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

If interest rates stay tame, as signaled by Jerome Powell, we might be able to buy stocks of companies that are about to report. 

Historically speaking geopolitical shocks and conflict events rarely affect the long term trajectory of markets. In the short term they can have a 5 to 15% draw-down. Right now we're between that. A major oil shock can have a longer term effect of 20 to 30% but he sees that oil prices could ease this year. Energy stocks have done very well so be hesitant to add to them. Look at other areas that are down such as financials, maybe some technology (selectively), and some industrial. The downturn has affected the whole market. The market is really broadening with other sectors taking leadership away from tech. They are moving away from some big tech names and hyperscalers. 

Lots going on this year. We came into 2026 looking ahead to the US midterm elections, always knowing that would bring some volatility to the markets. We had our eyes set on interest rate decreases for sure by the US Fed, and possibly by Canada's BOC. But that shifted immensely in the past couple of weeks, due to the inflationary impact of higher oil. 

Right now, the market is pricing out those interest rate cuts. For the US, that means not till 2027. The Fed's focus had been on the labour market as part of its dual mandate, but now that's shifted to inflation. There are actually some whispers out there that there might be some hikes.

Our market has been resilient. Between oil and gold, we have a natural hedge. Gold was ahead early, tailing off in February. But now we have energy taking the lead and holding.

The composite index has seen a modest pullback. As Canadians we tend to hold more Canadian equities in our portfolios, so we've been somewhat insulated from the global impact.

The price of oil is really going back and forth. US president's speech last night had mixed messages. It's really day by day.

He'd be looking at the VIX. Right now it's trading around 28-30. Needs to get back below 20 before the markets calm down.

Between closure of the Strait, capacity and infrastructure that have been taken out, and all this uncertainty, he doesn't see oil dropping substantially anytime soon.

He heard that constraints on helium, of all things, have impacted the semiconductor industry. There are these impacts downstream. Fertilizer stocks are doing well because supply is tight.

ETFs show their value in this type of environment, as you don't have to make bets on single stocks and their liquidity lets you sell when you want.

Historically, 25% in Canada would have been too high. But it's the habit of putting $$ in every month that will be the real help to you, not necessarily what vehicle you put it in.

Companies set up an ETF with a basket of stocks, write some covered calls, and estimate what the yield should be. But then life happens and the NAV goes down. How are they going to make up the promised yield? With ROC, a return of your own capital.

Once you start seeing a double-digit yield, you have to look at it very closely. Don't be lured by the high yield. 

Once invested, investors tend to have a hard time selling their stocks that are down. As a younger investor, he's lived through that. You thought your choice was going to the moon but, guess what, it didn't. 

You have to be a disciplined seller and get used to the idea that you're going to be wrong a fair amount of the time.

Damage has been done to the global economy. If the war ended today, the repercussions aren't going to just disappear. If anything, it'll take a long time to reorient not only the oil and gas industry, but industry in general.

The inflationary pressures that the war has created will continue for some time. There won't be an easy fix. We're going to be in a choppy market for a while.

US is spending an exorbitant amount on defense amidst the war in Iran. If you look at what's been attractive in the market for the last few years now, it's been defense. All the NATO countries are beginning to spend more and more in that area. That industry will continue to generate greater revenues.

The questions are how profitable are those companies going to be and who's going to finance them?

In the near term, it's hard to tell what the impact will be from all the defense spending. Tax cuts from the "one big, beautiful bill" are starting to come in. If anything, deficit pressures are going to get larger.

If that occurs, then the attractiveness of US treasuries might become a bit less, which will put pressure on interest rates. That will feed right through the economy.

It'll be extremely volatile. A lot will depend on what's happening in Europe -- demand for energy is going up, and sources of energy are in question. His guess is that the pressures will keep oil above $80 (he could be wrong ;).

Overall, companies will continue to be fairly profitable. He's still very bullish on energy, even though there's some prospect of the Iran war ending (which may or may not happen).