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

He sees pockets of value and an abundance of growth amid earnings season. So far so good. Comps are easy vs. last year. The TSX will enjoy strong growth, and he sees good value in the market. We are set up for easy comparisons this year. A good recovery is under way. There's no denial there's carnage on Main Street where the situation is vastly different from the stock market. As for debt, yes, you can't spend money you don't have. Those who remember Canada in the 1990s know that big deficits lead to belt tightening and/or tax hikes. Someone's got to pay for this. Canadian banks looks attractive with robust earnings.

Lumber prices He doesn't own any lumber stocks. The current spot lumber prices are puzzling though he understands there exist problems in lumber supply while housing demand remains strong and people are bored, and so are doing renovations. Lumber prices are way, way too high, are frothy and will cool off inevitably. Not good for lumber stocks.

Market. It is a wonderful time because no body knows anything now. For the last year we had this COVID shock and then the markets almost doubled. If we are not going back to something normal we are going back to something new. You have to own the kind of stocks you want to own when you don't know what comes next. Worker productivity should increase in the next year. As a society we have not absorbed the implications of our ability to work at home.

Price of Oil. It has been surprising in all directions. Demand has already picked up and it will take time for supply to catch up to it. For all of the power we are generating we are eating it up in generating bitcoin or charging electric cars. Oil prices will continue to remain strong but Canada has to figure out a way to capitalize on it. We only have about 5 years.

Market outlook. It is clear that all the stimulus and central bank actions are responsible for the boost in asset markets. Powell hinted at froth in the markets. What the feds are doing is not solving inequality and structural problems.

Inflation. The large parts of the inflationary impacts are supply issues. The real question is on incomes. People must have a will to spend, but also wages need to go up. If this goes up, inflation will really go up. Employment numbers in Canada and US is really where we must watch. Feds cannot do much about it since if rates go up, the economy will collapse.

You cannot taper bond issuances, and contrary to this, it must be stepped out. The debt must be financed and this will push yields higher.

Precious metals as a hedge against inflation. Precious metals accounts for 2-3% of the market. 30% allocation would be too much. However, inflation will be an issue and gold could be a good asset class. It is personal how much you want to allocate.

Educational Segment. S&P500 companies have been reporting great earnings and most times, investors are selling into it. FANGs, Tesla and Visa are some examples. Selling on news is not a bullish thing. On the last two earnings of Apple, you can see that the stocks rallied up into expectations of good earnings, and then markets sold off for a couple weeks. Tech heavy NASDAQ will continue to weigh on markets. Market breadth is important to look at. Slowly, stocks are starting to break their intermediate trend line. This usually leads to a correction. We could correct 5-10%. Time to be more conservative.

Another record-breaking month should be turning bears into bulls, but it isn't. Tech rolled over today. Now, we'll subjected to talk that great earnings don't matter because we're at the peak and there's not enough money for all sectors to rally (which is true). Bears only see rolling over. Enough of that. You must own stocks now that the consumer is flush. Money will return to tech.

There is finally a structural bull market for oil. Goldman Saks and JP Morgans are now calling for $80 oil in Q3. The party is just starting. His fund is up 70% this year. Stocks fell so much last year that they are up quite a lot. Even at $60 oil, you can buy stocks at 2-3x cashflow. These used to trade at 7-8x. Best measure is free cashflow yield. Companies need to commit to meaningfully increase dividends and buy backs. OPEC will be out of spare capacity by the beginning of next year, global off-shore is in decline and US Shale hyper growth is over.

Gold and inflation. Gold is manipulated. It's about the fiscal deficit we're in. The longer it takes to get out of this mess, the higher the price will correct. Buy right and sit tight. He owns many gold and silver producers that have massive leverage to the price, which will have to go higher. Copper is signalling a lot of money devaluation. Copper above $4.50 is a bad sign. People think that inflation means things go up in price. What it really is, is things are constant but money is devalued. We're facing a bigger storm because of the currency reserve. Look at the CPI number today. With all the stimulus thrown at it, it's not a good number. We should have had a much bigger rebound. We're facing exponential money printing, which is bullish for gold, but not for the dollar. The currency reserve is in trouble, as the USD couldn't muster a rebound above 92.50, and yesterday's jump above 91 lasted only hours.