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There's no expectation at all for any rate cuts. We've seen a marketplace that went from completely pricing out rate cuts, to the equity market weakness we've seen in the past few weeks and now pricing in 3 rate cuts over the next year. Treasury Secretary Scott Bessent said over the weekend that market volatility was not bothering the US administration at all in terms of policy.
We're facing a bumpy couple of months. Lots of policy uncertainty. Market's primed for a bit of an oversold rally, which started late last week and is continuing today. He expects it to continue through options expiry this week. But he doesn't see us going a whole lot higher, maybe another 1-2%.
No, because if they get overly easy right now, and inflation becomes a problem, that's going to be very difficult to roll back. The Fed's on hold, and he doesn't expect a move in either direction. The equity market would need to fall another 10% or so from here before consumer savings would be impacted and the Fed motivated to cut.
Still a lot of inflationary risks to the economy in front of us that the Fed just can't ignore -- tariffs, and tax cuts that Trump wants to put through.
What's important today is that they have a big conference this week. On a 1-year chart, you can see for the last 3-4 months that it's been chopping around, not doing much of anything. While that's not bearish, it's certainly not bullish.
To get to the next leg up, it'll take even better news than the market's expecting. DeepSeek indicated that maybe we don't need as many of these chips as we think we do. INTC is a turnaround story. Lots of uncertainty, and it'll take a lot to lift this stock and others.
Seeing a big rotation. Money coming out of big, overvalued names and into the broader stock market. A very positive development, but it's very early in that too. Not clear that the next bull market is here by any stretch of the imagination.
There will be a better opportunity later this year or early in 2026.
Not tempted at the moment, because one of the things we're concerned about is weaker economic growth. And that just would not be good for the financials. That risk isn't priced into the market at the moment.
In the last week, a gaggle of street economists have downgraded the growth and earnings outlooks for the US. We're in that part of the cycle right now where the street is chasing the market. If a rally were able to get going, they'd all upgrade their targets. But he doesn't see that happening.
There probably is one but, as he doesn't use it, he can't recall the ticker. There are a couple of plain consumer staple ETFs, and the question is whether to go with US or Canadian market. You get more breadth in the US, but the US market typically doesn't have a lot of covered call strategies.
Covered calls typically get a premium yield based on volatility. Consumer staples stocks don't carry a lot of volatility in general, due to their nature. So covered calls on consumer staples doesn't sound like a good idea, and perhaps that's why he can't think of any ETFs.
ZFL is Canadian long bonds. TLT is made up of Treasury long bonds. Both great vehicles in the context of trading and looking out for a recession. We're in a trading range for interest rates in general for the next few years. Bound on one end by colossal amounts of government debt, and on the other side inflation is driving rates higher as well. And all with the prospect of a slower global economy.
If you think there's going to be a harder economic landing, federal bonds will outperform provincial bonds as a rule of thumb. But you'll get a bit more yield in a provincial bond in the long run.
Most recently he's been adding duration and maxing out long-bond exposure. After the markets rally a bit, he's trimming that back. He wouldn't say buy and hold. If you were to see the US 10-year get back to 4.75%, and the US long bond get back to 5%, those are great opportunities for longer-term trades.
ZFL is Canadian long bonds. TLT is made up of Treasury long bonds. Both great vehicles in the context of trading and looking out for a recession. We're in a trading range for interest rates in general for the next few years. Bound on one end by colossal amounts of government debt, and on the other side inflation is driving rates higher as well. And all with the prospect of a slower global economy.
If you think there's going to be a harder economic landing, federal bonds will outperform provincial bonds as a rule of thumb. But you'll get a bit more yield in a provincial bond in the long run.
Most recently he's been adding duration and maxing out long-bond exposure. After the markets rally a bit, he's trimming that back. He wouldn't say buy and hold. If you were to see the US 10-year get back to 4.75%, and the US long bond get back to 5%, those are great opportunities for longer-term trades.
Looking at crude oil overall, best-case scenario is that we're range bound. Oil's now at the bottom end of the range, and he likes it down here. He's accumulating a lot of oil & gas names, but we're range bound. Very unlikely to go into an environment where these stocks can start trending longer-term higher.
Lots of ways to play -- bullion, equities, junior names. Bullion has outperformed equities over the past couple of decades by a wide margin. Gold equities will have their day in the sun, but that hasn't materialized yet. Longer term, he's bullish on gold. But at an approximately $3000 all-time high, he's more cautious and more of a seller.
Trim some of your exposure on strength, rather than thinking it will break out and rally from here.
He likes the idea of adding on weakness, that's what he's been doing. He uses a lot of optionality in his portfolios. So he's writing puts in the energy sector to acquire companies; if they don't go to those prices, he just earns the income. He's perfectly happy with a strategy like that at this point.
If we get a harder economic landing at some point, then oil has some more downside. The US outlook for crude oil demand was just downgraded. We're in a trading range, and he's accumulating into weakness.
He likes the idea of adding on weakness, that's what he's been doing. He uses a lot of optionality in his portfolios. So he's writing puts in the energy sector to acquire companies; if they don't go to those prices, he just earns the income. He's perfectly happy with a strategy like that at this point.
If we get a harder economic landing at some point, then oil has some more downside. The US outlook for crude oil demand was just downgraded. We're in a trading range, and he's accumulating into weakness.
Very concentrated stock portfolio, leverage of 2:1. Pays out a lot in income. A bit of smoke and mirrors here, but not in a nefarious way. Twice as volatile in general as underlying markets. When things are good, they're really really good. And when things are bad, they're really really bad.
If you're OK with leverage, and you think markets are going to go higher, you'll probably have a good experience. Last 2-3 months, with all the downside market risk, have not been pleasurable.
The misleading part is to look just at the dividend, and say that's a great dividend. Don't be fooled; it's the leverage talking to you. There's also a risk with the preferred shares of absolutely losing your money. For sophisticated investors only.
