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

Markets. It’s a gray day in the markets. There is a lot of geopolitical risk in Europe and Hong Kong. Even Ebola in the US is creating jitters. It is a little bit of a panic. He thinks the sell off is overdone. He would be stepping in and buying equities that sold off. He is picking up some good companies in Canada and the US. The correction will be short because you don’t have lots of debt. Companies and consumers have delevered over the last few years. Dividend payers are the place to be, but you need earnings expectations that meet expectations or exceed them. Buy value and GARP.

Canadian Banks – which is the best? He is underweight Canadian financials and prefers the US. Loan growth will be weak in Canada. The Canadian banking system is very sound and there is no risk of a big downturn. He likes CWB-T, leveraged to commercial loan growth that he feels will hold up better and they could be a takeover target. He also likes TD-T as they are well leveraged to the US.

The oil price has been weak of late, especially the Brent price. Production growth in the US has weighed on sentiment. US production growth was strong last year in an environment of strong oil prices. It will be interesting to see the capital discipline of companies at these prices. Thinks it will eventually drift up.

Markets. There has been a 20% move year over year in the Canadian market. The fundamentals are still intact. He is sitting tight, but did rebalancing in early September. He now has redeployed the proceeds. It increased the income generation in his clients` portfolios. He doesn`t think commodity prices have to be so weak. US and Global growth should have lead to stronger commodity prices.

Markets. Consumer confidence numbers today were weaker than expected. There is profit taking as we get into Q3 earnings season. The US is decoupling from the rest of the world. It is a quarter of the global GDP. China continues to decelerate. Emerging markets are worried about a downshift in commodities. You want stocks that have a range of growth possibilities ahead of them.

Australian Banks. Buy now? Very, very strong banking market like Canada. They have high dividend payout ratios. Good long term investment.

Markets. We had an interesting day. A number of technical indicators are indicating more downside. We are just getting started on the selling. The bottom of the 4-year cycle for US presidential cycle is mid-October. He is 20% in equities, 7% in commodities and the rest is in cash or fixed income securities. Mid to end of October things will change. Earnings this month will not be that good. Estimates do not take into account the higher US dollar so you should get lots of negative guidance. The S&P and Dow are only down 4% from their all time highs. Others are down 10% or more. We are going to have some fun on the upside.

Seasonality for Gold is strong from end of July until the end of September. The seasonality conked out very quickly. Stay away from it.

Oil. Seasonal strength from Jan to July/August of each year. But the seasonal trade was truncated. Now the trend is down, it is underperforming the market and below its 20 day moving average. Seasonally it starts to go down until Jan of each year. Get out of crude oil, but not necessarily out of the sector.

Nat Gas is interesting. It is bottoming and showing strength in a difficult market. Nat gas does well from end of September to end of December each year. Technicals are finally starting to turn positive.

S&P. It has had a 4 year upward trend and we are testing the bottom of the trend. We are very close to 1930 and he thinks we will test it in the next two weeks. If it holds then it is very bullish. It is below its 20 day moving average (in fact the 50) so there is technical selling coming into the market.

Markets. The strong US dollar is an indicator of a stronger US economy. It has recently widened the gap between it and world economies. The US dollar is telling us that interest rates are going to rise. For multinationals it is a headwind in terms of repatriating profits. We have to look at balance sheets closely in terms of leverage and debt servicing. There are some negatives of a higher US dollar, but it means a better US economy. It gives companies pricing power. You can’t look at any one indicator in isolation. Most people think rising rates are negative for companies, but it also means that the economy is good and in that case small negatives are overwhelmed by positive economic growth.

Markets. Things have played out exactly the way he thought they would. He is half invested and nibbling away. S&P is in a bullish trend. The TSX broke out from its old highs, but now we are seeing resistance in the resource stocks. He thinks you are better to look on the US side, but avoid NASDAQ and US small cap stocks. The IWM-N ETF showed slightly lower highs through the summer, while the S&P continued up. This divergence suggested a correction coming. We are in a massive bull market with another 5 to 10 years left, even if there is as much as a 20% correction in it. These are buying opportunities. S&P has support around 1960 and we are approaching it. It is quite healthy here.

Gold. Short term is the right way to look at it. There may be some support at the old lows of a year ago. He would not like to see that level broken as it could mean more trouble. It is trying to base. There is a descending triangle. He would not touch gold, but if you wanted to you could trade it off the bottom.

Venture Exchange. (JX-T) It has been treading water for some time. It is a tight base and going nowhere fast. Don’t assume a breakout or break down is going to happen.