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

He covers U.S. healthcare stocks including large biotechs and insurers. Themes that have emerged here during the pandemic: the foundation of this sector remains intact as people grow older (aging demographics). There are 3 main drivers: we've had the extreme political noise of Bernie Sanders and now it's centrist; there's a lot of cash flow in health compared to other sectors; and, these companies have pivoted towards vaccines and treatments, which has dampened pessmism over this sector. The US vote is tantamount. Biden's proposals for healthcare are very centrist. Meanwhile, vaccine news is coming from several drug companies. There's a 20-year valuation discount (forward PE is wide) to this sector is not warranted given the macro backdrop. There is robust growth in this sector. Add to this sector on any volatility in the coming 18 months.

U.S. healthcare sector outlook (see also opening comment) The Democrats/Biden want to build on the Affordable Care Act, but there are no extreme views (i.e. from Bernie Sanders) here anymore. He's less concerned with who will be the president, but more concerned over who controls the Senate. Every time the Dems control all levels of government, the health sector turns positive. That said, he doesn't see a negative scenario depending on that vote.

The Nov. 3 presidential vote There's not that much difference between the stocks that'll work under Trump vs. Biden with exceptions...The Biden bull market charged today: solar energy. Trump championed coal, but coal is dead. Ironically, we've seen a huge gain in rewewables: they're the future.

Market. One always has to be a bit skeptical about numbers from China. But there are always ways to look at satellite images to check that the trends are right. Industrial production numbers are quite encouraging. We are slowly seeing in parts of the economy, that 'V' shaped recovery globally. The markets are pricing in a Biden win. Was it to happen, there would be a stimulus that would offset some of the negative with the democrats having the senate, the house as well as the White-house. That would bring higher taxes but probably not in 2021. 2022 is when we have to get cautious about higher taxes.

The outlook and dynamics of coronavirus is a big driver. We saw global cases spike last week. We're only heading into seasonal flu season, so globally we could start seeing a million cases everyday. Global death count has not increased proportionally however. Individual behaviours are significantly modified still.

Earning season just started in the US. Markets are also excited for a stimulus deal, but he doesn't think the dems want to give Trump a win before the election.

Government debt. When debt is ramped up, and the debt is non-productive, it is bad for long-term growth perspective. The world is slowing significantly. Growth problems will not change seeing the policy from governments. For the next coupe of years, however, getting people back to work is the priority.

Upside and downside to investing in Canadian dollar hedged ETFs. Foreign exposure ETFs typically have a cost to hedging. With interest rate so low, you actually get paid to hedge against the Euro versus the Canadian dollar. That is because interest rates are lower in Europe than Canada. With regards to the US, it's virtually the same so there is no variance.

Educational Segment. There is an asymmetric risk going into the US election. When looking at the prediction and polls, it still favours a blue wave. However, looking at it on the state level, we probably have more market difficulty post election. We will probably see something like Bush versus Al Gore but worse. Today, the price is more priced for perfection. Looking at the electoral colleges, it's too close to call. If we get grid lock, we will see more battles over things like stimulus that is not priced in.

Trader Larry Williams' theory True, Biden is leading in the U.S. election polls, but Williams posits that as long as the Dow holds up above the August lows, the market favours Trump. This is based on the 2020 late-summer rally and continued strength (considering some volatility) to the present. This pattern matches historical charts when the incumbent winning. The year after the incumbent wins, markets rally. If a new president wins, then they are rockier.

He thinks there is a shot for WTI to rise to $50. The economy is healing quicker than thought. The crude surplus YOY and other fuel demands are compressing. Inventory is falling around the world. Demand is also rising; for example, in India, diesel demand is up 9%.

U.S. Shale. The US shale story is over. They will never surpass the high watermark of 13M barrel per day. It negates US growth. Looking at non-US production, we are in the 6th year where we're not investing enough to offset global declines. He is overwhelmingly bullish on oil.

He does not believe OPEC will increase production. There is no meaningful reason for a supply response. The additional 2M barrels per day expected in January will not come online either probably.

Large scale consolidation in energy. Hopefully there will be mergers and acquisitions. There is a management entrenchment problem. The boards or CEOs don't want to transact right now.