Larry Berman CFA, CMT, CTA

Many US companies have reported and in 2 weeks even more will, so we will get a good sense of the US economy and what the companies forecast. Meanwhile, there's economic data and the US election. He expected markets to be a lot more volatile. The market seems to be banking on Trump winning, though polling says it's tied in several states. It's close. Same goes with the House, also close. Trump is seen more inflationary than Harris given tax cuts and tariffs Trump wants. Earning season once again will see tech dominate, reporting most of the gains.

A global ETF that's the best for Canadians from a tax point of view. Slightly higher cost than others. It tracks a total return in the US market, and is tax-efficient in taxable Canadian accounts.

It's not cheap and shares get weak in a market downturn. However, the world is going digital in payments. Visa has low credit risk, because the banks are lending the money (Visa takes a transaction fee). Buy in dips. Is good for the very long run. Maybe other digital pay streams will eat into their market share, but maybe not for a long time.

Last spring, he's moved his asset mix into private credit and private equity like Blackstone. The latter are less volatile and less tied to the market. Pension funds have 50-70% of assets in private securities. It depends on your need for liquidity, which isn't readily available each day under this strategy.

It holds tech companies linked to AI, like ServiceNow or Microsoft and cybersecurity, and not just Nvidia.

It holds only the 70 tech names out of the Nasdaq 100.

ZWT pays you income using covered calls. But it can be a little volatile; it depends on your risk profile.

The Canadian dollar will get weaker, before it gets stronger, because our central bank has been more aggressive in cutting interesting rates than the US, and he expects this to continue, 25-50 points by year's end vs. 25 in the US. Also, weaker oil prices will make the CAD weaker down to 70 cents in the next 6 months. But after that, you will like the Canadian economy more.

One of the best semi stocks, are well-positioned for growth. Likes it, but is overbought now. Buy dips. The street target $230. Support from the 200-day moving average is $160.

What happened in the last decade in bonds won't happen going forward. The world be slightly more inflationary going forward, but nowhere as bad as post-Covid, like 2.5-3%. There will be government deficits (a major problem), so there will be a need to finance that debt. The 60/40 portfolio no longer works. Look at XBB. Today, the best you'll earn in a bond portfolio is 3-3.5%; you have credit risk and capital risk of inflation. Not bonds, but private credit will give a much better fixed income return for the next decade.

A bit of revenue on the miss side, a bit better on EPS though mixed among sectors. The next 2 weeks are pretty key. The US election is 15 days away, and the bulk of the S&P reports in the next 2 weeks. For more, see today's Educational Segment.

If you look at what's priced into the swaps market, virtual certainty on a 50 bps cut. The way the CAD is trading, you'd argue that there's a bit more weakness to go. Not great for the snowbirds looking to buy USD to go south, as the CAD doesn't go a long way in buying US dollars.

A 75 bps cut is a discussion point. But how fast do they need to cut, and is inflation under control? In the US, that economy has proven to be a lot more resilient and robust than here in Canada. On a relative basis, you could argue for more easing in Canada. But if the Fed is going to slow down, and the BOC is going to accelerate, then the CAD has a date with $1.40-1.45, as the currency is where the interest rate differential really manifests. So he'd be surprised by 75.

It's never "completely different this time", history rhymes. We will mean-revert at some point, some crisis. The last one was Covid, which was a shock; we mean-reverted, and it lasted a few weeks until they threw money at it. To think that that's always going to happen is probably a truth to count on, except that every time fiscal/debt/deficit all get a little bit worse.

So it's not different this time, but fixing things by throwing $$ at the problem has always seemed to work. When does a mean-reversion happen, and how long does it stay? Will we go through a period of really undervalued markets? For that to happen, we'd need inflation to be sticky. That puts the cost of money higher and takes all the leverage out of the system. Not unlike what we started to see in 2022, when the Fed was raising rates. We found out that the Fed had to pivot and cut rates, and inflation didn't come back under control.

If we were to see persistent inflation, that's when valuations would have to get cut and cut on a more permanent basis. That's more the debate, rather than all these financial ratios. For example, you could argue that, because technology is so much a bigger part of the market, it deserves a higher multiple than we've seen historically.

Difference between today and the dot.com bubble is that the vast majority of companies back then didn't have the revenues or growth that the leaders today have to drive markets with real earnings. There are things that are very different today from past cycles. Doesn't mean we shouldn't look at any of those metrics, but they're almost impossible to time as a way to think about your portfolio.

Doesn't use it himself. It should use similar strategies as ZMMK, but he'd have to do some research on it. Does deliver a slightly higher return than ZMMK. Stay tuned to X, and he will send out something when he knows more. 

He sees about $3 EPS, which at $46 per share, comes to a bit over 15x trailing PE. Looking forward, earnings growth isn't going to be very good. Is it worth the value it's trading at today? For the dividend, yes, as long as they can maintain it. Not a growth company, so should trade at a lower multiple than the market. You could make the argument that it should trade where the banks do, around 12-13x. They'd be equivalents, so it's pretty much around fair value at this point.

But the discussion point right now is that if they're borrowing money to pay the dividend, then at some point, a dividend cut is likely. For a long-term dividend payer in Canada, that's the challenge right now.