Stan WongA Comment -- General Comments From an ExpertA CommentaryCOMMENTAug 13, 2026

Remains very constructive on equity markets. A lot of the story now is the earnings power of the S&P 500, which has become the real market driver. Seeing almost unprecedented earnings growth forecasts going forward. Strong earnings mean a strong market.

We're in a major capital spending cycle, with the beneficiaries being data centres, chips, cloud, power, utilities, industrials, and automation. Those sectors are the parts of the market that are moving higher. 

If you look at the cash component sitting on the sidelines in money markets, we're north of $7.9T in USD. If the geopolitical situation becomes more stable, and if earnings continue to be strong, then some of that $7.9T can rotate into risk assets like equities.

Still some cross-currents to be careful of. Somewhat sticky inflation, elevated long-term bond yields, oil volatility can pop back up, geopolitical situation can toughen up a bit. Seasonally, September could be a softer month. And then US midterms are coming up.

The inflation numbers have been somewhat benign. Expectations for a rate hike have been pushed out. The interest rate environment is beneficial. Oil prices coming down from peaks would be a tailwind for equities. Any volatility from geopolitics, September weakness, and midterms is normal and not thesis-changing.

Probably won't see lower rates in the near future. Likely flat for the time being. 

Going back to 1950, midterm election years tend to have about a 15% drawdown. We had a 9% drawdown earlier this year, which was a pretty heavy almost-correction. September, right before the midterms, is also seasonally soft. Over the last 10 years, on average, September is a negative month. He wouldn't be surprised to see sideways movement or a bit of a pullback before those elections. 

One thing to note is that the 6-12 months after midterms tends to be the strongest period in the 4-year presidential cycle. 

Oil prices are a wild card, as it really depends what's happening in the world. Looking at futures markets, oil is expected to come down to the $70 level. It did come down, but then went back up.

Base case is that things will continue to be resolved as time goes by. Oil prices should calm down into the $70s.

Selectively, you want to be in technology. Industrials -- given the manufacturing resurgence in the US, reshoring, data centre buildout, and creating a more powerful electrical grid. Certain, specific areas of healthcare. US financials are good value, too.

He's been getting a lot of questions about covered call strategies. The attraction of a very high yield has interested a lot of  investors. But you really need to understand your objective as an investor. 

If you're looking particularly for income, and tax-efficient at that, covered call strategies can make sense. On the flipside, they tend to underperform the underlying securities in a rising market. You earn a premium from the options, but you get struck out as stock prices reach those option prices.

When markets are falling, covered calls can provide a bit of a buffer. They can give you a better return than the underlying securities. In a falling market, you probably want to be out of that security altogether.

So it really depends on the goal of the portfolio. For long-term growth, just buy a regular ETF with equity exposure. If you're looking for income in a taxable account, then you could consider covered call strategies.

Duration bonds are a great way to grow core safely. They haven't kept up with inflation though. For cash flow, long-duration bonds have been horrific for investors. But use covered calls--gives you equity exposure and create a 7-9% annual yield--if you seek cash.

A few factors are really contributing to inflation. The first is energy prices and what's going on with Iran and the Strait of Hormuz. The second thing is the AI infrastructure buildout in the US. Both those things are creating price spikes in certain commodities and pushing inflation up. 

This puts the US Fed in an awkward position. Recent employment numbers weren't as strong as anticipated. There's speculation in the market as to how hawkish the Fed will be. If you look at the Fed's stated goal of 2% inflation, they've been above that for more than 5 years. So there's some pressure on them and the new chairman to curtail that. 

The market's sitting on edge on whether rates will be held steady or be reduced. The translates into a lot of volatility.

The argument for lowering them is really tough, as that will stoke inflation. US unemployment for last month missed by a huge amount. If the trend of weakening employment continues, that makes the case for the potential to lower rates. Makes sense to hold off and wait and see, which is exactly what the Fed did.

Time will tell, but it is an awkward environment.

The US intervened in the yen currency market for the first time in 30 years, with the goal to keep a lid on long-term rates. The US central bank has a little more control over the shorter end of the yield curve, but less so on the longer end. The US 30-year yield is now above 5%, which is a key threshold. Not really a red flag, but more of an orange one to keep an eye on.

Lots of negativity surrounding the spend. What's unique about this buildout is that you're seeing some companies already start to monetize. You don't know the exact ROIC because they don't break it down by projects, but a company like GOOG has already started to monetize its AI investments.

It may not be a bubble; it may be a legitimate infrastructure buildout. Similar to what happened for rail infrastructure back in the day. It's really important to focus on companies that are monetizing AI and so you have good insight into how they're going to get payback on their investment.

There are a whole bunch of companies with dual Canada-US listings. And lots of companies earn a whole bunch of money in the US, but you can buy them on the Canadian exchange. So you don't always have to shift your money, especially as the CAD is fairly weak right now.

Here's one idea. Take a look at your income names -- banks, utilities, pipelines. A lot of those tend to be fairly richly valued right now. This might be a good opportunity to reduce exposure to some of your income names and move into what's fairly inexpensive right now, and that's some of the growth names. You can access US companies within Canada, without the need to shift your money.

See his Top Picks for names that feed into that strategy.

In a balanced portfolio, there is an opportunity here. He tends to stay shorter on the curve. Bonds for utilities, pipelines, and financials have really attractive bond yields. A good time to lock in, especially in Canada because the odds of an interest rate cut are significantly higher over the short term.