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

Canadian banks. Never likes to tell clients to sell their banks. But if you're sitting on cash, waiting to deploy, it depends on your time horizon. If your time horizon is greater than 5 years, this is a great time to invest in bank stocks. Yields are very attractive, valuations have checked back. But the Canadian banks are going to have a rocky ride for the next few months. Likely to be more estimate revisions on the negative side, with the rapid tightening of interest rates. We haven't seen the impact yet of higher rates. Going to be some tough months as people renew mortgages. This will potentially increase credit loss provisions, capital markets have been very slow. Tough for banks to generate above average returns. You could hold off for a few quarters to see how things go. But he'd tell a young investor with a long timeline to start throwing some money at the market, as it's so difficult to time.

Stocks without dividends. It depends on the strategy. He has an all-cap portfolio that doesn't require dividend payments. One of the common threads across his 3 strategies is to own companies with good balance sheets that generate lots of free cashflow. If a company doesn't pay a dividend, there's going to be more volatility with the stock that you have to pay attention to.

Stock buybacks. Tax-efficient way to give money back to shareholders. He'd prefer that companies deploy capital on acquisitions or internally to generate a higher ROE, but it's a reasonable way to provide capital to shareholders.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Historical Changes in the US Dollar and What to Expect Going Forward. The US dollar index has been screaming higher this year amid rising interest rates and global economic uncertainty. Although, this is not the first instance that the DXY has risen ~20% in any given year, and in fact, previous instances that have seen this type of increase have been associated with major global economic events. Clearly, when the dollar is rising, traditional asset classes are going to witness headwinds and strain. This strain on traditional assets is quite evident with the S&P 500 down (~25%) and the US dollar up ~20% this year.

You need a strong stomach in this market--stocks, bonds and real estate have been falling in unison, not since 2008. Central banks were misguided in thinking that people would come off the sidelines and return to work, but many are not coming back. Hence, the banks are creating demand destruction through rate hikes. He's staying defensive.

Believes US Federal Reserve will slow the rise in interest rates now that the USA 10 year bond yield has reached 4%. USA 10 year bond yield of 4% provides stability to market. Energy prices will also weigh on US Federal Reserve decision to raise/decrease interest rates going forward.

Educational Segment. Market equity indicator - "Berman's Call Pro-Eye" indicating the market is oversold. First time equity market has been oversold since Great Financial Crisis. Short term (2-3) months - now is a good time to buy. Risk is low given indicators and market is setting up for a rally.

In the future, current equity prices will be seen as a buying opportunity for high quality business models. Inflation, war & rising interest rates putting pressure on markets, but also creating buying opportunity. Good time to be entering into the markets for the long term investor. Believes timing is most difficult part of investing successfully.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. What is the US Dollar Index (DXY)? There has been a lot of news and headlines this year around the strength of the US dollar and its negative impacts on risk assets. The value of a currency can only be measured relative to the value of some other currency or asset, and the forces behind that typically depend on the strength of the economy backing it and that nations interest rate. For example, the USD/CAD exchange rate measures the strength of the US dollar against the Canadian dollar, and if this exchange rate increases it means that the US dollar is strengthening relative to the Canadian dollar. The reasons behind this strength can depend on the robustness of each economy and the interest rates that they have to offer foreign investors. The US Dollar Index (DXY) measures the value of the US dollar against a basket of six foreign currencies. Those foreign currencies include the Euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and the Swedish krona. The euro is the largest component in the basket of currencies, representing just over half of the basket. The index started in 1973 with a base of 100, and the values since then represent the US dollars’ strength/weakness compared to this base.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. What is the US Dollar Index (DXY)? There has been a lot of news and headlines this year around the strength of the US dollar and its negative impacts on risk assets. The value of a currency can only be measured relative to the value of some other currency or asset, and the forces behind that typically depend on the strength of the economy backing it and that nations interest rate. For example, the USD/CAD exchange rate measures the strength of the US dollar against the Canadian dollar, and if this exchange rate increases it means that the US dollar is strengthening relative to the Canadian dollar. The reasons behind this strength can depend on the robustness of each economy and the interest rates that they have to offer foreign investors. The US Dollar Index (DXY) measures the value of the US dollar against a basket of six foreign currencies. Those foreign currencies include the Euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and the Swedish krona. The euro is the largest component in the basket of currencies, representing just over half of the basket. The index started in 1973 with a base of 100, and the values since then represent the US dollars’ strength/weakness compared to this base.

Will today's strong rally have rally or be another blip? True, many metrics were pointing to an oversold market though nothing has changed fundamentally. Headwinds remain such as China's ongoing strict lockdowns from Covid, rising U.S. wages and Russia's war in Ukraine.

There could be some respites in October, but the September nightmare could continue. Three events next week will tell us the direction. Non-farm payrolls, which he expects to show too much hiring; speaking engagements by the Cleveland fed chief, which is a hawk. Balance sheets are too strong for an apocalypse to happen. That said, we're paying the price for years of easy money, so it will be painful.

Based on volatility data by Mark Sebastian Normally, the VIX climbs as the S&P falls, but that didn't happen in September. Rather, the VIX has sedate, until the last few days this week. Why? The many VIX call options which act as a hedge and limits the volatility score. Add to that bond volatility. Sebastian's downside target is 3,386, when you should start buying. So, there's more downside.

Believes technology companies will recover once interest rates peak & technology will perform well. FANG stocks good place to invest now before economic recovery. Optimistic on future of tech industry for long term investors.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Market Update. The markets have been on a sharp decline over the past couple of weeks as bond yields have been steadily rising. The Federal Reserve announced a 75 basis point rate hike and plans for another 1.0%+ before the end of the year, causing yields to spike and markets to drop. The Bank of England (BoE) recently announced it will restart QE by purchasing long-dated government bonds to stabilize the market, as cracks started to form with the sudden rise in bond yields. Canada's GDP came in slightly higher than expectations for the month of July, with an increase of 0.1% as opposed to an expected decline of (0.1%). Further rate hikes for the remainder of 2022 are expected across the North American markets and right now the indices are testing their lows. Higher yields in the US have supported a higher dollar, and this has put pressure on traditional asset classes.