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

US 9.1% CPI number was a negative jolt? If you take it apart, the main factors were a spike in energy costs and other random items. Oil prices are coming down, already reflected in the price at the pump. We're probably going through the worst of it as we speak. Remain fairly defensive in recession-resistant companies. Take advantage of the volatility to add high-quality companies in your favourite sectors. He likes clean energy, infrastructure, aging demographics, some industrials.

Commodity stocks. You generally want to buy commodity companies when PE is high, so earnings are low; sell when PE is low, which means earnings are peaking.

Today's 1% BOC rate hike. BOC wants to take an aggressive approach to get ahead of this inflation scourge. Sets the table for the Fed to consider 100 bps, especially given the 9.1% CPI print, though they don't usually pay that much attention to the BOC. 75 bps is cemented for the Fed's next hike.

BOC wants to "front-load" rate hikes. The 100 bps move signals that this is what they're doing. How do they, and all central banks, wrestle inflation without driving too much of a stake into the growth story and choking things off for an extended time? His firm expects a shallow, short recession. It's a balancing act.

The bounce today holds hope that we could face a short-term bottom. Overall, he feels that things will get better. He's not a Fed dove; we need a big interest rate hike. The job market is strong enough to avoid a lot of layoffs, and we have made some progress with inflation. True, the june CPI data released today was hot, but commodities like grain have already fallen in price. Same with natural gas and oil. He suspects oil has peaked, though it won't plummet. July inflation will be lower than June. Meanwhile, metals like aluminum are crashing. Also, we're seeing a glut in clothing/apparel. Prices that have not come down: cars. High home prices are starting to price some people out. Watch bank reports starting tomorrow for confirmation. Inflation has peaked.

The Euro The Euro is now on par with the US dollar. Many think the Euro won't recover. But it can play havoc with tech services companies. Commodities expert Carly Garner believes the Euro will recover. In 2008, the Euro was trading at $1.60, but within that year it collapsed to $1.23. The Euro has been $1.05-1.20 in the past 10 years. The Euro could fall a little more before rebounding. Garner predicts a swift rally when the direction shifts. Commodities and even bonds are finally starting to normalize and this will trickle into the Euro. He sees oversold signals. The higher the Euro goes, the stronger US companies can compete overseas; the Euro and S&P have a strong correlation. Also, seasonality points to a Euro low in early July (now) then rises to a high in early October. Also historically there are volatility spikes right before the Euro bottoms--and that is happening now.

gold The dollar got strong; gold got crushed. Gold is still good, but it's a hedge in the same way that he likes oil.

We're seeing maturity in this part of the cycle with extreme negative sentiment. Markets have given back over 20% in the first half of 2022. History shows that 6-12 months later are significantly higher. It's naive to call a bottom now, but safe to say that much of the damage has been done. A lot of speculative excesses have gone away as well as those speculators, leaving investors to focus on stocks with earnings.

He remains optimistic and still sees a soft landing, based on revenue and employment data while the supply chain is a little better domestically. He sees no recession. He doesn't know if we've hit bottom, but there are interesting buying opportunities. Buy some. You won't make money in bonds. He expects 50 then 25 basis points higher by the Fed. We'll learn to live with Covid. The underlying economy remains strong.

healthcare It's an okay place to be. Many companies have good balance sheets. Wait just in case there's another pandemic. He's weighted at 20% of his portfolio.

No price is safe. Nothing can get too low as analysts fight each other to downgrade. To the bears, nothing matters except to get out before the other guy. Tech, especially, gets non-stop hate every single day aimed at semis and internet stocks--they have been too hard hit. But he feels more constructive about this market than a month ago. He foresees slower consumer data, then the Fed reversing itself.

Technical analyst Larry Williams Commercial hedgers (who buy the futures regularly). Williams says the hedgers have the best understanding of their sector. They're not always right but have an edge over the public and money managers. Despite all the gloom, Williams likes what he sees in the market. Based on DJ industrial average futures and other data since 2009: At market bottoms, commercial hedgers tend to be bullish while the money managers and public are bearish. When the going gets tough, the CH's go long.

Watch second quarter earnings closely. They will give a good clue to investors re earnings trajectories for the rest of the year and 2023. The correction we're in provides opportunities to buy high quality growth stocks with mid single digit multiples regardless of when the market bottoms. We could see a recession but the market will bottom before it happens.

Doesn't believe economy has entered into recession. Emotional fear of recession major concern, not the actual fundamentals of the market. If US Fed raises rates too high & too fast - could tip economy into recession.

Believes equity markets have not priced a recession into markets. Would buy into the market if S&P 500 goes to ~3800 mark. S&P 500 @ 3300 would be great buying opportunity. Is looking into buying healthcare (aging baby boomers) and banking stocks.