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

There are a few areas where you always want to pay attention. One is earnings. We're heading into earnings season for Q4. We'll really want to watch and see what guidance looks like.

The other area of caution that he has his eye on is the rotation that seems to be happening between Canada and the US. Money flow has been so strong into the US for so many years, and now it looks as though it's actually flowing the other way. The Canadian markets outperformed last year, and that could happen again.

The other space to focus on is the relationship of the Mag 7 to the other 493 stocks in the S&P. What's happening to capital flows there? A lot of money has moved into the Mag 7, and there have been a lot of specialty products like the single-stock ETFs. What does the rotation mean for those stocks?

He's seeing more sector rotation as well. The discretionary sector continues to do really well -- fascinating, as consumer sentiment is very low. 

In the last few months we've also seen a move to industrials, which is really positive for the economy. These include the truckers and the rails, moving freight and goods. This indicates that there's going to be strong economic growth as well.

You always have to keep your eye on our banks. How sustainable is the move in the banks? We had great performance last year from bank stocks. As earnings trickle in, it'll be interesting to see what happens to the prices of those stocks.

He has no exposure right now. The sector falls just a bit outside of his rankings right now. His firm looks at earnings acceleration. A lot of companies in the sector have strong future earnings, but they haven't been accelerating in the short term.

As nuclear projects are added (both big reactors and small), that just stokes more demand for uranium. It's tough to mine, and challenging to discover and build mines. There's a time lag there. Investors are always forward-looking, and as demand continues to pick up, but supply doesn't increase, they can see a boost to earnings down the road.

His fund has a fairly good-sized position in gold, and he's comfortable with that. Looks as though the move in gold can continue. That said, both gold and silver are very overbought on a short-term basis. Prices are getting fairly extreme from, say, the 200-day MA. When that happens, it's not unusual to see some pullback and consolidation.

You have to be prepared for that. If you don't have a position, that's when you want to enter.

At the top of the show, we talked about rotation among sectors. Fascinating that even with the decline of oil since June, some of the companies in the sector are rising up in his rankings. Anytime that happens, they start to pay attention.

That's telling you that the capital efficiency and discipline of these companies has been so good over the last few years that they've been able to generate cash even with a lower commodity price. Market's starting to anticipate that, as global demand picks up, we'll probably see a higher price in energy. As a result, some of these stocks are doing better as investors look ahead.

Leave the political discussion at the dinner table and don't let it infiltrate your investment strategy. It's difficult, but political actions are here today, gone tomorrow, and markets see through that. For example, the market looked past yesterday's Fed independence issue. Stay focused on company fundamentals and ignore the headline of the day. Gold: it's a risk asset and it's run a long way. In the big picture, gold is a lagging asset, lagging the main indices by a lot. Tariffs: some Canadian industries are disrupted by Trump tariffs, but tariffs tend to be negotiating tactics.

What's worse than a high rate is getting no credit at all. The danger is that credit card companies will bar some people from getting a card, because at 10%, the company doesn't want to take a chance on some people. This is unsecured debt and the write-offs are large. He expects this 10% idea to eventually die, because it would be destructive to financial markets and card holders.

Highly volatile. Silver is for the professionals.

No show today.

Time to pardon Jay Powell. He's not a criminal. Powell says that Trump is putting him under criminal investigation for not cutting interest rates fast enough--and he has a point. If this is such a big deal, why didn't the stock market react today? Wall Street is betting that the prosecution won't happen. Even Republican senators are pushing back against the prosecution. Besides, Powell's term ends in 4 months. Also, Trump usually changes his mind, such as last spring's tariffs. To prosecute Powell would end the independence of the Fed Chair--not good. Secondly, Trump wants credit card companies from charging more than 10% interest. Congress needs to pass that law. Again, Wall Street doesn't care, because the threat is too over the top. The bank stocks fell in the morning, then rallied later. If Trump gets his way, he's only mandating a crash where these companies stop lending.

There is no surprise that gold is rallying with the geo-political risks and a stimulative US budget along with an increase in defense spending. So there should be a continuation of what we had in 2025. If deficit spending continues along with the other factors we will see inflation pressure. One of the benefits of increased spending on defense, etc. is for the banks, since spending will move through the system. We are not going to see a lot of nonperforming loans. The wealth effect should see some capital investment, capital goods, and infrastructure plans. The US mid-terms will be in November next year and if Trump loses he will be lame duck president. Tariffs will remain status quo for Canada and he is surprised the market is up as much as it was last year in the face of these tariffs.

At this point, no reason for concern. More important to him was that the street was expecting a decline of about 5k jobs, and we got an increase of about 8k. That's pretty good for Canada, a nice solid beat. A slowdown was expected, as the previous few months had been so strong. So to even keep the party going at all was a good thing.

Unless something changes, he feels that at this point in time everybody has had time to respond to the tariffs already put in place. Negotiations continue. As long as there aren't any negative surprises, it seems as though people have gotten used to them and are moving forward.

Over time we may see some of the sanctions start to come off. Some of the flows may start to change regarding who they sell to and where. What's intriguing is that on the first couple of days we saw a bit of softness in oil prices. With prices hanging around in the $50s, maybe we've seen a lot of that priced in already. Even with a pending war with Venezuela, the price never really did much.

In the last couple of days it's been interesting to see the price of crude slowly starting to creep back up again. At this point in the market in terms of supply and demand, we just don't know the outlook. But overall, it suggests to him that underlying demand seems to be fairly stable. Unlike natural gas, which is getting knocked all over the place.