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The rule of thumb is that if you're really bullish on the equity outlook, you don't want a covered call strategy. You're not going to do as well as a long-holding dividend strategy. If you don't like the market and you're concerned about it, a covered call strategy will give you a little bit more income.
The second aspect of this rule of thumb is that, internationally, covered call income is going to give you better tax treatment. So in a taxable account, some of those strategies might give you a better after-tax yield.
You typically won't see that. On a short-term bond, there's not enough volatility for the premiums to add significant value. Long-term bonds have a lot more volatility, and preferreds might have some. There might be such ETFs out there, but he doesn't know any off the top of his head.
There's much more volatility in equities, so the option overlays add more value. The longer your interest-rate profile, the more volatility, so you could get some extra tax-efficient income off that.
Overall, banks should be correcting a little more than they are now. He sees some growth risks in Canada specifically. A bank like this, that's mostly exposed to the Canadian consumer and market, will have a bit of a correction if our economy is weaker.
Likes the name, but he'd wait for more of a drop before putting in new $$, perhaps another $10 lower.
Just cut and paste the chart from A to B, expecting more of the same. Liked it below $60; he trims between $70-75. Thinks oil and gas prices will generally be range-bound for the next year or two, and so will this kind of stock. Well run. Buy dips, don't chase strength.
He'd argue against prices skyrocketing. President Trump's "drill, baby, drill" policies will keep supplies in NA pretty ample in the next couple of years, offset by periods of economic weakness. Buy dips. Unless a name has an idiosyncratic tailwind going for it, don't chase strength looking for longer-term breakout.
Likes that strategy a lot, makes a lot of sense. It would keep the tech exposure, but de-emphasize the weight of the market cap.
In the US, there are some ETFs in the Innovator line. Gives you upside exposure, but contains buffers that protect on the downside for you.
Likes that strategy a lot, makes a lot of sense. It would keep the tech exposure, but de-emphasize the weight of the market cap.
In the US, there are some ETFs in the Innovator line. Gives you upside exposure, but contains buffers that protect on the downside for you.
Two different companies; one trades in Toronto, and the other in New York. Essentially based on the identical global water index. Ask yourself if you want to own it in CAD or USD, and that will depend on what type of investment account you have. With CWW, most of the underlying securities are not in Canada.
Likes them both. He uses the AQWA ETF, which has better exposure.
Two different companies; one trades in Toronto, and the other in New York. Essentially based on the identical global water index. Ask yourself if you want to own it in CAD or USD, and that will depend on what type of investment account you have. With CWW, most of the underlying securities are not in Canada.
Likes them both. He uses the AQWA ETF, which has better exposure.
US Interest Rates and Debt Pressures
There's a link in the Berman's Call blog, so viewers/readers can follow along with graphics.
The new US Treasury Secretary, Scott Bessent, did an interview last week, where he talked about focusing policy on long-term inflation expectations. Bessent really has his eye on the ball. He was looking at the 10-year interest rates, but not at short-term rates. Trump has been audibly outspoken against the Federal Reserve for lowering rates, and that policy has been inflationary.
Last month, the Michigan Consumer Sentiment survey numbers really shot up from 3% to over 4%. If inflation expectations really start to elevate, people change their behaviour. For example, if they think prices are going to rise in the future, they buy more now, which further fuels inflation. You really have to be mindful of that, as the cost of the debt is the biggest line item on the balance sheet. They have to think how they can get the cost of the debt to the taxpayer as low as possible?
Elon Musk, the czar of the DOGE, "tweeted" out fiscal outlays on an inflation-adjusted basis, providing real and adjusted numbers. Medicaid, Medicare, and Social Security are very big items. DOGE might be able to save $50B, but it doesn't really move the needle for a $29T economy. The tax cuts that Trump wants are going to cost too, so you need balance.
Net cost of all the US debt together has been rising as interest rate costs have gone up in recent years with central banks raising rates. That's the single biggest thing they have to control. The right framing is to focus President Trump's attention on keeping the long-term cost of debt as low as possible. We have to keep inflation expectations anchored.
Trump's America First policies are inflationary, make no mistake. We don't want policy moves to ignite inflation, or they'd get out of control and really problematic. Hopefully when Powell speaks this week to Congress, we're not going to see Trump complain on social media that this isn't being "fair" to him or whatever he might say.
An enhanced money market yield for short-term exposure. It's money market, but corporate bonds, so a slightly higher yield. Not a HISA, but similar to one.