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

If stagflation, own high tech growth vs. value? His comfort level is to own companies that generate profits, deliver cashflows. He can't predict which will be the next AMZN or SHOP. And when the bloom comes off, you see how badly they do. He focuses on companies and businesses, not labels. His job is to buy profitable companies that will generate the most money for his clients over the long run. He doesn't know what's going to happen in the next month or beyond, so he doesn't sell in a panic. What goes down could easily pop right back up, if it's a strong business.

Averaging down. He's happy to buy businesses on sale. When good companies pull back, put your money to work.

2007-9 was much worse then the curent bear market. However, stocks are still up huge long term with even the Nasdaq up far higher than Treasury bills. Since March 2005, the top stocks are: 1) Netflix reports tomorrow. Up over 13,000% since 2005. 2) Apple up over 10,000 3) Regeneron, thanks to its various drugs. 4) Monster Beverage. 5) Booking Holdings after beating its online travel competitors. 6) Nvidia whose chips are essential to computer and high-performance computer. 7) Amazon after taking over retail and cloud computing. 8) Illumina. 9)Monolithic Power. 10) Tyler Technologies up over 4,000%. You could have made huge gains it you had stuck them out and didn't sell like many did today.

2007-9 was much worse then the curent bear market. However, stocks are still up huge long term with even the Nasdaq up far higher than Treasury bills. Since March 2005, the top stocks are: 1) Netflix reports tomorrow. Up over 13,000% since 2005. 2) Apple up over 10,000 3) Regeneron, thanks to its various drugs. 4) Monster Beverage. 5) Booking Holdings after beating its online travel competitors. 6) Nvidia whose chips are essential to computer and high-performance computer. 7) Amazon after taking over retail and cloud computing. 8) Illumina. 9)Monolithic Power. 10) Tyler Technologies

Given hot inflation and retail sales today beat, he believes the Fed will hike rates by 75 points this month and September then step back to see how the economy is doing.

Even the poorer consumer is still spending and consumers as a whole are taking on more credit card debt. These are positives. Market sentiment has been too negative, too mired. The economy is still healthy. The consumer is a giant driver of GDP group in the U.S. Coming weeks will see corporate earnings and offer more insight.

Believes interest rates will continue to rise even after 100 basis point increase from Bank of Canada. Expects inflation to remain at high levels. Not expecting a dramatic change in the markets (continued volatility). Anticipating further action from central banks across the world to battle inflation.

Expecting Canadian bank stocks to weather the economic downturn well. Recent market selloff has already been priced into Canadian bank stocks. Not expecting sharp declines. Remains supporter of the Canadian banking industry in the long term.

Markets and volatility. Expects volatility to continue. After-effects of the pandemic like supply-demand imbalances, labour shortages, supply chain disruptions that have been exacerbated by Russia's attack on Ukraine and lockdowns in China. This lethal mix has caused inflation to spike and last longer, making central banks raise rates more aggressively. Resulting volatility in both stocks and bonds. Rising rates and high inflation will slow down the economy, some parts more than others, such as real estate and consumer discretionary spending. He's in the camp of a soft landing. Both Canada and the US have low unemployment, high personal savings, historically low interest rates, and strong currencies. Core inflation numbers are starting to roll over. Don't get too spooked by the headline numbers, but stay diversified in recession-resistant businesses in case things get ugly.

US 9.1% CPI number was a negative jolt? If you take it apart, the main factors were a spike in energy costs and other random items. Oil prices are coming down, already reflected in the price at the pump. We're probably going through the worst of it as we speak. Remain fairly defensive in recession-resistant companies. Take advantage of the volatility to add high-quality companies in your favourite sectors. He likes clean energy, infrastructure, aging demographics, some industrials.

Commodity stocks. You generally want to buy commodity companies when PE is high, so earnings are low; sell when PE is low, which means earnings are peaking.

Today's 1% BOC rate hike. BOC wants to take an aggressive approach to get ahead of this inflation scourge. Sets the table for the Fed to consider 100 bps, especially given the 9.1% CPI print, though they don't usually pay that much attention to the BOC. 75 bps is cemented for the Fed's next hike.

BOC wants to "front-load" rate hikes. The 100 bps move signals that this is what they're doing. How do they, and all central banks, wrestle inflation without driving too much of a stake into the growth story and choking things off for an extended time? His firm expects a shallow, short recession. It's a balancing act.

The bounce today holds hope that we could face a short-term bottom. Overall, he feels that things will get better. He's not a Fed dove; we need a big interest rate hike. The job market is strong enough to avoid a lot of layoffs, and we have made some progress with inflation. True, the june CPI data released today was hot, but commodities like grain have already fallen in price. Same with natural gas and oil. He suspects oil has peaked, though it won't plummet. July inflation will be lower than June. Meanwhile, metals like aluminum are crashing. Also, we're seeing a glut in clothing/apparel. Prices that have not come down: cars. High home prices are starting to price some people out. Watch bank reports starting tomorrow for confirmation. Inflation has peaked.