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

Market. They've made COVID-19 a real political hot potato. The market has not priced in Trump NOT being the president after the election. You should take a more cautious approach in managing your investment portfolio. Be cautious when things are a little illogical.

Negative interest rates. He does not think we will get to negative interest rates. That would be catastrophic. The Fed does not want to see negative interest rates. Interest rates will, however, be glued to zero for some time. In the next couple of years, longer term rates will tend toward zero.

Canadian Oil Outlook for Mid-Cap Sector. There is massive political risk because the current government does not support pipelines. Because of climate change, the world is moving more and more away from oil. The next decades will see less and less demand relative to supply. The sector is not investible but probably tradable.

ETF covering FANG stocks Exclusively? The big six names in tech are 30% of the index. You might go to the stocks directly. You may want to avoid FB-Q for now, for example. Cloud Computing ETFs might be a way to go.

Quantitative Easing vs. Debt Monetization. The difference is time frame. QE is temporary. However he thinks the Fed will never be able to unwind the balance sheet. Debt Monetization is permanent. Essentially they have to print money.

Educational Segment. The Fed's Stress Test. We are in a bear market – we are not in a 'V'. They don't want to tell us what's wrong. He compared the expansion of the Fed balance sheet vs. the SPY-N ETF on a chart. The two run closely and peaked about two weeks ago.

Market. Markets sold off indiscriminately in March and as markets rebounded, not all real estate entities are the same. Are the prices of buildings off 30%? What geographies should one be focused on: Residential rental, industrial warehouse space, and different classes within residential. He focuses on cash flows and their dependabilities. Yields have gone higher, making them more attractive, but he looks at cash flow because they can cut dividends. It has been a desired asset class for 15-20 years by pensions and institutions globally. We are in for lower for longer interest rates. Those real estate classes will capture inflation when it goes higher. There is a lot of capital sitting on the side lines waiting to get into real estate.

ETF for UK Real Estate. He is not familiar with such a REIT. He would look at SGRO in the UK. Its balance sheet is in good shape.

Market Outlook The market is very sensitive to news flow about COVD-19. Some of the states are reporting rising numbers and President Trump is also talking about putting in new tariffs. That is never good. Q2 was in lock down for much of the economy, so we should see some positive growth in Q3 and forward. She wonders if this will lead to consumer confidence and spending. The market will continue to be sensitive to news about a vaccine, she thinks. There has been a lot of positive news early on and hopefully in early 2021 there may be a viable vaccine candidate that can be widely distributed.

Canada downgraded to AA+ The reasons for the credit downgrade are not necessarily unique to Canada -- being COVID-19 related. The increases to deficits will be impacting companies around the world. The debt to GDP should be expected to increase. Going into this, consumer debt was high and the economy has been impacted by the exposure to land-locked oil production. Overall, she is encouraged that the rating agency sees the situation as being stable.

He's a long-term bull, but needs to see a COVID vaccine and a lower U.S. death count. He expects a slowdown after July 31 when PPP ends in the States, followed by weak demand there. During the pandemic sell-off, he recommended buying across the board. Since then, it's been overdone on the upside. He expects another pullback in the next few months, so investors should get ready and buy. Tax-loss selling at the end of the year will be another buying opportunity. He expects $50-60 WTI oil in 2021, and even higher after a vaccine is produced when oil demand will spike. However, he expects WTI to fall below $30 before this in the next couple months, because oil inventories are rising and the Saudis and OPEC have not met their oil production cutback goals. Expect supply-demand oil balance over the winter.

Market. P/E multiples are near record highs. Look at the last bull market. The S&P increased 16% annualized. There were some strong tail winds that don’t exist now. The market will probably be lack-lustre for several years. 40% of the upside in the last bull market was from multiple expansion. 25% of the gains were from pre-tax profit margin expansion. There were tax breaks contributing 10%. None of the factors contributing to these exist now. Consolidators should do well going forward. The economic pie is not going to grow that much. Disruptors should also do well. Both are taking more of a pie that is not growing.

Collateralized Loan Obligations. They are similar to sub-prime securities causing the financial crisis. They are low quality debt. When a recession or downturn occurs, these could suddenly find their ratings go down and prolong the recession. Look for banks that have long term track records and are conservatively managed and Canadian banks do this.

Market Outlook He thinks oil demand is back to almost 90% of pre-pandemic levels. Although he thinks it may not be quite that high, it is the path upwards that he likes. There was a 5 million barrel per day surplus over the past month, which he thinks is not as bad as the market thinks. Traffic is going back up in major metropolitan areas, and flying is showing an inflection as well. By the end of this year he thinks demand will be close to pre-pandemic levels. There are many energy stocks still down 60-70% so he thinks there is good support for a recovery in energy stock prices. The market is near not as loose as he thinks the markets believes.

Market. AAPL-Q is closing some stores. The market is ignoring the persistent increases in COVID cases. As soon as they open up again, it could spread. There are going to be persistent challenges due to COVID. The only reason the economy is performing is all the programs the central banks have. We are in this liquidity trap for perhaps decades. We need another valuation correction.