Opinions Stan WongA Comment -- General Comments From an ExpertA CommentaryCOMMENTJul 09, 2026
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We've had a sharp pullback in energy prices from the highs. That's positive for markets. Investors are starting to return their focus to corporate and economic fundamentals.
Certainly, a renewal of tensions is starting to worry the market a bit. But we know that as quickly as it can start, it can end quickly as well.
Stocks in the semiconductor and memory spaces are high beta. You're going to have major moves upwards, and then major pullbacks as investors take profits. There's a bit of fear currently in the marketplace.
Still sees the needs for data-centre capacity, with forecasts in the US quadrupling by 2030. Still sees major spending by the hyperscalers, so semiconductors and others will be major beneficiaries.
The AI story isn't over by any means, and it's not stalled. It's just normal profit-taking.
Oil prices being much lower than where they were is important. Need to watch out for inflation and whether it remains sticky. Earnings are very strong, and that's helping markets quite a bit.
US cash on the sidelines is at record highs again. Some of that cash can rotate back into equities or other risk assets and help prop up markets again.
Oil prices being much lower than where they were is important. Need to watch out for inflation and whether it remains sticky. Earnings are very strong, and that's helping markets quite a bit.
US cash on the sidelines is at record highs again. Some of that cash can rotate back into equities or other risk assets and help prop up markets again.
Very tax efficient, as you're getting the dividend from the stocks plus the covered call premium overlay on top (typically a return of capital, so it's really a deferred capital gain). You can hold them within an RRSP or TFSA, but the tax efficiency obviously works well for non-registered accounts.
The question then becomes whether you should hold covered call strategies? The providers always highlight the tremendous yields. But when you start stacking them against the underlying securities, you're better off holding the underlying securities more often than not. As the options get struck, you miss out on the upside.
If you need income, and that's the most important thing for you, then covered call strategies can make sense. But don't get lured by the high, fantastic yield being promoted.
Absolutely. In fact, the inflationary concerns never really went away.
The market was really pricing in an end to the conflict, but she's been more doubtful. Regardless what happens from a military standpoint, economic consequences outlast all of that. Bottom line is that she doesn't necessarily buy a ceasefire when you're dealing with several countries who aren't getting along.
Inflation is tricky because it takes a while for the effect of events to get priced in. We're dealing with higher energy prices, but there's a lag before it impacts food, airline prices, and such.
Another question is what effect will inflation have on interest rates? Prior to the conflict, the expectation was for cuts. That stopped. Now there's an expectation for possible increases. And that will affect the consumer. It's a snowball effect, which wasn't being priced into the market until a day like today.
There's only so much the market can continue. She hates to use the word "bubble", but let's just say the market's showing late-cycle characteristics. A lot of capital was raised with SpaceX, and we're not done with upcoming IPOs. The market seems to be absorbing it at any valuation.
The valuations don't make any sense, but this is typical of a late cycle (similar to the late 1999 tech crash). There's strong investor enthusiasm, regardless of what the fundamentals or economics are dictating.
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.
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.
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.
Looking back to 1950, on average we see about a 17.5% market drawdown in the year of a midterm election. In March, we had about a 9-10% drawdown. It could be that was it, or we could see a bit of renewed volatility going into the elections.
Because we've had such a great second quarter, it wouldn't surprise him if markets paused a bit.