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

Exactly. The story of 2022 was all about inflation, and it's come down pretty significantly over the last 6-9 months. It will keep trending down, especially in the US. The housing portion of inflation has been very sticky, and we're seeing home prices decrease YOY, and rents are now decreasing. That will be a driver of inflation continuing to trend lower for the rest of 2023.

Housing prices are down YOY, but they're finding a bottom. No one wants to sell if prices are lower, especially in the US if a homeowner is locked into a 30-year mortgage at an attractive rate. Homebuilders are starting to see accelerating interest in their product. It's good for general economic activity if they start building more homes.

Can do the first draft of code, thereby saving lots of programming time. Another example is that it can review video for 5 km of sewer pipe looking for flaws, rather than a technician doing this. Reviewing radiology scans.

He owns TD and BMO, which have exposure to that market without the existential risk of the regional banks. FRC is definitely a name he wouldn't be stepping into. FRC could be gone by Friday or it could get a lifeline and triple from here, but it's a binary risk. There are lots of well-run regional banks, but if you don't have that sticky deposit base, when the money leaves you're done. 

In Canada and for the larger US banks, the deposit bases are strong and growing. That's what he wants.

When you buy a company, you know what you own. Whereas if you explore and develop yourself, there's always execution risk. To capitalize on this market for the next decade and get scale, it seems easier to buy.

Money inflows start with ETFs, then flow into senior producers like AEM, ABX, and NGT. If enough retail interest, money then flows to intermediates, juniors, and even exploration. As the cycle matures, exploration really starts to outperform, as that's the last flight of capital. 2022 was tough, so there's a bit of overhang. Looking for better things this year. 

$80 is probably a fundamental floor. Lots is predicated on OPEC being willing to create that floor. Question marks about the velocity of China reopening. Recession: when, how deep, how long? 

Companies are probably valued in the $65 range, so there's material upside in the right companies. The key is to stay defensive, own companies with dividends and clean balance sheets that are willing to return capital to shareholders.

They've all focused on cleaning up the balance sheet, and pivoting into return of capital. Crucial to maintain the balance between running a business with moderate growth and returning capital to shareholders so they can see the true value of the business they've created. 

They heard shareholders, after a 5-6 year span of growth at any cost, especially in the US. The new mantra has become the norm, and the stock prices have reacted. Executives used to be compensated on absolute growth, but now it's based on other criteria like return of capital and generating free cashflow.

Defined Benefit Versus Defined Contribution. If you are the owner of a pension asset, particularly a defined income stream, consider yourself lucky! A pension is one of your greatest financial assets. There are two types of company pension plans: Defined Benefit (DB) and Defined Contribution (DC). A DB pension means you receive a specific, known and periodic payout that is guaranteed by your employer regardless of how the pension investment performs. Your defined benefit amount depends on how much is paid into the plan and your years of service with that employer. The employer bears the investment risk and any ‘underfunded’ status. A DC pension is entirely dependent on investment performance. The employee typically directs the asset allocation via investment fund choices. There are no guarantees about what your payout will be when you either retire or leave that employer.
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News is positive, then negative. Nobody knows about this market. We need to see the impact of existing interest rate hikes on the economy. Companies like 3M and Disney are making job cuts, though unemployment remains low. A dichotomy. Those buying a GIC should note that you're locked in for a term, so when that term ends, what will interest rates be? Higher or lower? Instead, you can buy a stock that yields 5% plus share appreciation, rather than a GIC at 5%, that offsets inflation.

The FAANG names report this week, except Apple. Valuations are stretched, up 25% YTD. There is better risk/reward elsewhere.

Major tech earnings are coming this week, so markets are tentative today. Will numbers be positive? Layoffs? Full-year-forecasts up or down? Q1 and Q2 earnings on the S&P have been negative, but Q3 has been positive, so the end of the year looks positive. But if earnings will be lower for the year, then earnings now are too high and need to come down. There's complacency in the market, given the VIX at 16, so volatility could happen in the next several months. Also, the market expects the US Fed to raise rates 25 points next week--the issue is inflation. Unlike the market, he expects rates to stay higher for longer later this year.

It's better to invest in car parts than car stocks. Inflation costs have already been passed onto buyers, so don't expect much in the future. EV's are a tailwind for the parts companies. Are trading at decent PE's. Again, the car business is tougher and he avoids that.

Believes corporate earnings (big tech) will be main focus of the market this week.
Is expecting earnings to be lower than previous highs.
Big tech will focus on "cloud" & "A.I." potential.
Thinks A.I. will take years to prove itself as a legitimate business.
Productivity will be positively affected by A.I., but could see social issues. 

Chicago Board Options board recently launched 1 day volatility option.
Creates very volatile market.
Indicates speculate opinions of investors.
Very complex product, should only be used be expert traders. 
Average investors should beware.