Larry Berman CFA, CMT, CTA

We are seeing a decay in the employment situation for both economies. Demand for labour is softening, as well as the supply of labour. Starting to see an increase in how long it takes Americans to find jobs. That will matter far more to the Fed cutting rates than what President Trump says.

The Fed has a dual mandate -- inflation and full employment. It's balanced 50/50, though at times it skews. If we were already starting to see job losses, it would be far more weighted to the employment situation than to the inflation fight. If job losses are here and now, then inflation's going to come down because demand will fall dramatically.

Right now we're around 50/50, but there's concern that the inflationary policies of tariffs are going to be a factor. Things change by the hour these days, and we have no visibility. President Trump's policies put the Fed on the sidelines, it's just that simple.

Over the last couple months of uncertainty, we saw forward expectations on earnings flatten out for the US. They didn't come down in a big way, but they became flattened to slightly down. Recently, now that markets are at all-time highs, we're starting to see an uptick again.

He doesn't follow the Canadian marketplace for earnings as much. Canada is 3% of the world economy, whereas the US is 65%. We have a structurally weaker economy, and so our earnings will be structurally weaker in general. But our market multiple isn't expensive to the same degree that the US market is. There's still better value in Canada.

Investor is holding HDIV, ZWC, SMAX, and ZEB. By holding all of these, it looks as though you're diversified but you're just duplicating a lot of the strategies.

Likes HDIV a lot for yield-seeking investors. A nice strategy, and you probably don't need a whole lot beyond that. The dividend and covered-call strategies are nice defensive ways to stay invested.

If an investor did want to branch out, they should be looking for growth. But he wouldn't add growth-focused now, because we're at all-time highs and he's not sure the multiple is sustainable.

Investor is holding HDIV, ZWC, SMAX, and ZEB. By holding all of these, it looks as though you're diversified but you're just duplicating a lot of the strategies.

Likes HDIV a lot for yield-seeking investors. A nice strategy, and you probably don't need a whole lot beyond that.

Investor is holding HDIV, ZWC, SMAX, and ZEB. By holding all of these, it looks as though you're diversified but you're just duplicating a lot of the strategies.

Likes HDIV a lot for yield-seeking investors. A nice strategy, and you probably don't need a whole lot beyond that.

Investor is holding HDIV, ZWC, SMAX, and ZEB. By holding all of these, it looks as though you're diversified but you're just duplicating a lot of the strategies.

Likes HDIV a lot for yield-seeking investors. A nice strategy, and you probably don't need a whole lot beyond that.

On every dip to the $85-86 range, he's been maximizing his duration exposure into the recent weakness. He's overweight right now.

There's a narrative developing where Trump wants to issue less coupon debt and more bills to finance his big, beautiful bill. That manipulation of the yield curve could spark a very strong rally in TLT. If you think the economy's headed for a hard landing, TLT should see a good rally. Thinks it can get back to $95-100. Because of the monumental supply, not sure we can get higher than that.

See his comments in the Educational Segment.

RY has been the Cadillac of the Canadian banks for years. But it trades at a premium. TD recently has had some idiosyncratic issues. BNS has perennial issues with Latin American exposure. National Bank has more of a growth story. BMO and CM are just average, doesn't see a lot of growth.

He doesn't like any of them right now for new money. They're all pretty expensive. Loves them long term, measured in years and years. If we are going into a harder economic landing (which is still his base case), these banks aren't going to maintain current levels. Need to buy them when they're cheap and there's blood in the streets.

You take the market capitalization of the entire US equity market, and then you compare it to the GDP. The market cap is $58T, and GDP in the US is $29T. So it's 2:1. Buffett says that when that ratio gets high, it's a bad time to invest. Remember, he's a value investor. 

If you look at this ratio going back decades, you'll see that timing markets on valuation is a bad idea. Markets can stay irrational far longer than you can stay solvent. BRK.B has the most cash it's ever had, but the individual investor can't think that way. We don't have the same timeline to infinity that he operates on.

This ETF is the one he's been talking about for years as the broadest way for most investors to play the sector. Every time there's a big pullback, just jump in. Trying to pick the 1 or 2 companies that are going to be the AMZN, and not the Nortel, is too hard unless you have the time and skills to do an in-depth analysis. He's always been an advocate of playing long-term themes by using ETFs.

When you're choosing an ETF, make sure it's not using AI to make its stock picks. That's a whole different thing.

By including mid-cap names, a broader offering than just focusing on the large-caps. Doesn't love the sector here. Unemployment numbers foreshadow weakness and a hard landing. We'll have to see how those Trump policies shake out.

Already trading 30% above what analysts think it's worth a year from now. In momentum mode. If you're going to trade and buy at the breakout here, you have to be very sensitive to a correction at some point as seen in the chart in February. That's the environment we're in when you're chasing new all-time highs on a name.

He's a value guy. He likes to buy on a pullback, not when a stock's breaking out to all-time highs. That's just his style, doesn't mean it's right and other ways are wrong.

GDP

Last week, he talked about the cost of funding all the debt in the US. What we heard last week from President Trump is very disturbing; he said that any of the new debt needed to issue to pay for the "big, beautiful bill" should be 9 months and less. So he wants to finance all the new debt with bills. That's literally like printing money, which is inflationary.

Scott Bessent spoke this morning. He could have walked back what President Trump said, but did not. Looks like the Treasury is going to manipulate the way it's financing the debt, so that it can lower the cost of interest rates.

US total debt today sits at $36.2T; that's the debt ceiling, can't issue any more. That will change in July, and the debt's going to go up. The dot-com boom was the last time they had a surplus, and it's been deficit financing ever since. The GFC and Covid both added to the deficit, with the rate of overall debt going up. Now at the point where it's choking off natural economic growth.

So, what does the administration want to do? Manipulate the market, spend more money, get re-elected. 
 
Historic US economic growth was 2.4%. Today, the number is 2.2% and they've racked up a lot of debt. And the cost of that debt is sucking away from future potential growth. The system's broken, and there's no political will to fix it. A few brave souls are standing up to speak out, but they'll be coerced into voting with the team.

Government bonds in your portfolio, that historically have been thought of as safe, are riskier now more than ever. The Fed will only lower rates when the economy starts to slip; remember that the debt:GDP ratio will increase, because deficits go up when an economy's weaker.

Today is a sell the news event with oil down sharply. Oil in recent weeks rose because it was anticipating what would happen in the Middle East. Made sense. Today's events de-escalated the tension, but this isn't over by a long shot. Israel wants to delay Iran as much as possible Iran getting a nuclear weapon. Also, no nuclear reactors were hit to avoid spreading radiation. Don't adjust your portfolios, because the wild cards are vast. No idea what will happen.