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

It's about who owns the data. On the infrastructure side, go with the big guys. As we enter earnings season, mega tech will maintain their growth levels. Twilio is the cloud/AWS of the communications side. If interest rates continue to rise to battle inflation, it will compress valuations.

Volatility and markets short term. Increased volatility. Two narratives. 1) If you live in Europe, will the conflict in Ukraine expand? 2) Outside Europe, it's higher rates, which will also have some impact on slowing demand. As we transition to higher rates, it causes a rotation. The impact on high-growth, non-profitable tech has been a selloff. Now we're starting to see buying into value and GARP names. Options and futures markets are moving around like yo-yos. If you look at a longer term 3-5 year horizon, there are fabulous opportunities right now for those with capital to put to work.

Price of energy going forward. Tied to Ukraine. Supply in Europe has to come from somewhere else, and this is good news for Canada. The price ultimately reaches a point where it becomes a tax on the global consumer. Some countries are backtracking on taxes on oil. He sees it spiking up into the $130 range, which is reminiscent of the 1970 oil crisis. Investors need to think through these dynamics.

Advice to investors. Prudent to have a cash buffer right now. This cash can be used to buy high quality stocks when they've sold off. Some good quality European companies have sold off, even when they have no debt, so it's worthwhile to take a look at those. Some of the global opportunities are looking very good, especially those based in Europe. Those that have European HQs, but global pressures. Lower and rebalance your tech exposure, in the face of higher rates.

Investing in tech right now. In the face of rising interest rates, stay away from high growth with no profit. Instead, go with more mature tech with dividends and a structural theme. Big tech will hold up much better in an inflationary environment. Higher rates are toxic for tech.

Cybersecurity. Cyber hacking is an ongoing threat. Clearly, it's a growing market. Still, the interest rate environment will be toxic for tech. Pay attention to the space, but be leery on the pricing right now. Come back in a year and revisit the space.

Has inflation peaked? The price of natural gas, oil, wheat, corn and other commodities is spiking. Nat gas is approaching $8. So, inflation isn't finished.

Has inflation peaked? Yes, but inflation could sustain at high levels of 4-6%. In this environment, valuations contract to 15x; if the market trades higher, then 10-15x. Don't fight the Fed on the way up or now. Valuations are contraction and that's painful and unbalanced. A good earnings report of nice data point will offer brief relief. Stocks above 19x PE will contract and will weigh on the market for some time. 75% of companies so far that have reported have beat. Earnings and a strong consumer will save the day. This doesn't mean it will lead to an explosive rally, but the market won't fall as much otherwise.

Has inflation peaked? Maybe a little. Look at natural gas which is pushing $8 and crude oil has risen. If inflation has peaked, it doesn't rule out that it won't sustain. The market is nervous, as reflected in the Nasdaq.

Has inflation peaked? If it has peaked, interest rates still need to rise meaningfully. The Fed will keep tightening regardless. Another worry is Putin--suppose he uses chemical weapons or tactical nuclear weapons. Earnings will come under pressure, so what will happen them? We didn't see a peak inflation rally recently, but a bear market rally. As for a strong consumer, the consumer isn't that strong. Rather, they're fighting to stay alive in this 70% consumer-spending-driven economy.

Markets and supply chains. Hard to tell right now, visibility is quite low. We'll be able to tell more with earnings season. A lot of companies were anticipating supply chain issues alleviating later this year. Does it get better? Corporate profits will be very important to drive this market higher. Corporate profits are forecast to grow this year and next, and margins are expected to be maintained. Analysts expect companies to pass through higher costs.

Sectors with expected good results? Very difficult to say. Price spikes in energy and commodities, so those sectors will benefit from higher revenues. Utilities are more defensive, but they should do well. High growth tech has pulled back, so if they don't meet expectations, they could get hit. US bank reporting is alluding that the environment is uncertain and volatile. JPM increased provisions yesterday, which is a big change. Given the commodity-driven economy, Canadian banks should do relatively better than the US this year.

When to sell? Very difficult if there are huge capital gains behind a position. It's a good position to be in, as it means you've done well. One factor is if you think the future outlook for the shares is not good, take some money off and deal with the tax. You're going to have to pay the taxes at some point. Another factor is if the position has grown to a large percentage of your portfolio.

Canadian banks. Good core holdings for income. She allocates 12-15% of a portfolio to the Canadian banks. All are diversified with lending, high net worth individuals, and capital markets. Steepening yield curve is a positive, so she anticipates net interest margin improvement. Loan growth and increase in credit card applications is still to come. Will continue to increase dividends and grow earnings.