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

There all these extreme events that could happen (such as CUSMA blowing up). His team looks at the risk in the market from a probability point of view. If an event has over 50% of occurring, then for sure it will be factored into their assessments.

CUSMA blowing up would be meaningfully detrimental to Canada, but it might be even worse for the US. It's in the range of extreme scenarios, but not his base case. The agreements that have been made globally have been way more digestible than the initial sticker shock of "liberation day" tariffs.

US president is shooting from the hip and testing who'll flinch first. Nadeem expects a fairly reasonable outcome from CUSMA negotiations. Once we achieve closure on this deal, then companies and consumers can look past it and start deploying capital.

In logistics and wealth management, for example, these services businesses are deeply entwined with other products that won't be disrupted by AI. The story has switched overnight from companies that can use AI to grow productivity and earnings to being disrupted by AI. This is really inaccurate.

If you look at the last 3-6 months, we've seen a bit of a broadening of the market cycle. It's no longer all about tech and communications. Technology is starting to float to the bottom of the 11 sectors in terms of performance. Now other cyclicals are starting to perform well -- industrials, basic materials, etc. 

It's great for continued market upside. 

The concern really is about how much money they're spending. If you look at the hyperscalers, we're talking about 100's of billions of dollars. The market's saying "show me" that what you're spending is going to produce great results.

We're seeing a shift -- instead of the build up, we're going to the build out that's the infrastructure required around data centres and AI.

Likes them because for some time we've seen valuation discounts in international markets and emerging markets. Seeing a breakout in Europe above previous technical ceilings, and seeing that in EMs as well.

Because the USD is not as dominant as it was, you're getting upside on the currency as well.

When you look at the second year of a presidential cycle (ie. with midterm elections), it's always a bit more volatile and choppy. That year can be softer relative to the other 3 years of the cycle.

Throw in the renegotiation of CUSMA and predictions on US monetary policy, there's going to be a bit more volatility. For an active investor, you can take advantage of some of these ups and downs (such as last year, when the S&P dropped almost 20%).

Consumer staples space in the US has really been all about COST. WMT, too, has done well.

Thinks we're mid-cycle of the economic cycle, and really likes cyclicals at this point. Staples are best owned when approaching, or in, a recession.

Many gold names have performed extremely well given rise in gold prices. 

Instead, he owns silver bullion. Has done well, but volatility in January. Silver outperformed gold this past year, and has many industrial uses. He wouldn't put new $$ in until it got to more normalized levels.

He suggests it might be the base metals that have their turn to shine. Starting to see that already with copper prices breaking out. Look beyond precious metals to base metals.

Absolutely. Numbers that came out this morning were very strong, and the futures market reacted accordingly. The market's still pricing in that there will be rate cuts in 2026, but it's pushed them out a couple months. 

It is. There's been lots of focus on AI spending, and that has been quite a big stimulus. When you see the strong US employment numbers, and you hear what's going on around the world, the government spending in most developed countries is massive. 

This, combined with the spending on AI and data centres, is a big catalyst driving economies.

It's on a market-by-market and sector-by-sector basis. At different times, some sectors are very strong while others aren't. Overall, Canada has fundamentally different drivers than the US. 

In the US, over a third of the market is tech-focused. That's what's driven it over time. We're more resource-focused, and last year it was really gold that was a strong driver of Canadian markets. 

Tough call. Gold had a really big move last year. The main driver of gold has been central bank buying, and gold has become the largest reserve currency. 

With the pending appointment of a new Fed chair, people were really worried about a lot of uncertainty in the US. That was really driving gold, and it really came off once the appointee was announced. People are taking it as a positive, and it could be a catalyst that doesn't really drive gold anymore. 

Flawed structure -- pays out the majority of income to avoid taxation. When there's an economic or market downturn, it leaves them vulnerable to a capital raise.

He owns only BEI.UN and MEQ. If you want to be in the space, look for REITs with below-average payout ratios and ones that can do counter-cyclical acquisitions in a cyclical industry (this really adds value).

For him, it's MSFT and GOOG for various reasons. Their cloud services businesses are quite strong. For MSFT, its software businesses and productivity suites are quite attractive. For GOOG, online ad business is phenomenal. The two of them generate more cashflow, and their FCF yields are quite strong.