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

Markets. We have been in a sideways market for 4 of the last 6 months. Markets are pretty flat so far this year. Very strong support at 11,270 on the TSX Composite. Doesn't think we'll get down there, but if so we will test it. He has it skewing downwards because of the oil and other commodities, mainly gold. We are below the longer term moving averages which is never good.

(A Top Pick July 4/11. Up 10.2%.) Cdn$ versus the Euro.

How significant are death crosses and golden crosses? You cannot create a trading plan based on crossovers and moving averages. You have to apply money-management like Stops, take profits, sizing in and sizing out (not jumping in or out all at once).

Doesn’t think anyone believes the good numbers today. Market is expressing a certain amount of concern. Majority of numbers coming in are missing consensus or hopes. Thinks the global economy is running out of steam. They are approaching problems by trying to throw more money at it when we don’t have it. Thinks bank of Canada will more or less keep going with The Fed. His recommendations you can buy today. There is no doubt that the investment world is starved for income.

Markets. Believes that we don't have long to wait for the next bull market. In the 8th or 9th inning of the current bear market. This has been going on since 2000 on the Dow when we were at 12,000 and now it's at 12,800. We have really gone nowhere for 12 years. Now starting to see some of the requisites that are necessary for a bull market to get launched. 1) US housing market has been a fiscal drag for the last 5 years and is starting to bottom out. 2) Corporate balance sheets have never looked this good. 3) Money market funds are loaded with cash so there is money on the sidelines to fuel the markets once we get it started. It's the politics that are holding things back and he thinks there will be some solution in the next 3 or 4 months when the Americans go to the polls. Also, the Chinese are going to elect a leader in the fall.

Videotron 7.125% due Jan 15/20. Cable operator in Quebec. Not an investment grade security. Will probably be called in the next 3 years.

Outlook for Real Return Bonds such as XRB-T or PH&N Inflation Protected Bond over the next 12 months? These are very expensive right now. Half of the bonds in this are trading at zero to negative yields. If rates rise in the near term, these are going to get hammered.

Bonds. Looking at value in the market, overall it is very expensive right now. 10 year Canada bonds are yielding 1.7% and you have inflation running at about 2%. This means you are losing money and purchasing power over time. You have to start looking for additional yields. Corporate markets are fair value but slightly a little bit cheap here but high-yield (junk bonds) on a relative basis is very cheap still and investors need to put some money here.

Economy. Canada is well-positioned. Very strong performance economically compared to the rest of the world. Our fiscal house is in much better order than most of the other industrialized world. Debt levels overall for the average Canadian is a little bit high but steps have been taken to address this factor.

Oil has been pretty attractive. He was bearish after it hit $110. He is concerned that we could see quite a bit less demand. Inventory is about 94 days and should be about 80 days. In a few months we will be through the summer driving season. If there is no Iran crisis in the next month or two it will probably go below $72 a barrel. We could even break $70. Nat gas historically bottoms right before winter. We had the annual bounce about May. Thinks Nat Gas will go back to $2 low is likely before winter. With tax loss selling there will be real bargains out there. He talks people into defensive positions and having a lot of cash ready.

Pipelines: A lot of pipelines are trying to do significant growth but there are significant environmental issues, especially near the coast. Chinese have made big bets that they get through but he thinks they may not get through. 1 or 2 may be built, but not all 4.

A lot of bad news is coming out economically but investors are not buying it and this is a bullish sign. This is typically a positive time of the year as we come into earnings season. This is a short term trading opportunity – next few weeks.

Uranium: Spike right now because Japan started nuclear power plant again. Just a bottoming pattern. It is a positive sign. This will probably be better in the fall time. Broke a downtrend, but watch for a weakening in August/September. In this case the commodity tends to lead.

Nat Gas: It’s not going to keep going straight up. We have seen some positive technicals. It is a very volatile commodity and it will go up and down a lot. It broke a long-term downtrend and it is a bottoming trend. Not on his immediate radar but he might look at it in August.

He has done a remarkably small amount of trading the last few of months because he was waiting to see which way things were going to go with Europe. They are now set for a slow growth environment. US market is well on its way to recovery but he does not expect it to do great things. There is a global slow down going on that is precipitated by Europe. Unlike 2008, people know what the issues are and the surprises are out of the markets. Get the yield in the door.