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

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.

At the end of 2025 and into 2026, we saw a really big commodity run. That trade has gotten a bit crowded, with the result that stock prices really swing. She'd stay away from the space right now. In general, you need a large risk appetite to be here.

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.