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

Wouldn't be surprised if there were hostilities in the near term. That's already being priced into the commodity with a significant move in bids. Geopolitical tension is what's moved the price of oil about $10 YTD. Absent geopolitical tension, the oil market is pretty well supplied.

Risk (and opportunity) management is about probability and severity. Probability of a strike seems to be increasing, but we don't know the severity. In particular, we don't know if Iran will respond in a scorched-earth way (which it didn't do after last summer's strike on nuclear sites). Attacks on oil production and infrastructure in the region could disrupt the global oil demand balance, which could cause the price to skyrocket.

Geopolitical tension tends to be sharp and fleeting. US action in Iran shouldn't be the reason you put oil in a portfolio. Any company you choose should have more going for it than just the commodity price. For his firm, that's XOM.

It's bifurcated. You have the asset-light tech side, and then there's the asset-heavy buildout side. AI is moving from code to atoms. First phase was chips and core networking. Next phase is physical -- data centres, power grids, electrification, materials, equipment.

Pretty good diversification opportunities at the moment. An interesting regime shift under the surface -- US indices are treading along, but Canadian indices are breaking out.

Canada has a lot of oil and gas, rocks and trees. It's a heavier-asset-based economy, which has added to its outperformance and makes a nice complement for the tech-heavy indices that most people are exposed to.

Investors should have some tech exposure.

Canada represents a nice opportunity, but so does Latin America. Good to add to your diversification. LA has commodity exposure, light tech exposure, and better valuations. With potential for the USD to keep weakening (stated objective of the US administration), that would give international regions some extra torque.

Now, he wouldn't bet too much on the USD weakening a lot more, simply because most market participants are anticipating that. With that type of saturation, we might be due for more of a counter-trend rally.

The world needs to think about how AI creates an agentic world. The work that needs to be paid for won't run over traditional banking rails, but instead over digital assets. While the price of digital assets has been really difficult over the past 5-6 months, under the surface we're seeing the infrastructure and network underpin more and more assets. You could start a position in this area; remember that volatility is very high, so position size is very important.

Can't locate the ticker, but Picton is one of the premier asset managers in Canada. Generally speaking, does a really great job on their whole lineup. He'd be pretty confident purchasing.

His team runs a more diversified portfolio rather than being just in tech. Interesting selloff in software, leading to some quite ridiculous valuations for some stocks.

On the AI side, just because you can build something doesn't mean you can create a viable company. A successful company has to communicate with customers, retain business, and grow that business.

In the US this is a midterm election year, with a president who doesn't want to become a lame duck. That means there will be spending, which will positively impact growth. Like him or not, Trump is a catalyst for growth. So we can expect growth in some shape or form, as we had last year.

In the industrials and infrastructure space, worth a look for the long term.

One reason is to lower debt to facilitate an acquisition, and that would be a positive story. So you have to look at the reasons. In general, the optics are very poor.

If CUSMA gets ripped up, Canada won't be a great place to invest. So you want to have some diversification.

In Canada, for example, we don't have either vacuum technology or pharmaceutical companies of scale. So for access to certain industries, you need to go international anyway.

The market is like the early 2000s with commodity prices soaring, goal and oil near all-time highs, but the flipside (Shopify, Constellation) are impacted by AI. Over a third of the TSX is made up of commodities, just like the post-tech bubble era. The TSX is detached from the economy that's driven by the consumer. Commodity prices will continue to drive the market. Neither good nor bad, but reality. The CUSMA renegotiation this summer will be successful. No doubt, Canada needs the US as a trading partner, but the US needs from Canada steel and lumber. Trump really wants to make jobs in the US, so the car industry is a target.

Last Friday's US Supreme Court decision cancelling Trump's tariffs reiterates that Trump will continue playing the tariff game. So, he's leery of any sectors that can be hit, like manufacturing. We had a great 2025, but not February-early April which was terrible and could come back. Leery of oil and gas, because Trump wants to get the gas price down ahead of midterm elections. The market is looking beyond that as oil stocks rise, which he thinks will continue. Inflation seems to be cooling, so the chances of a US rate cut are increasing, but he doesn't focus that much on the macro. He trades only midcaps which have been left behind by the markets and trade at lower valuations than large caps.

More of the same in terms of Trump's style, pivoting and using tariffs as a negotiation tool. None of this should be a surprise to the markets. The SCC ruling was a bit of a surprise, and we got a pop on Friday.

The reality is that Trump was always going to try all these other avenues for implementing tariffs if SCOTUS didn't vote in his favour. Now he's going to try a different approach, and the market shouldn't really care too much about whether it's 10% or 15%. Ultimately, it's more status quo. 

The most interesting thing will be what Trump says about Iran. One of the US presidents called it the axis of evil -- North Korea, Iran, and another player. 

Most of the world understands that there's some sort of regime change coming in Iran. We hope it's peaceful, but it's looking as though it may not be. That matters more for the market because all eyes and ears are going to be focused on that speech.

If he ramps up the rhetoric around "cooperate, or else", with the military buildup in the Persian Gulf right now, that's what the markets are probably most nervous about right now.

If you believe strongly in Israel's right to exist, and there's a country whose official policy is to wipe Israel off the map, there can't be a version of the world where they get access to nuclear weapons. That's the discussion here. Larry said that what happened on October 7, 2023 wasn't going to end in Gaza until Hamas is eradicated and there's leadership change in Iran. He doesn't see it any differently now.

Standard definitions can be found online. Typically tied into credit expansion and contraction of the economy.

Think of the business cycle in terms of quarters and years of positive GDP. When it contracts, that's the end of the cycle. The economy going up and down is the business cycle.

There's also the presidential cycle. In the US, we know that it's every 4 years (unlike Canada). Most countries in the world don't have that fixed cycle. Depending on the makeup of Congress and the White House, spending happens in certain periods to get re-elected. Some years of that cycle are better for markets than for others.

There's the commodity cycle -- typically related to the business cycle. There's more demand for commodities as we build more and more things.

Harvest has been great. But you have to be careful. A lot of what you're getting is eating into capital appreciation compared to just owning the underlying securities. 

But if you're seeking tax-efficient income, a lot of these high-yielding products are very good. Though not a material benefit inside a registered account.