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

US Banking Sector: There’s going to be some problems in the Canadian banking sector. They have over extended themselves and we are going to see that over the next 3-6 months. None will go bankrupt. In the States. Could look at Bank America or City group. Might wait for pull back. Bank of Ireland is his holding, but it could go bankrupt or be diluted or be a 10 or 15 bagger.

US Dollar: printing money at such a rate. They throw around trillion dollar amounts like nothing. You have to compare to other currencies that are also printing a lot. It should go down and substantially soon. Canadian dollar should go up.

Coal: (Market Call Minute)

Worst of the recession is behind us, but US inventories are way too high. Chance for a significant correction. Oil could go to $40-42.

March 9’th lows were a good low, but would not rule out a test of those lows. There are signs of improvement but we need signs of stabilization. Recent up turns would be put into the context of a bear market. Some of the conditions are starting to materialize. People should re-visit their asset mix and there should be rebalancing going on.

Is one of the of the three ETF companies better than the others. IShares are only on the long side. Horizons has some inverse and leverage products. Claymore has a broader range of products including theme based. Leverage is a two-edged sward.

We are in a bear market rally. They can go for a pretty long time. Looking back on history, you can get 40-50%. Good news is being rewarded. What keeps him up at night is Bank loans, derivatives, etc. We are not out of the woods economically.

There is more pain to come – we have not bottomed. But now the pain is getting less. Still a ton of foreclosures to come. Manufacturers will continue to chop inventories and output. 4’th Quarter this year or at latest next summer will be the bottom before the Bull Market. He holds 40% in growth portfolios because this is a rally in a bear market.

There’s a lag from the time a retail store hurts until the mall hurts. Commercial real estate is soft. New buildings will likely fill up by sucking tenants from older buildings. Money is short for re-financing and the cost of money is high. Houses got so cheap, they robbed tenants from apartments.

We in doldrums. We don’t have direction anywhere. There is too much financial distress. Not changing his strategy because of Swine Flu. He is sitting tight.

The US Fed will say that they will remove the stimulus when it is apparent that the economy is growing again. He thinks they will mean that but wont ultimately do that. They could announce an increase in the quantity of securities that they are purchasing. They would be just printing money. Value exists in US corporate bonds below investment grade (US Junk Bonds) – diversified.

Strip bonds as part of an RRSP: Excellent way to get exposure to bonds, especially in a small RRSP.

Real Return Bonds: Pay am interest rate on top of the inflation rate. Around 2% so total coupon rates are 2%+3%=5%. Want them at or above 3% above inflation.

How bonds are priced: Interest rate used on bond is the “coupon rate”. They trade at either a discount or a premium to face value, depending on prevailing interest rates.

No opinion on Swine flu as we have to wait and see how dramatic the spread of it is. Doesn’t think recession in Canada will be that deep. We may see a downturn in commercial real estate in IS. Retail malls will not be hit as hard as commercial real estate.