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

Marijuana stocks. They own CURA on the TSX. Canadian-listed, international company. One of the leaders in NA and Europe. Lots of opportunity in the US, where the tide is toward full legalization. See his colleague Brian Madden's comments on CURA.

US banks. An impending recession would make him move away from the banks. For example, if the economy was long in the tooth, and central bankers were trying to dampen inflationary pressures. Where we are is being misinterpreted by the markets. Everything is working for the banks. The economy is starting to do well and there's a ton of liquidity out there. There's not a lot of reason right now to go to banks for loans. Once people spend what they have, they'll have the confidence to go to the bank for a loan. When the economy does well, it will be able to digest higher interest rates, and the banks will do well. This is a good opportunity to buy banks with both hands. Capital is piling up. Very strong on this sector.

ETFs vs individual US banks. An ETF is an option. Make sure you look under the hood to see the component parts. Pay attention to the weighting of the holdings and the MER. Don't buy something that's overpriced.

People miss the forest for the trees, in this case today the U.S. bank stocks which mostly surprised. The banks tell us about the economy: Americans are incredibly rich. Covid transformed this nation from spenders to savers, with consumers now boasting the best balance sheets in history. Consumer spending can truly ramp up going forward.

Vaccines and the reopening are. Corporate earnings growth (earning season is starting today) will drive this market. Emerging markets lag, but she expects they will receive vaccinations and she hopes vax rates increase. YOY growth rates this earnings season will be very high. She'll be looking for management's outlook--increases in demand and corporate spending rising. As inflation spikes, where do companies see cost pressures? Are there labour shortages? Will they absorb these costs or absorb them through productivity increases? The consumer saved a lot of money during Covid, so consumers have stepped up spending in the U.S. Prices in hotels and airfares have spiked. Corporations spent on tech to allow work-from-home, and they continue to spend this year back to pre-Covid levels; corps feel more confident. Demand has returned, so companies have to spend to deplete supplies and she expects them to. This is all positive. Ironically, the problem the banks have now is not enough spending; the savings rate is still up. Consumers are actually paying down their credit cards faster, but loan demand will eventually return and there was growth this past quarter. As international travel picks up, credit card spending will increase (during vacations and work conferences).

CAD outlook for the rest of 2021 Forecasting currencies is difficult. The CAD started strenthening against the USD starting a year ago. Maybe that's due to the BOC being more hawkish than the US Fed, and energy prices have surged. She thinks the CAD is rangebound at 75-85 cents. The economy will drive what will happen to the currency. She doesn't see the Canadian economy growing stronger than the US, though both countries are reopening and both will see higher interest rates at some point.

Market. He thinks we are early in this market recovery We are going to see strong profit growth out of cyclical companies. He thinks there will be strong economies and growth for the next three to four years. Don’t be afraid of the high valuations. Auto parts manufacturers should do well. He thinks supply issues will resolve. A high quality growth name is measured through return on equity and return on invested capital. Investors should stay invested.

Educational Segment. U.S. second quarter earnings season is starting. Expectations are very high going forward. Looking at the chart comparing 2017 market expectations to EPS, the market was up 20%+ with dividends even though earnings did no go up much. However, this can be accounted for by the anticipated tax-cuts from Trump. In early 2018, the market was down with lots of volatility since it was priced in. Earnings expectations fell dramatically in 2019 but the S&P500 had a great year. Every year is different but this year, we have super high valuations and high expectations for earnings. 2022 earnings are now at $213 and 2023 at $235. These are crazy high in terms of growth. Taking a 20x multiple, we have 4700 on the S&P500. Very close to where we are now. This means that we cannot expect double digit growth for the next few years since it has already been priced in.

China saw their growth metrics turn down a couple months back. There will be a perennial discount for the Chinese companies but they offer good value. China will be the biggest economy in the planet and you cannot ignore this. Last couple weeks have seen some interference by the Chinese government in capital markets. There is opportunities in pull-backs but there is risk of government influence.

Earnings week. Must draw trend lines and differentiate between pre-covid, during covid and post-covid. $163 was the initial expected earnings for the S&P. Now it is $191. This speaks to the strength in capital markets. Selling the news may be a good strategy.

Feds. The liquidity support that is driving multiple expansion is now being talked about to start unwinding. What are they going to say about housing? It is quickly becoming unaffordable for average people. Why are feds supporting mortgage markets when there is strength there.

It isn't "live free and die" but "live like a moron and die like a moron" if you don't get your Covid vaccination. Getting it is a no-brainer, so why are some Americans avoiding it? They see a conspiracy or a violation of their personal freedom or don't see the effectiveness. His daughter caught Covid and was sick and miserable for a long time. He knew elderly who caught it and died. What gives? We're at the start of earnings season and could see the impact of absenteeism from those who didn't get jabbed.