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COMMENT
OPEC. The Saudis have reduced production. Can they can keep oil prices higher? The demand for energy will increase as the world re-opens. The world does not need higher oil prices. Oil producing countries do want higher prices. The world is well supplied. There are calls for $100 oil. $60 oil is probably in the upper range of oil. Looking at the futures market on crude oil, there is an inversion in the curve. Futures are still pushing towards $50. For the next year or so, there may be elevated prices but it is tough to sustain. Demand may never come back to pre-covid levels.
COMMENT
COMMENT
Buying US stocks with Canadian dollars. The CAD has strengthened much more than expected. It is linked to OPEC tightening supply and oil prices going higher. Fundamentally, the CAD should be around $0.75. There is a case when there is reflation and oil prices that rise. 75 - 85 cents is the broad range for the next couple years. You could hedge the foreign currency exposure. You could dip into buying US stocks since he does not think the CAD will go below 75 cents in the near term.
COMMENT
Covered calls. When you are selling calls and the market falls as quickly as it did last March, and then recovers, you get called away since the stock price goes up. When you're bullish, you do not want covered call exposure. You must trade a little, especially during sharp declines and options expire.
COMMENT
Inflation. We are getting asset price inflation and supply constraint inflation. It is very different than demand pull from higher spending power from consumers and regular folks. Until the labour's share of income rises and is willing to spend more, inflation will not be too much of a problem. There is labour market slack in the next couple years so there will not be material core inflation.
COMMENT
Fixed income. In an inflationary environment, real return bonds makes sense if you have to be in fixed income. You don't have to be in fixed income though. Private debt is an area that gives reasonable yields. You can generate 5-7% returns without additional risk. Floating rate notes is another way to play a rising rate environment.
COMMENT
Viewer sought advice on allocating money from a GIC coming to term. Canadian banks are amongst the best in the world with stable dividends. There is little worry asides from the equity market risk. You could see draw downs like we saw with covid. You have to be able to not panic when it falls from $28 to $18.
E.T.F.'s
