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

Bonds. There is not much yield left anywhere in the world and if you factor in inflation, you have negative yield. Once we get through the deflationary effect of COVOD over a year or more, we are going to have a massive run of inflation. The Fed is planning on buying all bonds above a certain amount. The bond market will be owned by the Fed.

Copper. COPX is a basket of copper miners so you are not buying the copper commodity. Buy on the next step down.

Gold. It is extremely unlikely it will drop dramatically in the short term. He would buy into the dip. It is headed higher for years to come. When bond yields are zero or negative, then gold has no competitor.

Educational Segment. Comparison of present economic situation to that of the early eighties. At the beginning of the eighties Regan had some economic tailwinds behind him. Today we have grossly underfunded pension funds, healthcare and have a massive need for infrastructure as well as major concerns about the environment. There is a tragic demographic in the form of the ratio of people of working age to the young and old which will get worse for decades to come. There is also a massive decline in the output of labour. These are all headwinds they did not have in the early eighties. In investing, quality will be one of the most important factors.

Market. It is certainly a concern that people will not resume going into the office after the pandemic is over, impacting office REITs. He feels, though, that the world will return to more normal than not. There are a lot of things we cannot do effectively when we are not working together. 2-3 years out we will return to some sort of normal. SHOP-T will reassess in 2021 as to whether to have everyone work from home any longer. Even if a portion of the workforce has to work from home, social distancing will dictate that more office space is necessary as we resume normal life.

Big 5 Banks. He likes the banks and is adding to them as he was underweight previously. These measure to be the most resilient and strongest businesses in Canada. These things are like utilities. He does not feel they will cut their dividends.

Floating rate reset preferreds with interest rates going negative. Negative interest rates are not good for a floating rate preferred. He does not think our government will send rates into a negative territory.

Market Outlook He thinks global crude oil inventories should begin to draw in July. When oil demand collapsed, it was estimated production was about 98 million barrels per day (bpd), whereas demand had shriveled to 65 million bpd. He expects oil demand to recover to 86 million bpd by then. In Q4 he expects demand back to 94 million bpd. Gasoline demand recovery was a little disappointing in the latest statistics, however. He thinks oil price recovery may be a little ahead of itself, because it is not until the second-half that we should see oil prices hit $40-$50. He expects 10 million bpd storage builds in May and 4 million bpd builds in June when storage availability is low. This could cause oil prices to plunge once again soon, perhaps below $20 for WTI. He is telling investors to hold off buying now, because he expects a retracement is yet to come for energy stocks. Be patient.

Oil sands differentials? The differential has widened back out towards $10 /bbl. If WTI prices drop below $20 again, like he expects to happen shortly, heavy oil producers will really struggle. He believes global oil stocks will again begin to build sharply when there is limited storage availability. It is not until Q4, when he expects oil demand to recover, will we see WTI get back towards $40. He does not like the comment against KXL by Biden, which makes him worried about this project. Canadian exports to the US have been dropping along with demand declines. He is not as optimistic on heavy oil as he is on light oil and condensate.

He's finding the right point to switch to aggressive stocks during this disruption. During bear markets you get lucrative buying opportunities in order to offset lower returns. The strategy is to gradually buy stocks that fell 50%, but will return to previous levels, rather than stocks that declined 10%.

Dividends for safety, to sleep at night. Also look at Canadian bank stocks which have sold off 19-35%. Factor dividends and stock appreciation for consistent returns. In 2010, they endured without cutting dividends. They haven't cut them since 1940. He isn't worried about the headwinds, like a weak real estate market.

Are the Americans still shorting Canadian banks? These shorts are quite limited, but attracted media attention. This won't be a short squeeze. He's not worried. The banks have a tremendous track record and did well in the 2008 recession. Post-recession regulation has made banks around the world stronger, including Canada's.

Market Outlook It is amazing to think oil was trading above $40 a month ago. The build in inventories around the world are starting to slow as demand is slowly recovering. Demand had been down 32 million barrels per day. This may mean it will take a lot less time for things to normalize. Apple tracking mileage in the US shows travel is down only about 9% from a year ago. OPEC members too are struggling for survival. Global offshore is going into stagnation due to loss of capital investment. As bad as thing were, the outlook for 2021 is incredibly bullish. Using $50 oil prices, share prices could potentially quadruple. There are estimates that total oil stocks globally went up 450 million barrels, about half of what the IEA had predicted. June WTI futures go off the board next week. He feels it is much less likely that it will settle negative like the May contract.

Market. There is a new cold war developing between China and the US to be fought on the trade front. We expect more of this. Semi conductors took a bit of a hit on this and there is a lot more to come. Equity markets did not like Trump tweeting that he was tariff man back in 2018 and they won't like this. The exuberance from March is running out. The average stock is very much in a bear market.

Just buy covered call ETFs? You should be more diversified including being diversified globally. When you are getting those dividends, remember that they can be cut. He has no other issue otherwise.