Larry Berman CFA, CMT, CTA

The end of the Assad regime in Syria will impact North Americans through oil prices and energy stocks. We saw an initial uptick in futures and ultimately this will translate into inflation. Also, Trump wants to pump, baby, pump oil, which will lead to a supply offset. He read that because the US is the top producer, there's already underinvestment going forward; in a few years, US production numbers will come off due to this under-investment. Tech: we're in the early stages of the battle for tech supremacy and semis are in the middle of it. China: given Trump's rhetoric, expect volatility next year in emerging markets.

With the CAD declining vs. USD, it's time to think about locking in gains. Consider ZSP (S&P) vs. ZUE (S&P currency-hedged) where the difference lies in the exchange rate. Also consider if you're trading in a taxable account or not. As CAD weakens, ZSP (having more US exposure) will outperform. Therefore, ZUE (hedged) will outperform once the CAD gets stronger. In a registered account, sell ZSP and buy ZUE. If in a tax account, this is an individual financial planning decision. 

With the CAD declining vs. USD, it's time to think about locking in gains. Consider ZSP (S&P) vs. ZUE (S&P currency-hedged) where the difference lies in the exchange rate. Also consider if you're trading in a taxable account or not. As CAD weakens, ZSP (having more US exposure) will outperform. Therefore, ZUE (hedged) will outperform once the CAD gets stronger. In a registered account, sell ZSP and buy ZUE. If in a tax account, this is an individual financial planning decision. 

That doesn't exist. The premium derives from volatility, but there's less volatility in shorter-term bonds, because the price doesn't fluctuate much. However, in the US, you can buy an IEI, which is a bond note that gives 3-7-year exposure and you can't write your own calls to get the additional premium.

Minor exposure and limited impact. Foreign investment in Canada, if that money leaves (due to a weaker investment climate here), it will have little impact on Canadian markets and multiples; the flows are not that big.

Not really. Though very diversified, BRK isn't that different from owning the S&P.

BN is different from the diversified BRK, and is rather very narrow, holding real estate and infrastructure very well. There's less volatility here. No, it's not a proxy for private markets.

This holds mines, pipelines, electric utilities, engineering and construction, a mix he likes. It consists of 44% US companies and 40% Canadian. Overall, this is okay, but it's narrow, exposed to a couple of infrastructure sectors. Pays a little over 3% dividend, but is sensitive to interest rates. If inflation climbs again, CIF will struggle. The best of the infrastructure trend is past; inflation will come back a bit.

Will underperform for a little while as they deal with issues, but it trades cheaply at 9.5x PE. Question is: Will earnings fall? He likes TD below the current $75 and would have a half-weight position, but there's a chance this dips below $70, then would add more.

The Bank of Canada this week is expected to cut interest rates again, likely by 50 points. He expect by the end of 2025 the BOC will cut only another 50-75 points for all of 2025. Next week, the US Fed will cut too, though they are cutting less aggressively, because the US is seeing an uptick in inflation there, though Canada will. If US inflation data this week is hotter than expected, the Fed will pause. The BOC will cut because the Canadian unemployment rate is now at 6.8% because the participation rate has ticked up. Back up to 2023 through much of 2024, Canada saw a decline in that participation rate. He estimates that if the participation rate returns to normal, which is higher, then the unemployment rate will hit 8%, which is the 50-year average. We're quickly returning to those levels. Employment is driving the BOC decision. Therefore, the BOC will seriously slow down rate cuts in 2025. Also, expect more weakness in the CAD. In the US, inflation this week could come in hotter than expected, which will limit the US Fed's rate cuts.

Normally, yes. You get the Santa Clause rally and the late-year seasonals. Typically, they're magnified when you have a substantial amount of weakness in September/October, which we didn't see this year. He expects the performance to be somewhat muted. 

US employment numbers. He's said that the thing that will upset the market's apple cart will be the real economy starting to sputter. We saw signs of that in 2024 where initial claims went up here and there, or payroll numbers were slightly softer, slight uptick in inflation. But there really hasn't been a lot of follow-through. 

That's what it will take for equity markets to have more of a correction than just the 1-2% dip we've gotten used to and that everyone can handle.

That's one of the things that can keep you up at night. What's Trump going to do this time? With the people named to cabinet positions, he's pretty serious this time around. Looking to break the system and change it with his America First agenda. While everybody discounts him and says it's just his style, this time around the impact is going to be more material than last time. 

It's been stronger than expected. You could look at that and say "Goldilocks", because it hasn't weakened yet. That's where we are right now, so there's a balance between still getting jobs growth with inflation that's come down and is not going back up. The best of both worlds.

But it doesn't mean that we will continue to expand the market multiple. It does mean that we shouldn't correct a significant amount. And when we finally do get that economic weakness and/or significant uptick in inflation (because the economy's stronger than expected), that's where we can expect some more problems in equities.

Long US treasuries and writes covered calls to generate income. If you look at the chart, while you've been making 17% in yield, you've lost the equivalent in price terms. You must look at total return. Those that focus on the yield and don't understand the return are doomed to risk. Volatile.

Instead, just hold TLT or ZTL -- US bonds at the long end of the treasury curve -- and don't worry about the yield so much.