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

Cannabis sector He isn't involved at all in cannabis. It feels like a commoditized product, and the quality of management teams is not impressive. The sector is an uphill battle. In the future, will it be cheaper to produce weed in southern countries instead of Canada and the U.S?

Hotels and shopping malls will take a long time to recover. It's an incredible time in the market now with all this buoyant behaviour, coming right after the worst quarter in ages. He is "nervous long" in his stocks, but the tailwinds are rock-bottom low interest rates and monetary stimulus. Expectations of bouncing back to normal, as well as mounting debt, are concerns. He's cautious and looking for dividends. He has a core position in gold, about 7-8% in gold and silver in his portfolios. The US dollar will rollover as the US becomes the biggest debtor nation. Paper currencies are at risk--there's so much paper money out there.

Silver outlook He likes silver, which outperforms later in the cycle. There's a lag, but it will catch up to gold, and both will go higher. He has pure plays on silver.

Market Outlook He is still a long term US dollar bull. If anything goes wrong in the latter half of the year, it is the only safe haven, he thinks.

Gold. Gold is not his cup of tea. He has a model price that is over 40% lower than current market prices. He would rather put his money some place else -- outside gold. He would favour stocks that will benefit post-pandemic trends, like e-commerce.

Coronavirus cases in the United States. There was a compelling headline this morning of Remdesivir, the anti-viral drug from Gilead, showing efficacy in treating critical patients. The market celebrates this type of news, but it is not a cure, and we need a vaccine for things to go back to normal.

Earnings season. Last week he suggested being bearish on American banks. Today, there was massive call spread buying on the options market. Call spreads are a defensive way to play the earning season. There is optimism coming into the market. Banks have pulled back so there is some value trade. He expect the earnings to have more disappointments than good news.

Q2. There is tremendous amounts of noise. With the current levels of markets, there is a fair bit of perfect scenario priced in than disappointments.

Canada's AAA rating. Looking at where Canada should be trading, it should be at AA-. The US should also be at a similar level. He doesn't think the rating agencies are correctly reflecting the risks. Governments are printing money to manage the debt issues.

ARC ETFs. An ETF issuer that has a number of thematic ETFs, including fintech, robotics, general innovations, etc. He loves this company's funds. Right now, be patient and wait for a pull-back.

Biden. There's going to be political will to raise corporate tax rates and bring jobs back to America. There will be some supply price increases since labour costs will go up. He wants to raise minimum wages, reverse Trump's tax policies, and tax policies that encourage outsourcing. These policies will add to margin pressures. Biden wants to focus on clean energy in regards to infrastructure. ICLN, ZMT could be a good way to play this. Technical set-up and fundamental catalyst point to both benefitting if Biden wins.

Selling in the markets today. After tremendous Q2 recovery, equities are due for a bit of a pause. In part due to rising Covid-19 cases, especially in the US. Slower reopening would dampen corporate earnings. Renewed US-China tensions are probably at play. Upcoming US election divisiveness is weighing on consumer sentiment as well.

What kind of stocks are you buying? Still likes growth over value, as it's performed well over the last decade and should continue with low interest rates. Quality is important, as is high ROE, low leverage. Likes dividend appreciation over high yield. Largest weightings are healthcare, tech, communications, and some consumer. Key secular themes exacerbated by the pandemic are work from home, e-commerce, cloud infrastructure, and healthcare innovation.

Hedged vs. non-hedged ETFs? Long term, US dollar has been moving sideways. CAD will stay in the 70-80 cent range. In general, prefers the US dollar ETFs. But right now, prefers ETFs not hedged to the CAD. It's a little less expensive.

Market Outlook The pending federal deficit is not far from analyst expectations. The deficit is likely only going to go higher. The government is trying to re-balance, but they are trying to support as much as possible so the economy is not permanently impaired. Eventually government spending will have to decline and taxes will have to go up -- likely through the GST. The crisis has caused companies that were already growing well and have done well through this time have seen their multiples expand -- with PEs exceeding 30. The prime beneficiaries have been the fintech companies so far.