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

6.1% GDP growth in the quarter and they hiked the rate a quarter point. Doesn’t know if they will accelerate the raising of the rate much this year. He got cautious in the funds because the market seemed over bought in April. Now he is back into the market buying some of what he sold. We continue to expand due to the stimulus plans but not at the same rate. This market was looking for a triggering event to go lower. The Europe situation is contained. He is looking at this as a buying opportunity. Maybe we will double bottom, but he didn’t want to sit on a whack of cash.

Volatility is pretty much here to stay. We will be range bound for 4 or 5 months. It will depend on how things are played out with Greece. In the fall, things will start to move up slowly. We will bounce around between 11,000 and 12,000 for the TSX.

Bank of Canada will raise rates (70-80% likely) according to the market. It is the right thing to do for Canada. There is some adversity because of Europe. Inflation is running at the high end of several bankers’ estimates. Real Estate values are increasing due to low rates and raising rates may be to head off a bubble. He is cautious for the last few weeks. Thinking about when to toe into the water. He will be slow to deploy.

(Top pick Jun 02/09) 3-month treasury Bills.

Treasury Bills 4-Month. Take you through until the end of September, bottom of 4-year cycle. That bottom might be delayed until the beginning of October.

Money Market. Have money on the side for sectors that are lined up to do well this fall. As technicals start to bottom out, you are there.

The middle of last week we went into the memorial day trade. One of the best one-week periods during the whole year. Traditionally markets go down (specifically DJIA) from here until the end of September.

(A Top Pick May 4/09. N/A.) Long term real estate bonds: E.g. Riocan, First Capital. Really cheap last year but not so cheap now.

Provincial Bonds. If dealing in government bonds, he would deal only with government of Canada bonds and not provincials and would stay with shorter terms of 5 years or less.

Canadian banks in general have outperformed the market. Have pulled back so are attractive for the longer term. Good area to be in. 3.5%-4.5% dividends.

North American steel. This industry will depend on how well the North American economy recovers. Steel prices have gone up because of higher input prices. If the economy softens, the producers could potentially get squeezed on the cost side.

Gold. Likes gold. Even with the strong US$ it is acting independently. People are looking for an alternate store of value. Everyone should have a portion of gold in their portfolio.

Cdn$ outlook is very good on a long-term basis because Canada's balance sheet is very strong relative to any other nations like the US, UK and European nations.

Longer term, clean coal is going to be a very good spot to be and is one of the cheapest ways to produce energy.

The market is trying to find some stabilization. Things look interesting, not super cheap. We should go bargain hunting soon. Take a look at your asset allocation. Earnings have been strong and we have to focus on what drives stocks higher and that’s earnings. We can ignore the news coming out of Europe. Stick in Canada because we are the best performing world economy.