Larry Berman CFA, CMT, CTAA Comment -- General Comments From an ExpertA CommentaryCOMMENTNov 17, 2025

Difficult to say, there's an argument for both cases. Oil has come off fairly aggressively the last 2 weeks. His gut feeling is that this won't hold. 

When the supply/demand balance gets disrupted, very difficult to get things to match again. We're going to have higher energy-price volatility, and he'd expect more upside volatility than downside.

No. When you get a disruption of this magnitude, it has longer-term implications that are difficult to fix with just some statements. 

If you look at the Fed's mandate and at what the new chairman echoed yesterday, they've had a 5-year problem with inflation. Their target goal is 2%, and they've exceeded that for longer than 5 years. Yesterday saw a very hawkish tone, and a willingness to take a fresh look at some new data sources.

As there's more onshoring, and if the trade balance were to rightsize more, there's less demand for US treasuries. With less demand comes upward pressure on rates. So inflation plus trying to rightsize the trade deficit are two factors that likely push interest rates up.

Yes. If you look at the largest foreign buyers of US treasuries, and if the US is to have a smaller trade deficit, there's less demand for US treasuries. The trade deficit and the demand for treasuries are tied together.

There is a workaround for the US government if they decide they want to increase their balance sheet, and the Fed alluded to that via one of its working groups. Japan's been doing this for more than 25 years. In the past Warsh has indicated he's not a fan of growing the balance sheet (and that may change). But it would facilitate downward pressure on interest rates.

Wonderful businesses, very well run. But valuations are a bit rich right now.

The whole notion of the tariffs was that consumers would pay a bit more, which would hurt companies selling into the US, but the US government would have the fiscal firepower to lower corporate taxes. That logic hasn't played out, and has hurt consumers. The US economy has remained really strong.

There's more than one thing contributing to inflation. Biggest shock right now have been energy prices. Slower shocks over time include commodity prices, power prices, and tariffs. Inflation has been persistent, it's running hot in the US (most recent figure north of 3%), and AI spending has been massive. If tariffs were reduced, it would contribute to inflation being lower. But eliminating tariffs alone wouldn't be a silver bullet.

Nothing yet in Canada, you're probably too early. There's a rush around the world to secure AI sovereignty and have a homegrown AI champion. A lot of companies have partnered with Cohere, but it's private (longer term, will probably transition to public). 

You can still benefit by owning a US security with AI exposure. A lot easier than struggling to find a Canadian play.

Really tough to call. Gold did nothing for so long, and then Russia's invasion of Ukraine started it running. Central banks around the world started to buy, which was further exacerbated by conflict in the Middle East. At the end of the day, you don't know when those trends are going to continue or stop. Gold is really hard to value, so it's hard to know what you're getting for your money. 

The one name he likes with very little geopolitical risk is AEM. Valuation's still a bit rich. You want to buy commodities when they're down on their luck. With gold, you're trying to play momentum and heightened fear. Not a sector he'd go with right now.

He's being cautious and defensive. He's been doing this too long to get excited when everybody else thinks the future looks fantastic ;)  You have to take a step back. Valuations are a concern, as is overall bullishness. General public interest in the stock market is very high. In the US, cash levels are very low. 

He gets that Q1 earnings were strong. But he gets concerned about the underpinnings of the economy and perhaps the market, and about profit growth. Growth has been pretty concentrated; the capex spend for the AI buildout has been a huge tailwind. At the same time, deficit spending has continued. In the US, a 6% deficit to GDP is unheard of when you don't have a war or recession.

The stock market itself is producing a wealth effect. People have been running down their savings, and the wealthy are spending some of their excess savings. But that spending isn't across the economy. Consumer sentiment in the US is at an all-time low. He'd rather the economy be driven by employment growth across the board.

As a money manager, he'll always be invested. But when he looks at a stock, he looks for the downside protection.

It involves a bit of asset allocation, and a bit more cash then he's had in the past. It's mostly about the sector and the weights of the stocks he owns. He's taken $$ out of economically sensitive areas such as consumers, financials (his conviction has lessened a bit), and tech (especially those areas that are less sustainable and where valuations are high).

He's gone more into energy infrastructure, pipelines, and telecom (for the yield).

He's seen this movie before, when everyone started loving the Canadian banks and the valuations became extended. Great capital, safe, proven in market downturns. But 4x forward earnings is high. There's an argument to be made that bank earnings will be less cyclical than in the past -- loans are diversified, more fee-oriented. But we'll still see the downturn, and capital markets will cease to be a tailwind.

He's significantly underweight the banks. More of a seller. Don't buy into these valuations.

If that were to occur, there's a whole other swath of areas that would be under greater threat of collapse. For example, what's going to happen to a stock like CLS? Ultimately, copper wouldn't be under that much risk.

June can be choppy, and there has been recently. Risk is still there, because the breadth in the US market has been lousy. So, he's cautious US stocks and bullish Canadian. Only tech is beating the S&P while all else is lagging. In Canada, many sectors are beating the baseline TSX. He's buying Canadian tech--it's building a base and trying to break out, such as the XIT ETF. In contrast, US tech is parabolic, and it won't last.

No show today.

Regarding the SpaceX IPO he is interested but not a buyer since IPO's tend to fall from their IPO price. Historically they are down 20 to 25% in their first year of trading. He is not interested in buying on concept alone - there is lots of work to be done on a valuation basis. It is incredibly over-valued. For the same reasons he is not buying into two other big IPO's later in the year. He did buy Alphabet and Facebook, but after their IPO's, waiting for much more visibility of the valuation and fundamentals. As far as sectors go, Healthcare is at a 22 year low and there have been incredible advancements in healthcare. Industrials are also at a great valuation. Money flow is slow, even glacial, but it does flow into sectors with low valuations. Consumer Staples are over-valued.