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

Oil Prices: $147 was pushed up for speculative reasons as well as concerns about US storage and Iran’s sabre rattling. He is looking for a price between $100 and $125 for the next few quarters and then the upside will probably be moved to new highs above the $147 in the winter of 08/09. This is a short-term window of lower prices. Enjoy it. Keep your tank full on cheap days.

Natural Gas: Was trading at $13.69 and backed off to about $9. $9 to $9.50 is a very cheap price and stocks are very cheap. Winter of 08/09 we could see much higher prices. Hurricane season really starts in August and September. Inventories are still very tight in the US and we could see prices rebound and even quicker than for oil.

US Economy: Seeing decoupling taking place from the rest of the world. Many emerging markets, China particularly, have been accelerating over the last 2 years as the US has slowed. The one area that is not decoupling is the financial market. There will be slower economic growth in the emerging markets. China has dropped from 12% growth down to 10.1%.

Toshiba and Hitachi: Both are very well positioned for the growth and demand for nuclear power going forward. This is a very small part of their business so you won’t get a great bang for your buck.

India: When talking about economies that are going to succeed or fail, this is on the cusp. Had tremendous growth in the past 5 years but started to run into much higher inflationary pressures. Started running into a current account deficit situation. Will require some very tough policy choices for the government, particularly in an election year. Stock market in the last 5 years has been driven by a massive amount of foreign equity inflow, which is now starting to leave.

Extremely positive on the infrastructure building processes taking place globally. He is trying to find more direct plays than this one would give.

Louis Vuitton: Can see luxury goods as a good place to be going forward. Wouldn’t buy it today but expect it will drop in 6 to 9 months. The numbers they are seeing in the growth in China is staggering.

GMAC Bonds 1 year. GM is a disaster but GMAC Canada, the financing arm of GM, does not have the mortgage book like GM US. Now earning 18%. They are covered until 2010 so he would not buy longer than 2009.

Infrastructure Bonds: There are a number of bonds such as Toronto Airports Authority, 407 Toll Road. For pure infrastructure companies, the only one that comes to mind is Brookfield Asset Management.

Canadian Bank Bonds: This is the best investment globally. These spreads between banks and government of Canada have never been higher.

Real Return Bonds: These have had a really great run in the last 6 months. Going forward, they are going to have troubles because oil and commodities have come down and that will impact the inflation rates.

Banks: - Toronto Dominion (TD-T) stands out as being a very fine operator but, with some of their US operations, they have been hurt. For more international exposure, people tend to go to Bank of Nova Scotia (BNS-T). The long-term bank that has really shown tremendous ROE’s over time has been the Royal Bank (RY-T). Any one of these 3 are strong operators.

Gold: Based upon where we are today and the strength of the US economy and the seemingly inverse relationship to the US$ gold should be significantly higher by the end of the year.

US Banks: Canadian banks are in a better position than US banks. There could still be further bankruptcies on US banks.

Banks: - Not a lot of them are good Buys yet. National Bank (NA-T) is the only one he owns. Less exposed than other banks to asset-backed commercial paper.