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The ultra-low bond yields of the post Great Financial Crisis and pandemic periods led to the market-boosting TINA phenomenon which dictated that There is No Alternative to equities. Confronted with yields that were below the rate of inflation, investors that would normally buy at least some bonds instead added to stock portfolios, particularly growth stocks.

The TINA era is over, according to Goldman Sachs strategist Cormac Conners, replaced by TARA – There Are Reasonable Alternatives to equities. The benchmark ten-year U.S. Treasury bond provides a risk-free yield of 3.32 per cent now, attractive enough for investors intimidated by equity market volatility or concerned about an approaching recession.

Goldman Sachs expects the ten-year yield to climb another 100 basis points to 4.2 per cent by the end 2023 amid persistent inflation pressure. Mr. Conners calculates that U.S. households will remove US$750-billion from stock markets and into credit markets as a result of these higher yields.

Corporate stock buying through merger and acquisition activity and buybacks, as well as foreign buying, will offset much of the household equity sales. It’s important for investors to realize, however, that an important upward driver for equities has faded.

Generally lower valuation levels will likely be the result of this trend. Investors should focus on equities with lower price to earnings ratios, and companies capable of maintaining profit growth in all environments.

-- Scott Barlow, Globe and Mail market strategist

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The Rundown

Investors cautious on stocks, even though Fed hikes may soon end

In its first meeting since the collapse of two U.S. banks this month and the downfall of ailing European lender Credit Suisse, the Fed on Wednesday raised interest rates by a quarter of a percentage point and indicated it was on the verge of pausing further increases in borrowing costs. It was a message long awaited by many investors, after the S&P 500′s fall by nearly a fifth last year as the Fed launched its most aggressive monetary policy tightening cycle since the 1980s. Yet some fear the rapid rises in rates are only starting to ripple through the U.S. economy, and remain wary of jumping into stocks amid banking sector turmoil, a downbeat outlook for corporate profits and a looming recession. Lewis Krauskopf of Reuters reports.

Also see:

Why global markets are in uproar over a risky bank bond known as AT1

Banking stocks fall sharply again Friday as investors head for safer shores

How investors should react to a miserable year for green energy companies

Over the past 12 months, the S&P/TSX Renewable Energy and Clean Technology Index lost about 29 per cent. That’s deep bear market territory and a huge disappointment to investors who want to direct their money to climate-friendly businesses. So, what’s the problem? Demand for energy is high and fossil fuel companies continue to thrive. The S&P/TSX Capped Energy Index (mainly oil and gas companies) shows a three-year average annual gain of 64.45 per cent, although it’s been virtually flat over the past 12 months. Given the amount of government support they receive, you’d expect green energy companies would be doing better. Gordon Pape provides some reasons why they’re not.

This ETF darling of the moment looks better and better as GIC and bond yields fall

Investors with money to put into bonds and GICs must face up to falling yields. The yield on the five-year Government of Canada bond was about 3 per cent at mid-week, down from 3.7 per cent in early March. In bondland, that’s a massive decline. Yields on guaranteed investment certificates have retreated enough to make the once common 5-per-cent return a rarity. Looking for a way to cling on to high rates? Rob Carrick suggests taking a look at high interest rate savings account exchange-traded funds and mutual funds.

Three stocks that may have been unduly sold off amid the U.S. banking chaos

In periods of higher volatility and indiscriminate selling - like we’re seeing now - you can often find companies that have been unduly sold off. In this latest instalment of the Screens With a Theme series, portfolio manager Ryan Modesto went looking for stocks that are down at least 20 per cent over the past month, yet have limited exposure to the financials sector and are posting healthy revenue growth and cash flows.

Others (for subscribers)

The highest-yielding stocks on the TSX, plus risk data

Number Cruncher: These 10 U.S. stocks have been outperformers in a bear market

Number Cruncher: 25 Low-volatility Canadian stocks to weather stormy markets

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Friday’s Insider Report: CEO and COO are buyers on the dip of this energy stock

Thursday’s Insider Report: CEO invests over $2-million in this beaten-down energy stock

Ted Dixon: CIBC insiders buy as bank shares retreat

Monica Rizk: Bullish on Canadian National Railway

Lithium price dives in heated auto price war

Globe Advisor

Why this $2.5-billion portfolio manager is buying Meta Platforms and Salesforce but selling IBM

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What’s up in the days ahead

John Heinzl will tell us about three REITs that allow investors to profit from the recent surge in food prices. Plus, David Berman ponders whether Bombardier has become an interesting stock again.

World market themes for the week ahead

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

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Compiled by Globe Investor Staff