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

We need to get meaningfully higher, and the challenge is time. Time is not on our side. Building a 1M-barrel-per-day pipeline to the West Coast takes roughly 8 years.

US and Canadian governments are in discussions about resurrecting Keystone 2.0. Great because the timeline is a lot faster. Not great because it ensures customer concentration risk with the US, and we've been trying to move away from that.

We should be doing both. We're approaching full capacity, which is an issue. Global demand is roughly 106M barrels per day, anticipated to grow to at least 150M by 2050. Meaningful growth in US is over. Non-OPEC production is peaking this year, OPEC has 1.5M barrels per day spare capacity and then they're done.

Where are the necessary barrels going to come from? Only a handful of countries are on the list, and Canada's at the top. We're the only country in the world that can't get out of its own way to build extra capacity. It's economic treason.

The world loses 7M barrels per day of productive capacity due to well decline. The very-well-respected minister of energy for Saudi Aramco has been warning the world for years that it needs to invest more. He can see what's coming, and that was pre-Iran.

We're in an opportunity-rich environment. Almost every oil stock is a Buy today. The value in hiring a professional to help you is that you go from being up 20% on your own, to being up 80-100% or more with a professional manager.

In general, political events have (at best) a temporary effect on the market. The defining political event of his adulthood was 9/11. Yet markets closed higher at the end of 2001 than they did on September 10, 2001. Markets tend to take things in stride and then move on fairly quickly.

There's conflicting information coming out of the Iran situation. Iran is saying they're not having any discussions with the Americans. Trump is saying he's talking to "Top. Men." (just as in the last scene of Raiders of the Lost Ark). Of the two, Brendan actually believes the Iranians; yet the market seems to be accepting the reassurances coming out of the White House.

As the wise New York philosopher, Paul Simon, said, "A man hears what he wants to hear and disregards the rest."

He's pretty heavily weighted in energy, especially Canadian energy, but hasn't trimmed. It would have been really nice if Canada already had in place the business case to get more of our energy to world markets.

As the wags are saying on the internet, "The difference between this conflict and the Vietnam War is that Trump knew how to get himself out of the Vietnam War." 

This will continue on in some way for a bit. Even if it doesn't, the bigger problem for energy prices would be if there was a slowdown in the economy driven by higher interest rates. The president would very much not like rates to ratchet up in the 6 months before the midterm elections. 

The US being able to keep interest rates low is more of a determining factor than whether this war continues on.

Still heavily weighted in energy, especially Canadian. Financial services have been a bit weaker here, but he likes them and they should continue. As for AI, we'll probably talk about some of the most boring companies in the tech sector during his Past and Top Picks.

He worries that oil prices will lead to higher prices for consumers as a tax on spending on necessities and discretionary alike, but this will result in deflation longer term. In energy, he owns bellwether CNQ, but generally one should consider taking prices; this energy spike will pass eventually.

He would differentiate the two that much, but ETFs offer far more liquidity. Now, he isn't surprised to see in Asia a sell-off in oil as well as gold to become more liquid. But this sell-off is temporary noise.

He's not going to cross-check an expert like that who understands the dynamics. Though no reliable sources yet, he expects there's been some damage to Iran's ability to produce. There's enough excess capacity in different parts of the Gulf to offset that, so he's not too worried at this point.

The market's celebrating today with a relief rally that the war isn't escalating, but he suspects there's more to come. The rally may last the rest of the week, until negotiations start. You can also expect the US to be bulking up its presence in the Gulf; this was just a bit of a pause.

Right now, it's a glass half full/half empty scenario. For him, the end goal is about regime change in Iran; the world just might be a better place if we had less terrorism.

A couple of weeks back he reduced exposure in the energy sector, assuming that the spike would be temporary. But recent events suggest it's a bit more permanent.

If we see that December crude oil is starting to trade a lot higher than where it is today, that suggests sustained elevation. We're not seeing that yet, but something to keep an eye on.

Oil and gas are big inputs into everything. Transportation is the obvious one. When you raise the price of gas at the pump that's $$ that literally goes up in smoke, leaving less discretionary income for the consumer to spend. Restaurants, clothing, you name it.

Discretionary income is what will get hit if this is a more permanent thing. He doesn't think it will be, but it's going on longer than the couple of weeks initially thought. Could easily be several more months.

The extent to which the US has mitigated Iran's military and missile capability is still being debated.

It's a huge factor. By and large, President Trump has broad support from the Republican Party in the sense that the world's a better place with less terrorism. They want to finish the job, rather than leave it half-done at this point. Trump's request for additional funding last week put pressure on the bond market which, in turn, helped put pressure on the stock market. 

A number of things need to be considered.

The answer depends on your specific situation. If you're an active trader, currency trading can get very expensive. It would be different for a buy-and-hold investor. Are you in a taxable account or not? Generally speaking, CRA doesn't look kindly on tax-avoidant strategies.

CDRs give Canadian investors a way to invest in big US firms by using only small amounts of money. The smaller amount of capital required also lets you diversify more easily.

US Debt

That it's at a tipping point is an understatement. The amount of debt in the world is catastrophic. We're at a place where there's an opportunity here.

Over the years, governments have been very lazy in not being willing to make hard choices because it risks their political future. They've been poor governors of our tax dollars. So the debt problem just gets worse and worse and kicked down the road.

The book This Time Is Different: Eight Centuries of Financial Folly comments that the inflection point is when public debt is 100% of GDP. Last year, 2025, was the year the US crossed the Rubicon of more than 100% debt to GDP. Projections by the US Congressional budget office aren't even taking into account recession risk, and we'll almost certainly have one. (There's a link in his blog for those who want to look into the book further.)

It's the 10-year bond rate, not necessarily the overnight rate, that matters the most. It has everything to do with supply of debt and inflation. With the war going on, both inflation and the cost of debt are big problems.

TLT is an ETF that he likes to trade. It's the long bond, giving you the 20+ end of the bond market. Chart shows that it's at the lows it's hit for the last number of years. With a US slowdown and recession, it has the potential to return to $110 (though not much more). Big potential for capital gains. Compelling risk/reward.

Concerning the whole market he sees smaller and mid cap companies operating a little differently and not as over-valued as the market in general, even with its decline up until Friday. There is a reversal of the enthusiasm in the markets, but with an overhang of enthusiasm especially with the larger companies. The market hit a high in January and he has seen a decline since then even before the Iran war. He feels momentum has been completely lost. It looks like a classic reversal pattern. Usually you see a 30% drop from the high point in a major downturn. There are issues such as rising interest rates and inflation especially with the war in Iran. We don't know where the price of oil is going.

He tries to identify trends in a chart to create a trading plan. Have a target and this is an exit price. You have to apply the discipline.