A Comment -- General Comments From an Expert (A Commentary)

Uranium sector. He's a strong proponent of uranium as being a green fuel. Growing desire to bring uranium back into a green fuel source. Europe is a window into that. Germany has hurt themselves by shutting down nuclear before they were ready. The stocks are very expensive. His preference has been to own HURA.

Caution on analyst estimates. Often when stocks have the highest analyst expectations to target, it typically means the stock has collapsed but the numbers haven't been adjusted yet. If you bought stocks based on the highest return to target, you'd lose money over time. They tend to be stocks that are in downtrends, and price momentum tends to persist. Whereas if you bought stocks with a low return to target, you'd make a lot of money.

Canada's Q2 GDP numbers of 3.3% vs. expectation of 4.4%. Canada's numbers tend to be more lumpy than US numbers. So far growth has been fairly strong, as well as employment. Starting to see more and more evidence that the economy is slowing in Canada and the US. US has been talking about job openings, but that's a lagging indicator. A number of surveys in the US are showing contraction. PMI tomorrow is expected to come in around 52, and below 50 means that we're in a contraction. Time to be cautious in the markets and perhaps lean more towards some of the boring sectors.

Will BOC still raise by 0.75% in September? He thinks so. Central bankers have lost a lot of credibility, and they can't start backing off from what they're doing. They need more evidence to say the economy is substantially slowing, and one GDP number isn't enough for that.

Headwinds for the fall. Weak seasonals at this time of year. Since 1950, September has been the weakest month of the year. Doesn't mean that the market will be negative, but it's a tough backdrop for the market to overcome. Combined with the economic data, it's a time to be cautious. He wants to be optimistic as well. The markets could struggle for the next month or two, but could do very well in the back half of this quarter. Opportunity to be into the cyclical sectors a bit later on, but not just yet, perhaps the end of October. Wait for a month or two for an opportunity to get into the market.

Canadian vs. US banks. Canada's an oligopoly structure. Canadian banks pay out a lot more of their cashflow, so you get a higher dividend, and this makes them more defensive when the market turns down. Composition is different as well. US banks tend to be attractive when the market's really rallying, and when interest rates are moving up. When interest rates move up, US banks outperform Canadian banks. Right now, the Canadian banks are suffering a bit, but he'd be leaning towards them.

Gold. Overall, gold stocks have taken a beating. Gold usually performs well this time of year, and it just hasn't. Hurt by rising interest rates and stronger USD. When the market's going down and gold is going down, gold stocks tend to go down even more. If the USD comes off, gold could go up a bit, but he wouldn't be stepping into gold right now. He has a 1% position in GDX. September tends to be strong for gold, but we haven't seen it yet. The next seasonal opportunity would be in December.

Energy seasonality. Difficult to tell what's going to happen with energy prices with the Russia-Ukraine war. Don't take a position in energy based just on that. The first seasonal period is Feb 25 (sometimes starts in January) to May (though it could go longer). The second is July 27 - late September/early October, and this one isn't as strong as the other. October/November tends to be very weak. Be very careful. Nat gas tends to well from September to mid-December.

Seasonal investing. Seasonal investing is a long-term discipline. You're asking when do certain sectors do well in the year, and you rotate into those sectors. It doesn't work all the time for every sector, but for most of the sectors it provides extra value long term. Just because the seasonality is from A to B, it doesn't mean you have to be in there. If the technicals and momentum aren't holding up, you exit.

Semiconductor chip stocks. Supply issues. Now we're seeing a build in inventory, so you have to be a bit careful. Seasonally, chips do well at the end of October and November. This time, he'd be hanging back. With mid-term elections and market seasonality, you could see better opportunities to enter later on toward the last few days of October. Higher beta than the technology sector overall. Push for domestic chip production will have a long-term influence on markets, but that will take about 5 years.

Pipelines. Hybrid of utility and energy sectors. Not a bad way to play energy. He'd skew more towards pipelines than to oil at this time. You'll get the yield, and it's more defensive.

Inflation will come down, based on leading indicators. This will cause the Fed to pause a little and this will benefit markets. There will be a positive close to 2022.

tech Big-cap tech is heading to serious growth slowdown. Software and services are investing a lot to buy growth while cloud companies invest a lot in capex.

We need to focus on the consumer, because that's where we will see a driver to the economy in 2023. Main street doesn't care if Powell pivots. It is concerned with inflation. Consumer demand won't decline as fast as expected, which puts to risk the Fed's plans.

tech Big-cap tech has the potential to grow earnings faster than industrials in a slow-growth economy. This is how she is anchoring her portfolio.