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

We're on the cusp of a new bull market for oil? Once we emerge from the Covid destruction, we'll exit this year about 4% below prior conditions. It's all about supply. The last 5 years have revolved around US shale. But due to shutting of external sources of funding and investor apathy, shale companies are aiming to grow at most 5% a year. The world relies on US shale, so the future is very different from the past. Saudi remains with a budget deficit on the price of oil. We can get back to $60 oil next year.

The biggest opportunities are in Canadian small and mid cap names? Going forward, investors don't want growth of capital. They want dividends and share buybacks. Low debt levels and low corporate decline rates let them do this. Canada shines in this area. Already seeing capital flow back to Canada. Conditions in a few months will be tighter. His fund is 100% invested in Canada right now.

What do you make of the markets? There's a bifurcation between the economy and the stock market. The economy is slowly improving, but the markets are at all time highs. But that's not the whole story. The S&P peaked on June 8 with the non-farm payroll, and if you take out the top 6 runaway stocks, the remaining S&P 494 are below that peak.

What do you think about big tech? No question, they've done really well. But it's a very crowded trade, so it's becoming extremely expensive. Watch when tech starts to underperform, as that could be a sign that the global market is in trouble. The market doesn't like the anxiety of an election. Usually, the markets dip down from September to November. Investors should be cautious.

Where is the US dollar going? You're always making two decisions: the currency and the stock. Converting CAD to US dollars means you're expecting the US dollar to go up. That's not for the average investor. You want to have a macro picture. US dollar has gone down recently, and is very oversold, so we might see a bounce with the non-farm payroll on Friday.

A good time to buy a partial position in natural gas? Nat gas had a huge move in the last week. Inventories are lower than normal, plus the storm on the East Coast. With commodities, they can really go. Seasonal period is September, so look at that as an entry date. Before that, look to see if it's oversold. He's waiting right now, either for a pullback or for seasonality to start. A lot of positives for natural gas.

Invest in gold? He watches both gold and the miners. They've all run up a lot. Start with an ETF of gold stocks, such as XGD, GDX or GDXJ. If the market were to correct sharply, the miners can go down quickly, so you have to be careful. Be careful with the miners, as they've run up so much. This is the seasonality for gold miners, and they've performed well.

Earnings seasons and double-digit profit declines (i.e. Air Canada): earnings are dreadful or not as bad as feared, depending on your expectations. Anyway, he's conditioned for earnings to be down a lot, and forecasts were slashed earlier. It's a market of winners vs. losers. Winners: big tech mostly in the U.S. and Shopify here, and gold stocks. Losers: banks struggling with loan loss provisions, and oil given low prices. The gold rally is legit and it's onwards and upwards--gold rallies in troubles times and now certainly is. We'll see Canadian Q3 banks report later this month; banks will be pressured by narrow interest margins and of course loan loss provisions, though business loan deferrals may cushion the blow.

The stock market is going up, with the S&P up 8% ytd. It's a fallacy that the stock market and the economy moves hand in hand. The market is significantly undervalued taking into consideration the interest rates going to zero. Earnings for tech companies are growing, and he is bullish on good quality companies.

There is uncertainty with COVID, but there will always be cause of worries regardless. Looking at earnings being reported by companies like Apple, he thinks it is still undervalued. Chose good quality companies, and it should be alright.

US Debt. He believes it's been a long time coming for worries over US debt. If the USD wasn't the currency reserve of the world, it should be trading at AA-. They had to start printing money and it's been decades in the making. It won't mean much for market response until the rating drops by a couple firms.

Tech earnings. The market was delighted for earnings. For Facebook, the backing away of many companies from the social media site has not affected the earnings so much. The firms with data will be hit hardest by anti-trust, like Google or Facebook. He expects some pain coming.

Market performance. The S&P 500 was up 1.7% on the week. It's been an okay week. We now have 3/4 of the large cap stocks report. There is a 30-35% of Russell 2000 small caps reporting their earnings next week. The pain is more in the small cap.

Educational segment. Back in 2014, he said that gold was broken for a little while. Central bank money printing hadn't played out yet. In 2018, he changed his tune as the Federal Reserves rose rates. In 2019, we saw a breakout from $1,400. Fundamentally, for gold prices to go up, you need investment demands. There is an increase in investment demand and a massive decrease in the jewellery demand now. With real yield going negative, gold is a no-brainer. He expects inflation in the USD. He expects 10-40% upside on an inflation adjusted basis for gold. Lots of upside for gold.