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

After yesterday's selloff, it was probably a good time to buy. There are a lot of options around these big tech names. Especially for selling puts and calls, they're laddered on either side of the "spot price" of these stocks, and volatility gets exaggerated. 

Bottleneck in hyperscalers and data centres.

No issues getting chips and GPUs. But one issue is connectivity. Apparently 30-40% of GPUs around the world are sitting idle because they're waiting for ANET and CSCO to bring in their connections

Last year, the market has healthilly rational about the amount of money companies were spending on AI. This year, the market is more enthusiastic about the AI trade, but that is supported by real demand. Microsoft, Apple, Meta and Alphabet are still growing revenues by 10-30%, and their valuations reflect that. The rest of the economy is struggling with high interest rates and weak consumer demand, including home-builders and autos. These companies are not growing at all. Next year as interest rates decline and uncertainty over tariffs fades, these sectors could hopefully catch up with big tech.

Two things really stick out. The first is the general resilience of the US economy as a whole. It was a pretty good earnings season when you put it all together. AI-related companies seeing the most outsized growth, and the outsized demand pull.

The more negative end of the conversation is that the low-end consumer is seeing some struggles.

So earnings across the board are fine, though indexes are composed so that the big companies play an outsized role. But when you peel away a few onion layers deeper, you see the low- to mid-end consumer having a tougher time (restaurants are seeing less traffic, there's some down-trading, etc.).

It's somewhat of a 2-stage economy, but a lot more positive than expected.

Thinks it will. His team thinks globally, but likes to have a local perspective. It's important to look at the US market in this case.

Some viewers may be surprised to know that the US market is almost half technology at this point. So when it comes to the gap, that gap has been going on for 20 years. He doesn't see a convergence in the future. Instead, he sees further expansion between the haves and the have-nots.

Taking a step further back, the conversations on coal are beginning. But there's a longer-term story here. In the short-medium term when there are bottlenecks, he sees upward pressure on prices. OPEC has been running a low oil price policy for a while now -- they've added more supply to the market as demand has continued to grow. That being said, it's a short- to medium-term conversation.

Look out 10 years, and it's very clear that the role of oil in the mass utilization era that we've seen in the last 100 years is moving more to renewables. He doesn't mean to evangelize the green conversation. From a brass-tacks perspective, both solar and battery deployments are going to rise exponentially.

So the role of oil in the future economy of 20 years from now will be significantly different than it is today. There will always be a role for oil, and when there are shortages people are willing to tap into it. But those bottlenecks only last for so long.

Because energy demand is going to grow, oil will have a role to play, albeit a less important one. Oil's not going away. If Europe and NA don't find uses for it, India and Africa will. Commodities have a way of balancing themselves out globally.

Across the board, it's important to be careful. In a market that's only gone up for the last decade, it's very easy to think that if you just doubled your equity holdings using borrowed money, then you're twice as smart. Equity investing should generally be unleveraged, even if there are tax strategies available. For peace of mind and a good night's sleep, stay away.

For example, between 2019 and 2022 the most important thing was to stay invested. Margin and leverage does not allow you that optionality.

You don't have to make that choice. Instead of a TD, for example, you could own one of any number of global banks that give you more than what a TD can offer.

In general, the banks have more fully priced in a very benign Canadian economic outcome. They're releasing reserves, trading at 15-20 year highs. That's an interesting place to be when we're seeing home prices decline in major centres. Be very cautious on the banks as a whole.

If he had to choose, it would be lifecos every day of the week.

Different ways to participate in a gold run -- metals, mines, etc. When you go through a really aggressive gold market, the metals tend to do just as well as the miners. Might just be simpler to own the metals.

This has been one of the best gold markets we've seen in a very long time. Metals and miners have run quite a bit, and he's skeptical about where we are today. He'd rather own stocks as a long-term debasement story.

Due to technical difficulties, show couldn't be aired.

Latest Mag 7 earnings are showing that AI is still a major engine for growth. But investors are now rewarding companies that can turn big spending into real results. Market's starting to shift to companies that can execute and not just participate in the hype.

AMZN delivered a strong quarter with cloud momentum returning. AAPL proved that consumers will still pay for premium tech. MSFT, GOOG, and META reminded us that expectations are still high. All eyes will be on the earnings for NVDA coming up in the middle of November. But the consumer is still spending and the market wants to see those profits follow.

Leadership is starting to broaden, and that's healthy and a positive, making it feel more like a rally that's grounded and durable.

Still some geopolitical concerns out there that are still part of the story. The Trump-Xi meeting delivered a 1-year trade truce, removing near-term tariff threats. And that's really progress, though there are tensions that are far from resolved. Markets are treating it as a positive step, rather than a breakthrough.

She gets asked this all the time. The Mag 7 are spending, but they are delivering and executing on that growth. Expected to grow double digits over the next year, and they are hitting those expectations. So for her team, it's not necessarily that we're in a bubble.

If you think back to the tech bubble of 2000, valuations of a lot of those companies were 50-100x PE. We're not in that environment today. Instead, we're in the early stages of this AI breakthrough. Now pivoting from companies that are just blanket investing in AI, to companies that can make it profitable. Focus is turning to companies that can help their customers and employees to implement AI and turn it into profitability.

So far, so good. Earnings are coming in pretty strong. We're in the very early innings of Q3, especially for Canada.

We had a very strong Q2, beating by about 6% and with earnings growth a little over 8.5%. He expects this to follow through in Q3. The big tech giants are a little hit and miss; for example, META's down ~11% so far today.