway pulls out of $7B LNG project in Canada

The Trudeau Liberal Govt continues to be a disaster in managing the Canadian Economy. Investment and Investors are fleeing the country like never before. 

Berkshire Hathaway Pulls Out of Saguenay LNG Project Due To Canadian Political Context

'Bond King' Gundlach says Fed panicked and rates are 'headed toward zero'

'Bond King' Gundlach says Fed panicked and rates are 'headed toward zero'

Jeff Gundlach CEO and Founder of DoubleLine Capital thinks US 10 year bond yield will head to 0% just like Euro and Japanese Govt bonds.

DoubleLine Capital is 20% owned by Oaktree which is 61.2% owned by Brookfield  

CNBC: 'Bond King' Gundlach says Fed panicked and rates are 'headed toward zero'

Brookfield Infrastructure sweetens bid for Cincinnati Bell to $13.50 per share $2.8B Enterprise Value

Brookfield Infrastructure sweetens bid for Cincinnati Bell

Brookfield Infrastructure sweetens bid for Cincinnati Bell to $13.50 per share $2.8B Enterprise Value matching offer fro Macquarie Infrastructure and Real Assets.

Brookfield Infrastructure sweetens bid for Cincinnati Bell

Toronto Home Prices Surged 17% YOY Feb 2020 to C$910K - Closing In on Apr 2017 Peak Value C$921K

Toronto Home Prices Surge

Toronto Home Prices Surged 17% YOY Feb 2020 to C$910K Closing In on Apr 2017 Peak Value of C$921K. Number of sales were up 45% year over year in Feb 2020. With US Fed cutting interest rates by 0.50 to 1% and US 10 year bond at 1%, Bank of Canada was forced to follow suit with a 0.50% cut as Canada and US economies are tightly integrated. This has reduced the mortgage rates with first RBC lowering its Prime Rate to 3.45% from 3.95% and all other Canadian banks following suit. I believe Canadian House Prices will continue to be elevated until rates rise or a recession causes job losses.
Toronto Home Prices Surged 17% YOY Feb 2020 to C$910K

US Fed Funds Rate Cut to 1%, US 10 Year Bond Yields 1%

Today US Fed Funds Rate was Cut to 1% after a reduction of 0.5% to counter impact of Corona Virus on the economy.

US 10 Year Bond Yield also dipped below 1% for the first time in history. It is looking like US 10 year bond rate may keep going down to yield 0% like Euro and Japan. 

In this environment stocks which can produce 6-8% return over the long term look attractive with earnings yield spread of equities over bonds being +5%. Avoiding companies with exposure to travel and buying well capitalized companies with long term growth runway and competitive advantages is the way to go. 

US 10 Year Bond Yield

US 10 Year Bond Yield - 50+ Year History

US Fed Funds Rate

Corona Virus Selloff an Overreaction - Now is a Good Time to Buy Stocks

Corona Virus Selloff an Overreaction - Now is a Good Time to Buy Stocks

Maybe I am missing something but world is not going to end. Flu already exists all over the world and hundreds of thousands of people die each year but life goes on for rest of the world. I think this panic with media hype is making things seem worse than they are. People will recover and a vaccine will be created in next few months and world will be fine. 

If interest rates remain low like now with US 10 year treasury bond yielding 1.18% and Euro and JPY 10 year debt yielding 0%, people will flock back to stocks of great businesses and stock market will reach heights again as good businesses continue to generate cash and grow intrinsic value. The only reliable way to retain value and to make income is to buy stocks or invest in alternative investments. 

I believe this is a good time to buy stocks of world leading companies with low debt and competitive moats.

US S&P 500 Index 1 Year Chart

US 10 Year Treasury Bond Yield 20 Year Chart

S&P 500 In Correction Territory

S&P 500 In Correction Territory after falling from 3390 to 3300 on 27Feb2020. This has been the fastest 10% correction ever for S&P 500 as the recent high was made just a week ago on 19Feb2020. 

It has to be kept it mind that this correction is happening after a strong 2019 when S&P was up 30%. However in the same time the 10 year and 30 year US Treasury Bonds have collapsed to 1.25% and 1.8% yield compared to a year ago when 10 year and 30 year US Treasury Bonds has 2% and 3% yield. Given that and low interest rates exist across the world and investors have no where to go for decent return a higher multiple in stocks is understandable. 

The worst hit sector has been Travel and Leisure with 30% correction. This includes Cruise, Travel Booking and Airline stocks. The outlook is challenging for these companies near term. Also Banks, Semiconductors, Industrials and Metals/Commodity sectors are in correction territory with 10-14% losses. Oil and major commodities are down which should help most of the economies recover. Healthcare and Consumer Staples and Utility stocks are at close to 7-10% correction. 

The all important Tech sector also has had a 10% correction with major names including AAPL, GOOGL, FB, AMZN, MSFT all retracting from 52 week highs.

The near term future is uncertain as there is some chance the Corona Virus could become a pandemic and push some regions and possibly global economy into slower growth or a recession. However I believe the long term fundamentals for strong companies outside travel sector remain good especially if interest rates remain low over next 3-5 years. In a way this correction could turn out to be healthy for the market as it shakes out complacency and resets expectations of investors.