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

Banks. The pullback in banks is inevitable, both in Canada and the US. A number are approaching their 200 day moving averages. If a bank breaks through it would be a buy.

Petroleum (Crude Oil). There was the lock-down on the world economy and then you had the price war between Saudi Arabia and Russia. You are starting to get economic activity around the world that is upping demand for crude. He owns SU-T and CVE-T. He prefers to be in quality companies.

Market Outlook He believes today's jobs numbers add fuel to a euphoric market. What will be the path of the pandemic? The number of US cases don't seem to be dropping off like European countries. What is being under-reported is the number of unemployed. The first few million jobs to come back are the easiest, the rest will be harder. Job numbers are prone to revisions. Into the fall, US civil unrest may impact the upcoming Presidential election.

Canadian banks? Going through reporting, he was surprised how small the loss provisions were. This makes him think there may be more to come. He thought TD too an adequate level. He thinks Tier I capital is sufficient to maintain the dividends. There seems to be a growing rush to put money back in the market by Central banks and he wonders what might happen when that stimulus is reduced. If you don't own any banks, now would be a good time to buy, especially with dividends over 4%.

Current yield vs growth? Both dividend yield and growth are important. The longer a company has been around, it really depends on the commitment to that dividend. He considers the yield as part of his client's total return. Since fixed income does not provide enough return, he looks for companies that are committed to paying a material dividend.

Market. He does not like the market here from a valuation perspective. The market is seeing something he is not seeing. He thinks there is a lot more economic damage to come. Today there were numbers suggesting quite a bit of job recovery. He does not see the US dollar selling off a whole lot more. The Canadian dollar is trading along side the US dollar and he does not see it getting a whole lot stronger.

Another Market Downturn Still to Come? He thinks we will not shut everyone down during a second wave. We are more prepared to handle this round. He still thinks we could get to the lows of a few months ago at some point, maybe a bit below. The fundamentals of the economy will not come back as rapidly as the decline took place.

Gold ETF recommendation. You are not early on this story. It is his favourite asset class by far. However it will be extremely volatile for the next couple of years. Once we get through the deflationary time it will be an inflationary one. ZGD-T for equities. GLD-N is the biggest ETF for gold. [Larry's audio connection was too broken up to capture other tickers he mentioned].

Educational Segment. The bond market is broken. The message is different than from the stock market. He looked at a Fed fund futures chart; he showed how they backed off a little after employment numbers this morning. The chart is suggesting a zero Fed Funds Rate next year. He expects negative interest rates. On a chart of Euro futures, the curve goes out for a decade at no more than 1.5% central bank interest rate. There will be no rate hikes for the foreseeable future.

Market. He has been surprised by the strength of this rally amid economic gloom. The question is if the Fed can get people back to work. It is probably going to be a slow return to work and a show recovery. There is the tech stocks, the mega caps. But some mid-cap stocks are down 30% on the year. If the market is correct and we will get back to work quicker than we think then there is opportunity here.

If you have cash for 90 days, If you have cash for 90 days, there is no substitute for just leaving it in cash.

Gold and Silver have been reaching recent highs – forecast? He does not actually buy or short gold stocks. They are quite volatile. They have an emotional component or a currency component to them. He is coming around to owning gold for individuals who want to own it because of the massive central bank stimulus. This is one of the only assets that can stand in in a deflationary environment.

Renewable Energy – Which is the better choice? NPI-T is the one he would prefer. A lot of money is moving out of traditional energy into renewable, as mandated by the funds. They are all reasonable.

Market Outlook He thinks the last 4 weeks have shown a shift towards opening and the market is responding. Volatility has backed down below 26, the lowest level since February. We are seeing broader gains in value and industrial and even banking stocks. He thinks there will be a shift in supply chains. There will be on-shoring and tightening up of supply chains. This quarter is expected to be weak and there will be still be a couple weaker quarters yet to come. But after that we should begin to see good organic growth.

Canadian Insurance and low interest rates? He thinks the valuations of these holdings, trading at 0.6 times book value, and 6 times earnings are good value. Premiums continue to come out of people's accounts, so he would not count them out. He likes the solid yields. You could buy and tuck it away, along with a good dividend.