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

President's approval ratings have fallen below 30%. This reflects higher energy prices, and perhaps a tougher job market.

The president doesn't want to become a lame duck. If he loses control of the Senate or the House, he'd have to default to executive orders (which can be replaced as soon as he leaves office). So he's going to do whatever he can.

Monetary policy is not a lever he has control of. We've seen expansionary fiscal spending, and conflicts are inflationary. That spending makes its way into the economy, and that's why markets are at very high levels.

He'll do that for sure. But when you have at least the illusion of independence from the Fed, he'll have less ability to get done what he wants. Ultimately his big lever is fiscal, and he doesn't really need to heed the Fed.

If there was a significant escalation, he might consider allocating to energy as a trade. But his firm deals in outlooks of 3-5 years.

You want to take your dry powder that you reaped from taking profits and invest it in segments of the economy that have been depressed. Software looks interesting. As does healthcare and medical technology. From a global perspective, luxury looks very inexpensive.

Some portions of the industrial market are worth a look, particularly companies that use IT resources.

A cyclical category has wild swings. A catalyst can drive the price up. Do you want to invest at the top of the cycle? No. You make money when you buy, so buy at the bottom of the cycle and hold till the top. If you miss the cycle, wait for the next one.

Pay attention to the semiconductor capital equipment companies, as they lead semiconductors by about 6 months. When the first category starts trending down/up, you know that the rest will soon follow.

For the last few years, as we've seen significant money printing through quantitative easing or fiscal spending, debt has favoured growth. Looking back to 2008-2009, growth came out of the market and the market collapsed significantly. The value market significantly outperformed. 

Value names are very inexpensive now, so you could add them as ballast to your portfolio. You could buy staples now, and you'd be increasing the amount of income coming into your portfolio. Think PG, CL, UL, BN.

When tech crashes, you do the same thing. What you're doing is moving capital from expensive names to inexpensive. This builds a portfolio of sustainable wealth. If you get the timing right, you can avoid major drawdowns but still get fairly consistent growth.

His team are not really value investors, but more GARP (growth at a reasonable price) investors.

A lot of it, but not all, is definitely stemming from earnings. We're in the throes of a barn-burner of an earnings season. There's good fundamental support for higher share prices.

But there's another side. There's renewed interest in all things AI, and that's really driven the recovery from the selloff in hyperscalers. The elephant in the room is hopes for peace in the Middle East. Markets are clamouring for that to be a done deal and have priced in a resolution.

Almost certainly the prices of oil and liquified natural gas will settle in a range above where they started. But there's wild volatility. Yesterday, between his going to work and coming home, the price of gas near his house dropped 12 cents a litre. The price of energy is also implicit in the price of all manufactured goods.

A certain amount of destruction has occurred in the Middle East region that's not just going to come back online overnight. Estimates are in the range of 3-5 years for some facilities. There's a long tail to this war in terms of supply chains.

May represent a turning of the tide that Canada is once again investable. That we're going to get out of our own way and build things like the LNG terminal (in which SHEL has a stake) on the West Coast of Canada, which will surface value from our abundant resources.

Broadly bullish for natural gas producers in Canada.

It seems to be looking through the whole Iran issue and focusing on AI. It's also a result of earnings. ANET didn't do all that well last night, but AMD blew the roof off.

You can definitely see the winners and losers. Even with the Mag 7, META took it on the chin. As did MSFT. But on the other side of the coin (and a bit of a surprise), AAPL is a shiny apple ;)  NVDA earnings come out 2 weeks today, and that'll be the end of earnings season.

Earnings have definitely been a catalyst to send the NASDAQ for the better part of almost 2000 points. Once NVDA comes out, it may go back to the macro side of things.

If you look on the charts, the NASDAQ (the barometer of the tech arena) is 12-14% above its 50-day moving average. Whenever it gets up here, it tends to fall off.

A lot of people are going to be writing calls at this point. There's been a lot of FOMO, especially by the retail community. He thinks it's sort of the last gasp.

Levels of the stack: infrastructure and picks/shovels, platforms that facilitate workflows, and then end users make up the top stack. Today, everyone's flooding toward the picks & shovels. But that's because of the earnings that came out.

When he was on the show about a month ago, investors were looking at the end users and enterprise companies that were applying AI tools. This shows through in healthcare, banks, and industrials (such as ETN and TT). These companies are talking on their earnings calls about how AI is feeding to the bottom line.

His indicators signalled high risk yesterday, for the first time in many months. The reason is market breadth is terrible--AI and energy only are making gangbuster returns. This is unhealthy and can't last. His bearometer looks at sentiment (too enthusiastic), seasonality (not good), breadth, valuation (high), momentum and other factors.

If the consolidation pattern has big enough swings (i.e. Shopify), then the stock is tradable, but if the swings are less than 10%, don't bother. With the latter, wait for the breakout.