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

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.

To an extent. Whenever you have a lack of visibility in the market, it weights on markets and sentiment. Investors become fearful, and that can hurt markets.

He also thinks there's a bit of fatigue here. We've seen so much of this activity since Trump started all this noise. Sounds as though Trump and Carney were speaking at the APEC dinner, so things could be improving there. The news on China is good, as a long deferral is always good. He believes that Trump ultimately wants resolution on these issues.

It got ahead of itself, and now we're back to where we were only a couple of weeks ago. This is central banks buying. They're selling treasuries, looking for a place to park capital, and gold is one of those places. Gold is such a small market compared to how big the US Treasury market is. Hard to know when that demand's going to dry up, but not anytime soon.

Some tailwinds left in the price of gold. The companies themselves do extremely well in a range of $3-4k, as they're breakeven cost is ~$1500-1600. Margins are extremely wide at even $3500. Good place to be. He's about 6% weight right now (not market weight) in some strong production companies, a little bit of exploration, and a royalty company. Sustainable.

We're facing this 2-lane highway, or a K-shaped economy. That means we're seeing strong earnings from the corporate side of the balance sheet, but weak employment. 

The AI world inhabits the fast lane with lots of buildout and growth. Then there's the traditional economy that's suffering some job losses, but also the productivity that comes from the AI boom. That's the dual personality that the economy's having these days.

If you look at employment across US sectors, the only sector that had an uptick was healthcare. Everything else has been diminished or falling, and the only thing that's making it up is the AI boom. There's less residential and real estate construction, as all the demand is being taken up by the data centres. 

If we didn't have this AI boom, we'd definitely be in a recession.

Nice thing is that any Canadian ETF will be largely skewed to nat gas. He can't comment on the individual securities, but likes buying them as a basket.

If you're income-inclined, look to ENCC (one of the Past Top Picks for today). Very high yield of 15%, with some ROC. Get the higher income while you wait for individual names to trend higher, when you can start adding those names. Balance the two strategies.

If you're bullish on nat gas, then you're going to be bullish on the Canadian producers. XEG is another big one in Canada. We're going to need energy produced from all sources. In 5-10 years we're going to see higher energy prices, and that's when you'll see the benefit of your investment.

There are certain estate laws around a certain size of estate in USD. Check with your tax professional on that. US ETFs don't make distributions of capital gains, so there's generally not much of a distribution other than the dividend. You don't reap the capital gain until you sell. So a Canadian owning one is deferring capital gains somewhat.

Sometimes the US one is cheaper, but you have the currency conversion to deal with.

There will be more of this type of setup to come. We need nuclear. In order to kickstart it, this is exactly what they're doing. He has no concerns at all with the US government partnering with Canadian companies. There's sometimes a little bit of animosity on Canada's side. But we share technology on uranium anyway, so that's not a big deal for national security. It's a great idea.

Will be interesting to see if we can leverage off of what they're doing down there. If we're getting serious about nuclear providing power, the only problem with nuclear is that it can take a long time to greenfield (up to 15 years) -- especially in Canada, as the process is so slow.

If you can start to build these units and standardize them, as they're starting to do, then we can piggyback and work with the US. This will also be good for Canada.

Oil is usually a bit weaker at this time coming into the shoulder season. February to May is a much stronger seasonal period as we ramp up for the driving season. Sometimes it can start earlier, so it might start in December this year. But it generally tends to be weaker right about now.

That really goes back to natural gas. Nat gas has to fill in during the short term, and there's no way around that. Nuclear can then be there for the longer term, but nat gas will fill the gap for the next 10 years. We've seen it with PPL and META signing a deal just outside Edmonton. We'll see more of those setups as well.

AI is a demand for that whole cycle. We're coming into the colder season, and investors want to front-run that so they tend to move into natural gas positions ahead of that colder season. This move tends to drive up the price of both nat gas and nat gas stocks.

One reason that healthcare and other defensive sectors have been beaten down is because everybody's chasing tech. There's also a lot of policy uncertainty with the new US administration. Also pipeline concerns about drugs reaching the end of their patents over the next couple of years.

The sector's recently looked attractive from a value perspective. Starting to see hedge funds get into the sector itself, seeing a bit of a bounce. Could see the sector do well.

All these companies are investing in each other, which creates a circular relationship. Sometimes he thinks it might be a symptom of so much money, they don't know what to do with it. Capex is huge, $400B last year for the Mag 7 alone. These aren't straight-up, third-party, objective transactions. You can't really tell what's happening behind the scenes.