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

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.

Markets. Most of the lower hanging fruit has been sort of picked off and a lot of that happened at a much faster rate than expected over the course of 2013. The consumer durables, those companies that are tied to the housing market, got a good lift because of the low interest-rate environment as well as the uptick. Now we are probably going to see a little bit more of a movement down towards the mid-cycle companies such as industrials, technology, and to some degree, energy companies because we are starting to see a little bit of that rotation happen and a movement of CapX which was sort of locked up last year. Thinks we have a couple of years to go. Putting it into context, since 2008, $400 billion has escaped the stock market and the great depression was an unprecedented amount of central bank intervention, basically a true test of modern gains in economics. That stretched out the business cycle. Here we are, 6 years after 2008, and a normal business cycle which lasts roughly 5 to 7 years and we still have room to grow and expand in this economic recovery beyond another 12 months. There will be choppiness this year and will probably be the reason you are not going to have the same stellar 30% performance as we did in 2013. However, this choppiness creates a stock picker’s opportunity by being able to choose those companies that are fundamentally sound, but trading at irrational valuations.

Gold. Gold has done quite well this year. He looks for sustainable momentum and wants to make sure a trend is good long-term before he gets into a particular stock. Thinks the current uptrend in gold is short-term. Doesn’t like this sector.

Markets. Expecting some choppiness in the US in the next several months. Economic data has been weak. Housing numbers are not very good. Auto sales have been a little bit weaker. We are kind of back to record levels in the S&P and in order to get that market to move higher, we need to see economic data that confirms we should be paying these types of valuations. The market might just trend sideways until we see these kind of numbers in the next couple of months and what we see coming out of emerging markets. Does not want exposure to certain emerging markets right now. There is a lot of risk right now on the credit side. Has been a lot of growth through credit and that has to unravel. From an economic perspective, emerging markets have inflation and growth problems, which they are combating by putting interest rates up which he feels is a poor policy. Also, doesn’t want to be overweight Europe relative to the US.