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

XIC-T is the broad TSX and the XIU-T is the TSX-60. These are two excellent ETFs to get exposure to the broad TSX. Wait for the next major sell off to buy them.

Hyper-inflation. It takes a total loss of confidence in the system. We won't have hyper-inflation. There will be some inflation for sure. Spreads in corporate bonds have spread out significantly and that is where the price pressure comes from in the broader bond index. ZCS-T is a good choice. ZST-T, ZCB-T would also be good.

Market Outlook The incentives for investing are improving. Back in January, valuations were so priced to perfection there was room for risk. Over the past 25 years the market has been characterized by benign inflation, sustained global growth and liquidity. It appears there is a paradigm shift happening. The speed to which risk can manifest itself for instance. Being prepared for any market, with some investments to hold when markets decline for example. When we get shocks in the economic system, different assets classes respond differently. Currently we have a growth shock that is also deflationary. This suggests cash, long duration treasuries and gold are the holdings that are expect to do best. They have been advising to have something to deal with every market environment. Diversification is the real key. Small business in Canada represents 98% of all businesses in the economy and they have an average cash buffer of 27 days. It is unlikely this will be a V-shaped recovery. Potentially the market is still underestimating the growth impacts. You should start to think how to add those segments that will do well.

Big gains in today's markets, because there's lots of optimism about the US Congress pushing through a massive relief bill for working Americans who are staying at home to battle the virus. Also, there may be negotiations between the US and Saudi Arabia over the oil war. We face two black swans: COVID-19 and the Saudi-Russian oil war. Also hitting energy stocks earlier was a mild winter, depressing oil demand. Until China, Europe and South Korean restore demand, the storage costs for just holding existing oil will continue to skyrocket. The bottleneck in oil will be not just selling it, but shipping it. This will be the problem in April for Canadians and the Saudis alike. WCS oil: C$12 doesn't even cover operating costs for heavy oil. so he expects many more shutdowns of oil production. By late-April, the worst of this oil shakeout should be over. If the virus is tamed by May/June, oil should rise to $30-40/barrel, and the price in the second half of 2020 will depend on the wider economy. To pick an oil stock now, look at their balance sheets and cash flows last year. Natural gas prices haven't been hit as hard during all this. If oil prices rise in the second half of 2020, which he predicts, the 2020 average will be in the low-$50s. Oil companies have no choice but to cut dividends except those with strong balance sheets like Tourmaline and Birchcliffe. Energy infrastructure stocks are very cheap now and will bounce back.

[Berman's call was pre-empted this morning by the Prime Minister's COVID-19 update. However he appeared for half of the Commodities show after his show would have aired. An Announcement said that he would be appearing regularly on the Thursday Market Call show at 12:00 EDT on Thursdays for a full hour.]

Essentially the Fed today announced that they had created an unlimited amount of money to backstop financial markets. They are buying everything from investment-grade ETFs to the bottom of the investment grade investment spectrum. There is a hope that the triple B investment credit does not slip. This is a very inflationary policy and is very bullish for gold. The playbook from 2003 for this market is playing out perfectly. We removed the froth from the market. We are in the phase after 2009 where it took 2 to 4 years to see them get the recovery of the multiples and earnings. At some point we are going to see tremendous value develop in the S&P and global markets. Pull-backs in gold and gold equities are just opportunities to get on board. Crude oil bounced around the $20 area and could go to $15. It might take a month or two to shake this out. Buying oil here is a no-brainer. Don’t go to the speculative names. Stick with those with better balance sheets.

Market. He is surprised the market is not moving about 1000 points up due to the fed's morning announcement. But it may be that the congress has not got its act together to pass its bill on the fiscal stimulus. It is more important to prop up the credit markets than the stock markets. The extent that people are stuck in their homes are practicing social distancing, that is also an impediment to economic activities. It is important to put money into people's pockets so they are spending even though they are not working so the economy does not go into a real nose dive. We are seeing a lot of panic in the market. Sound businesses without too much debt are going to come back. Speculative stocks that never had profits that maybe have unsound balance sheets and not a lot to rely on, you may have a serious problem with them. You are seeing unrealistic prices here on good companies.

Borrow Funds now to increase Equity in an RRSP? He is never in favour of leverage. The last three weeks are his reason why. Some stocks fell extra quickly because shareholders had margin calls and had to sell. Buy stocks in your RRSP now that prices are down but don't borrow money to do it.

If REITs are interest sensitive securities, shouldn't they be going up, rather than down? Yes, if you believe their tenants can pay the rent. It seems some think they will not be able to pay their rent – even in apartment REITs, which is absolutely dumb.

US$ - when to convert to CAD$? Currencies are difficult to forecast. A lot of traders view the CAD$ as commodity driven. The CAD$ is not viewed as a safe haven currency. Based on the cost of a basket of groceries, the Canadian dollar is worth $0.82 US, vs. the exchange rate of $0.68, so you should convert them now.

Market Outlook He is not looking to buy back in all the way yet. The speed of the draw down is impacting other markets like commodities (oil down another 10%). There is no where to hide, except in cash. They are watching how different countries are reacting to COVID-19. South Korea took the course to do as much testing as possible, finding people who could have spread the virus, but were able to be contained. Very challenging times.

Gaming stocks? In the "stay at home" bucket -- what people are going to do when isolated at home. Activision is their most favored stock that they hold in this space now.

Big 6 banks in Canada? Yielding 5.8% collectively. The Canadian banks weathered the last crisis better than their US counterparts. He thinks the Canadian banks will survive this. They are not impervious to COVID-19 and the interest rate curve is not helping either. He does not call for negative rates in North America, but where the curve ha fallen, it is impacting profitably. Your are safe holding in the long run.

US Healthcare? Healthcare generally under-preforms in election years. A safer pick would be GILD, for their COVID-19 research and HIV drugs.