Market Call: Stan Wong's outlook on North American Large Caps & ETFs (May 14, 2026)

Key Concepts

• Capital Expenditure (CapEx) Cycle: A shift in market focus from software/code to physical infrastructure, including AI, electrification, and reshoring.
• Secular Growth: Long-term trends (e.g., AI, aging demographics, digital payments) that persist despite short-term market volatility.
• Technical Analysis: Using indicators like the 200-day moving average (MA) and Relative Strength Index (RSI) to determine entry/exit points.
• Base Metals: Commodities (Copper, Aluminum, Zinc) essential for the physical build-out of AI and power grids.
• Overbought Conditions: A technical state where a stock or market has risen too quickly, suggesting a potential near-term pause or correction.

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Market Outlook and Macro Drivers

Stan Wong attributes the current market rally to strong earnings growth, with the S&P 500 projected to grow by 20% this year and 14% next year. He argues that markets are successfully "trading through" geopolitical fears, proving that fundamentals drive long-term performance.

Headwinds to the Economy:

• Technical Overbought Status: Markets may be due for a pause.
• Energy Prices: Sustained oil prices above $100 could reignite inflation.
• Political Cycles: While the third year of a presidential cycle is historically strong, the upcoming U.S. midterm elections may introduce short-term volatility.

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Sector Analysis and Stock Perspectives

Healthcare and Pharma

• Novo Nordisk vs. Eli Lilly: Wong prefers Eli Lilly due to a broader pipeline. Novo Nordisk faces technical weakness (price below 200-day MA) and lower earnings growth expectations (3–4%).
• McKesson Corporation: A leader in pharmaceutical logistics. While fundamentally strong with 12–13% earnings growth, it is currently suffering from a rotation out of healthcare into more cyclical sectors.

Travel and Technology

• Booking Holdings vs. Expedia: Wong favors Expedia. He notes that AI agents pose a long-term "double-edged sword" for travel platforms, but believes the secular growth of leisure travel remains intact.
• Visa/Mastercard: Wong has exited Visa, noting that momentum has broken and the stocks are currently in a "penalty box" as investors rotate into more "exciting" AI-related technology plays.

Financials and Insurance

• Great-West Life: A sturdy business with a 3.5% dividend yield, though currently overbought.
• Manulife: Despite a recent earnings miss, Wong remains bullish on its long-term secular growth (10–11% through 2028) and attractive dividend.
• JPMorgan: A preferred holding in the financial sector. Wong expects increased investment banking fees and deregulation to benefit the stock.

Consumer Staples

• Dollarama: A dominant discount retailer. While the business model is defensive and strong, Wong warns that the stock is no longer "cheap" (trading at 34x forward P/E).
• General Mills: Wong advises against this stock due to a falling 200-day MA and projected negative earnings growth. He notes that consumer sentiment has shifted away from processed foods.

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ETF Strategies

• Emerging Markets: Wong suggests looking beyond North America. He recommends the iShares version of emerging market ETFs over Vanguard’s because the iShares funds include South Korea, which he identifies as a critical "growth hub" for innovation.
• DRAM ETF: A new fund focused on memory chip companies (Samsung, SK Hynix). Wong warns that a 62.5% return in one month indicates an overbought state and suggests caution.
• Canadian Market ETFs: For those seeking diversification beyond the TSX’s heavy financial/energy concentration, Wong recommends high-yield focused ETFs like XEI or VDY.

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Top Picks (New Recommendations)

1. NVIDIA (NVDA): Described as the "brains" or "arms dealer" of the AI build-out. Despite being overbought, Wong highlights a 45% annual earnings growth forecast and an attractive PEG ratio of 0.6.
2. GE Vernova (GEV): A direct play on the power side of AI. With a $160 billion backlog (four years of revenue), it is essential for the grid infrastructure required by data centers.
3. Invesco DB Base Metals Fund (DBB): A physical commodity ETF (Copper, Aluminum, Zinc). Wong argues that AI is a "metal-intensive" story, and these commodities are required for the physical construction of the new digital economy.

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Synthesis

The overarching theme of the discussion is a rotation from software-centric growth to physical infrastructure. Investors are encouraged to look past short-term geopolitical noise and focus on companies that provide the "picks and shovels" for the AI and electrification era. While the market is currently overbought, Wong emphasizes that long-term secular growth stories remain the primary driver for portfolio success, provided investors remain disciplined regarding technical entry points and valuations.