A Comment -- General Comments From an Expert (A Commentary)

The U.S. is increasingly a referendum on AI. The S&P is up 10% this year, with 80% of that from AI stocks. Which layer of AI will reap the greatest benefit? The memory stocks? The construction companies of data centres? Expect a lot more volatility as the market figures it out. He's invested in my of the Mag 7 and TSM. Meanwhile, investors ignore many sectors that have nothing to do with AI, though these contains good companies with fine fundamentals.

It's focused on building a model that's proprietary to Canada. He expects this trend to continue. BNS can use AI to improve their efficiency and modernize.

He hopes the new Sarnia-to-Alberta pipeline gets done; we needed it 10 years and need it now. The Trudeau government was anti-oil as it moved to a green agenda (not saying that was necessarily a bad idea), but it neglected one of Canada's major assets and was a mistake. Can that be changed? We'll see. US unemployment last week came in lower than expected. Wants to read the latest minutes from the US Fed under its new chief and how it communicates to the public and press. Tariffs: The US Surpreme Court ruling against Trump is forcing him to try other measures. Tariffs will remain on the table, though, but will be less potent, which is a good thing.

We have lower interest rates here than in the U.S. and falling oil prices, which are dragging the USD down. Also, the Canada-US trade deal looks uncertain.

It's one of the most speculative assets of our time and putting a value on it is a mug's game. It's a massive ponzi scheme. More people are investing in it, though, and it's in some ETFs. Frankly, is one better than another. Look for the most liquid one with the lowest MER. The money Trump has made on Bitcoin should be reviewed by the SEC. He's frontrunning his own tweets and making billions at the expense of the average investor. It's deplorable.

Crude oil levels returned to pre-war levels below $70, but other assets have not fallen back. However, oil futures past 2032, prices going forward are more negative than they were pre-war. This means that the long-run supply/demand story is getting more and more bearish for the price of crude oil. Maybe because we have more friendly supply of oil coming on market. Looking at the futures contract: Last February, there were 2-2.5 rate cuts priced into the December futures contract. When war broke out and oil prices spike, the expectation changed from rate cuts to hikes. Last week, 1.25 rate hikes were priced in by the end of the year. He predicts the US Fed to pause, but wants to read the Fed minutes and the impact of oil prices on interest rates. Also, the bond market is saying it's worried about inflation, in contrast to the message from the stock market. Finally, as we start Q2 earnings season, earnings growth has accelerated a lot this year, which is supporting the stock market; geopolitics and inflation have almost nothing to do with the strong market this year.

We are looking at a lot of volatility in the summer and the market is range bound because of this volatility. It should break out to the upside rather than downside at some point but we just have to get through the summer first. The next phase of AI, now that the infrastructure is in place, is all about the end users bringing AI to the edge. A good example is EV's computing to devices outside of the cloud. This can facilitate bringing in new products. There is a desire to have the decisions made on the factory floors, not the cloud, and the enablers do this. AI was a technology story but now it's more of an earnings story. It's for the consumers but is also spreading to the enterprise side.

Alleviating nicely. The market's actually moving more to a discussion about labour. Investors were pricing in additional Fed rate hikes for 2026, with labour markets staying strong and with the state of inflation. 

But expectations have shifted meaningfully with the labour numbers that came out yesterday showing some cooling. It was half of what the consensus was expecting, plus April and May job gains were revised down. Labour market's not as robust as we thought up till yesterday.

For the Fed, the focus will always be a combination of both employment and inflation. Inflation is coming off on the oil side, and it seems as though the labour market is more of a driver now. 

Expectations for growth in service industries have come down quite a bit. Expectations for Q2 GDP expectations have come down from 3% to 2.5% annualized, and most of that is due to the service sector.

We've gone through one cycle of investments, which were largely in large language models and data centres. Now we're entering another investment phase, which revolves around agentic AI. The types of hardware needed for model training are very different from the types needed for agentic AI. That means change, and that's where we're seeing a lot of opportunities.

For the model training era, the main focus was on GPUs. You were able to use one CPU to connect 16 GPUs together. Now, in the agentic AI era, we're using one GPU per CPU -- creating massive demand for CPUs. That's why stocks like AMD, INTC, and ARM are performing really well. We're at an inflection point, and we're in year 1 of that cycle.

Another area she likes is networking. The number of people on earth is finite, but the number of agents is infinite. Connecting these agents leads to tremendous opportunity -- copper, connecting components, and optical components.

A third area is memory, but this one is trickier because that sector is a lot more cyclical than the other two.

Yes, she'd absolutely invest in traditional players. Concerns around software were valid, but the concerns around cybersecurity were mispriced. Cybersecurity stocks sold off together with software stocks, but it wasn't justified.

Seeing lots of opportunities. First time in history where robot traffic on the web exceeds human traffic. Interfaces will have to change to accommodate this new reality.