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

Considering investing in GICs. Is the BOC still expected to raise the prime rate? Bank of Canada is likely to match what the Fed does. Expectations are to be around 3-3.5% at the end of the year. Highest GIC rates, should come in the next 2 to 3 months. GIC is good for capital preservation but not the ideal choice when worried about capital erosion due to inflation.

Educational Segment. Jim Cramer recently called a market bottom. Disagree. Nasdaq has been underperforming. Now starting to outperform. Could argue some form of market bottom has been reached but not necessarily THE market bottom.

Inflation is peaking now and supply is improving. He hopes things will moderate. The big thing is the Russian energy issue, replacing Russian oil and preventing them from selling it. He expects car production to rise quite nicely in latter-2022. Not sure if a recession will come, but it would happen in late-2023 or early 2024. It's tough to have a recession when everybody has a job and demand is strong. The market has sold off a lot, down to 15x earnings. 2023's earnings' growth is 8-10%, and 4-6% beyond that. You're getting value for your money now in stocks.

We're in an inflation shock that could lead to a growth shock globally. Too much monetary policy and under-investment in energy fields are key factors. If demand continues to rise, then interest rates will continue to rise. If the demand declines, it could lead to a recession. It is a bizarre world, now. From 1990-2021, inflation was only 1.3% and consistently so. Before 1990, inflation was 5%. Central banks have limited power except to dampen demand.

Canadian bank ETF The challenge with an equal-weighted bank ETFs is that it includes only six companies. Because of the MER to pay, you may to own the banks directly. Also, there's more risk than you think with the banks now, despite the juicy dividends. There's a pullback in housing, so if low-loss provisions become higher than expected or there's a world economic slowdown, there could be pain in banks. Wait the next quarter or two.

In today's investment environment pay attention to inflation and particularly inflation volatility. Inflation could lead to a slowdown in global growth and global growth shock. This is in part caused by over-indulgence in monetary policy over the past decade as well as under-indulgence in research development into energy fields. The market hasn't fully priced in a possible recession. Bonds are good because they reflect inflation changes and volatility. Inflationary impulses are hard to control, including by central banks which can only dampen demand by raising interest rates.

Mixed inflation data means the market remains volatile. The economy can go either way with contrasting signals about the state of inflation. But the seesawing could lead to a soft landing, not a brutal hard landing that everyone fears. If all economic data were strong that would lead to a series of aggressive rate hikes that would wreck the economy. However, if all data were weak, it's already too late. Pending home sales were up 0.7% in May compared with April. Durable goods orders rose in May. But today saw many commodity prices down, except oil which bounced back after recent weakness. What's ideal is to see enough of a slowdown so that the Fed can raise interest rates gradually without including a lot of unemployment. A caveat: there may layoffs after a hiring boom that happened at the height of the pandemic.

GlobalWafers' Texas foundry Congress needs to pass the CHIPS for America Act before the August recess. This is the plan by GlobalWafers to build a silicon wafer factory in Texas. The factory could create up to 1,500 jobs and produce 1.2 million. Supply chain constraints have stopped many industries, especially cards, from accessing semis. Meanwhile, demand is soaring. It takes time to build such a factory, so it's urgent to start now. Meanwhile, demand for semis will continue to climb in the coming decade. No way that a factory can be built in Taiwan, because that is too close to China and would pose a security threat.

Believes credibility of Central banks has been eroded. Events from the past century have proven inability of Central banks to manage economy. Inflation is not a surprise given the length of low interest rates.

Question is how high interest rates have to go before inflation is tamed. Looking for companies that can raise praises in response to inflation. Hoping rising prices will not feed fire of inflation.

The market was very oversold coming into this week, meaning it would soar on any good news. That happened today with a rally of over 3% Technical analyst Larry Williams called this rally. Meta and Salesforce led the rally (tech rallied).

Inflation is persistent, hitting a 40-year high of 8.6% in the US, market volatility and a technical bear market in the S&P. Only energy is the only star this year; there remains opportunity here. The US Fed is hawkish with a 75-point rate hike. He doesn't feel a recession is imminent; the 3- month 10-year treasury spread doesn't indicate one, at least not in the coming 12 months though perhaps later. He has tilted his portfolio away from growth and into value. Canadian and US banks are an opportunity. Energy, materials and healthcare too.

We're stuck now. It will be three weeks before we see June's inflation data and when earnings start. Earnings estimates have been going up this year, and are the big question going forward. That answer will come with earnings reports starting in three weeks. However, personal and corporate balance sheets are still in good shape. Companies are buying back shares. These balance sheets are a positive in a pessmistic environment and cannot be overlooked.

He's waiting for the world to change. He sold some S&P futures on the morning of the last inflation report and hasn't made any moves yet. There's no clarity in inflation, rates or tariffs. There is overwhelming pessimism in the market which gives rise to a trading opportunity, which is a bit of optimism. Also, lumber, copper and wheat are down over 20% or more since the winter. Even gasoline and crude oil are down (the latter 12% from the recent peak).

Not sure if we will enter a recession this or next year, but she expects growth to return to 2017-19 GDP (2-2.5%) levels based on earnings growth. Earnings growth will be the catalyst to raising stock prices. There are companies with strong moats and strong earnings whose PEs have come down a lot. Those names deserve to trade at a premium.