Larry Berman CFA, CMT, CTA

He's looking for earnings growth and a broadening out of it. We've had a very narrow and strong leadership by a handful of tech names (the Mag 7). For this bull market to sustain itself, it's really important for earnings to broaden out beyond those names. What will largely set the tone in the coming weeks is AI and what its related companies tell us about going forward.

We'll hear from banks to start off earnings season, as we typically do. There we have rising interest rates and a steepening yield curve, and the banks will provide some insight into that situation.

The market's swinging quite dramatically here and, for him, that speaks to the narrowness of the market. There's uncertainty. If we do get some bad forward guidance on earnings, that won't be good for the market.

True. There's a saying that "a rising tide lifts all boats". You want that broader participation. There are an awful lot of companies that just aren't making any, or any significant, money. When you look at the topline (revenues) versus the bottom line (earnings), you're seeing earnings growth expectations of 10-12%. But we're seeing nominal GDP of 4%. It's getting ever more difficult to reconcile what economic growth will deliver and what earnings will be.

When it's more concentrated that tells you that if those companies miss, look out below. It becomes a higher-risk market when earnings aren't broad.

That's it. The market went from pricing in a dramatic amount of rate-cutting six months ago, to virtually pricing out the entire rate cut path. Now the Fed still thinks it's going to cut rates a couple of times, but the market is now down to 1 rate cut for 2025.

Import prices will be lower with a stronger US dollar, sure. But that's a small part of the pie compared to labour costs, healthcare costs, and everything else related to supply/demand that's driving inflation. Domestic inflation is driving prices higher, and has little to do with exports.

Trump incorporating tariffs is a concern. It makes it far more difficult for the Fed to add stimulus until we actually see more economic weakness. Right now, the economy and labour markets are still ticking along. 

Weakness in the equity market is a much-needed correction at this point. If 18x PE is normal, we're trading at 24x. Is it egregious? No. But it's on the very high end of the range. It's open to risk with a narrowly led market, instead of broad participation to growth and earnings.

These ETFs give you exposure to an index such as the S&P 500, but then there's an embedded put strategy for protection. You'd buy 10-15% protection on the downside, and then sell a call to pay for that. A no-cost structure of protection. Limits upside, but protects the degree of downside risk.

Loves them right here, right now. It's for those who want to and need to stay invested in equities for growth in the long run, but who are nervous about the markets.

A great ticker. Every year, resets in January. 15% downside protection before any losses, up to about 10% upside. Upside/downside ratio depends on the price of volatility. Gives you exposure to the US market with a currency hedge. You want to hedge your foreign currency exposure right now, as the CAD is very weak. 

Loves it right here, right now. It's for those who want to and need to stay invested in equities for growth in the long run, but who are nervous about the markets.

Long-term, still likes it. The world is moving in that direction, but won't be moving very quickly over the next few years under Trump. Still lots of value, but you have to think multiple years into the future. 

Up to the individual investor whether to keep accumulating, or to take the money and invest it elsewhere. He's sticking with it for now, and he'll update BNN viewers if he changes his view.

If you need it in 2 years for a deposit, you don't want to put that $$ at risk. You need to put it in an instrument that will be there for sure in 2 years. While the S&P 500 isn't going away, it's possible (not predicting) that it could be down 50% in 2 years. In this situation, capital preservation is far more important than maximum growth.

Look at the buffer ETFs, as they have less downside risk and still some upside potential. He's also seen commercials for private mortgage investment corps, generating 7-9% yields; in a registered account there'd be no tax consequences. He'd go with that, as even the buffer ETFs are capped around 10%.

ZWK is one to look at; for a hedged version, look on the BMO website. But at this point, he'd rather have broader exposure than switching from global to US. Look at ZPAY.

At this point, he'd rather have the global exposure than switching to a narrow US focus.

Gives you broad exposure beyond just the financial sector, with about half the risk of the US equity market. Very tax-efficient. Nice yield in the 6% range.

Value has been underperforming growth in a big way for the better part of a decade. There will be periods, from time to time, when value beats growth. If the markets are going to be softer and weaker, and we are going to get a broadening out of earnings in the tech sector, then 2025-26 is likely to see $$ coming out of higher-priced tech names and into value stocks. At that time, value (banks, energy, industrials, lower PEs) will perform better than growth, no matter who the fund manager is.

So you have to make a market call. Right now, he's neutral on that strategy. He wouldn't be tremendously overweight value, but at the same time having some exposure would make a lot of sense.

The whole energy complex in US and Canada is up across the board, related to US policy sanctions of Russian oil. So oil prices jumped up. A puzzle as to why this name hasn't also moved, must be company-specific. Could be a canary in a coal mine, so you want to ask some questions.

M&A activity is definitely interesting. This name has been weak for a number of years. Merger should help, but probably not an investible idea. He owns Toyota.