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

Educational Segment. Pay attention to the outliers. Look at a risk/return curve for a market. Sometimes a stock does not lie close to that curve, e.g. more return for the given risk. SPY-US chart shown. Expects it to get to $200 and then he will hedge it with options.

Markets. We recently saw a soft patch of numbers, but they are weather related. We are in the midst of an economic expansion and it will continue. Bank of Canada will eventually follow the Fed who will eventually raise rates after tapering QE. We had a spike up at the new year on the 10 years and then they pulled back a little. The bull market in bonds has gone on for 30 years. The bull market ended last year. You haven’t seen back to back losses in Canadian bonds since the ‘60s. Thinks we will have a small positive for all bonds this year. It will be an underperforming asset. You want to be overweight corporate bonds.

Real Return Bonds. Long term, inflation-protected returns guaranteed by the government. Real yields got very, very low over the last few years. There is still a long way to go to get real yields where they need to be. Should be a very, very small position.

Ville de Quebec. 2.3% bond due Dec 4/18. (Top Pick Nov 22/13, Up 1.03%) Municipal space is looking good. But you have seen a lack of demand.

Canadian Bank rate reset bonds. Don’t be concerned about the rise in rates if you hold them. New ones may get reset at the new higher rates.

Bonds are safer than preferreds. You should do both but Preferreds are a quarter of the total.

Ville de Montreal 3.5% Sep 1, 2023. Cheap for a municipal bond. There were concerns Quebec could call an election, but then they passed their budget.

Markets. He gauges sentiment as ‘confused’. Worst case we go down to the 200 day moving average. Economic data was impacted by the weather so doesn’t tell you anything useful. It will rectify itself in due course. He thinks earnings will give us a good lift from here. Sugar and coffee are surging because of a drought in Brazil but this is temporary. There is some inflation, however. He thinks the market is expecting an inflation rate of 2.15%.

Insurance companies. Prefers banks to insurancDe companies.

Markets. TSX in midst of longest winning streak since 1985. It is doing a little catch up and we have been outperforming the Dow since last July. US economy had that QE and a lot of it ended up in the stock market. Some money is now coming back up from the US, being repatriated. The Loonie at $0.90 is where it will probably settle. We are going to balance our budget and our economy is probably outperforming the US a little bit. We had a bumper crop and we are not in bad shape. The dollar at $0.90 is good for the oil industry. The big move is over, however.

Markets. US economy is gradually improving but housing data is not better due to weather. We have to wait a few months and then see. If we got any unexpected inflation then the fed might react. Thinks they maintain the low interest rate policy longer than people believe. Earnings have been pretty good except for weather impacts. The market was just pausing while in a rising trend. Equities are fairly valued so you have to try to find companies whose earnings will rise above average or find undervalued companies. Thinks right now you have a bit of a rotation going on. The Canadian dollar being weaker is a positive.

Markets. Oil. $100 should be a solid floor for oil prices. Decline rates in the US are high, but he does not focus in on those plays but rather looks at the world. We are in a supply-driven market. Supply disruptions are about 2 million barrels a day. Keystone aside, we are seeing evidence that bottlenecks are subsiding. Nat Gas. 5 year high today. We are in the shoulder season. He has been selling some of his gas positions. Thinks there is not enough supply to bring up inventory levels ready for next year’s heating season.

Markets. Investors are becoming more defensive. The utility sector has done well, as has the healthcare sector. This is not normal this time of the year so that means investors are becoming a little cautious. This time of year is good into April or early May and he doesn’t see why this won’t happen again. Gold stocks are on fire. Sentiment towards gold has changed. With a breakout like this they could keep going. Materials and cyclicals the last two years have finished up in March so watch out this year, although he thinks it will go a little further.

Uranium. There are a small number of buyers and that can influence it. From a tech point of view it is right up against resistance. Biggest strong period is now through end of July. If it breaks out then it would be a good buy.

REITs. Typically do well in the summer time. We would not go in now. Prefers other places in the market.