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

Yes. People had expectations on the resumption of Chinese growth that haven't been expressed either in the domestic market or in demand for natural resources. We're seeing concerns about that both in commodities markets and in resource equities markets.

This will change, but for the time being it's an overhang.

Inflation will be higher than people expect, for longer.

Government debt in most western countries, in addition to being increasingly difficult to service at high interest rates, shows no signs of abating. Appears that the only way out of this debt trap is to do what they did in the 1970s, which is to inflate away the net present value of the government's obligations. 

Repayment from a government is a less certain prospect than from private borrowers. Private borrowers usually build an asset that contributes to repaying that debt. But repayment from a government relies on taxes from taxpayers. 

The bull story is intact. He's a uranium bull. The trigger has been that the pace of Japanese restarts has picked up. Japan is the second-largest uranium market. The game is really and truly on.

Silver has disappointed investors over the last 3 years; all are in the penalty box. He's attracted to silver because it's unloved, and he's shopping for stocks. Warren Buffett said "Buy straw hats in winter." When the silver market turns around, and it will, the silver stocks will participate.

Very attracted to copper, because he thinks in 5-6 year terms. We've underinvested in copper, and it's essential for the ascent of humankind. Any stock recommendation really depends on an individual investor's circumstances.

For most investors, the best strategy is trying to capture the market beta, which is the outperformance of the commodity relative to the market in general. You might want to own the very largest and very best of the natural resource companies, such as BHP or RIO.

If you were willing to take some risk in smaller companies, he's done well with LUN and expects that to continue.

They have been, as has anything that's selling as a yield stock. But that doesn't mean they should be ignored. If you're looking for yield, then banks, utilities and pipelines offer a relatively stable source of income. Despite the capital ups and downs, they're not a bad place to be looking at the moment. 

With the banks averaging 5-7% yields, that's pretty attractive. Any of them would be loathe to cut the dividend. Compare that with what you could get on a bond, and it's pretty good. You also get the dividend tax credit, and the prospect of the dividend growing. 

No, we haven't. Takes a while to filter through the system. With everything else that's going on in the world, we're going to see higher rates for quite a bit longer from here. 

What's happening is that since the financial crash, we've been living in an artificial world of very low rates. When rates get around 2% or lower, investors try to stretch to get yield and take higher risks than they might otherwise. We're seeing a bit of a reconciliation in all that as things change. 

With geopolitical uncertainty in the world right now, two wars going on, and a US presidential election coming up next year, it points to more uncertainty for the foreseeable future. It would be wise for investors to take more of a cautious, conservative approach to the market.

He does. In normal times, what you're trying to emphasize is total return, whether it's capital or dividends or a combination of the two. His clientele is such that a lot of them prefer the income side, so he tends to own more dividend-paying stocks than otherwise.

With pipelines and utilities, it's determined more by cashflow than by EPS. But in normal circumstances, he likes to see earnings covering the dividend.

With utilities and pipelines, they all exist on the high leverage of borrowed money. In the current environment, that money is rolling over at higher and higher rates. For the most part, they are allowed a decent return on equity. They provide necessary services to customers.

Lumber had its heyday during the pandemic, and it will take a while to get back to those lofty times again. But prices were crazy during that time. Likes them over the long term, especially CFX.

Overview of Recent Enbridge Deal:

Enbridge (ENB) is set to buy three utilities from Dominion Energy for a total consideration of $14 billion, including debt. ENB is buying East Ohio Gas, Questar Gas, and Public Service Co of North Carolina for $9.4 billion in cash and $4.6 billion of assumed debt.

This is a monumental deal for the company and for the oil and gas industry, as it now makes Enbridge the largest natural gas provider in North America. The scale of this acquisition is large, and it will effectively double Enbridge’s gas distribution business. The deal is expected to close in 2024.

The company decided to proceed with the acquisitions as they represent an opportunity that does not come around too often and allows Enbridge to benefit as natural gas remains a transition fuel while companies around the global try to reduce oil use. 

This is a big deal for ENB as it will now supply over nine billion cubic feet per day of gas to about seven million customers. The company will now be providing gas services to Ohio, Utah, Wyoming, and North Carolina. In these states, revenue from utility bills is expected to grow faster than the national average.

Of significant importance, this deal adds diversifying benefits for ENB, as it shifts from 99% of its gas distribution being centered in Ontario to a healthier geographic mix between Ontario, Quebec, Ohio, Utah/Wyoming/Idaho, and North Carolina.
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Investing Essentials: Keep Costs Low.

This is unlikely to be a surprise to many people. It is worth repeating though, as over the long-term, fees can destroy the value of a portfolio. 

If you consider fees, taxes and tack on inflation, it can be very hard to just break even. Fees are one of the few items totally in an investor's control, so it is something all investors should keep a tight leash on. No all fees are bad but it is important to understand and be sure you are getting value for the fees paid.

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There was some confusion in markets today. The bond market was closed today for Columbus Day, but if it had been open--and interest rates had risen, then today's rally would not have happened. We'll know more tomorrow when bond markets reopen. 

He corrected predicted a choppy August and weak September. He predicts markets to be rangebound in early-mid-October, but then launch into a powerful rally at the end of October. So, stay in the markets. He expects upside in the Dow starting now. He watches the commercial hedgers in the futures markets, and they have been loading up on stocks lately, are seriously net-long the Dow futures. Each time since 2020 when this happened it led to a big rally.