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

Which company in the oils sands would he like to buy? All energy companies are going to have a poor year, this year. As the recovery takes hold, demand for energy should increase. SU-T would be one of the better places to be. It is well financed and has a good balance sheet. It is also quite diverse, covering up stream to down stream operations. It has the capability to pay a dividend throughout this crisis.

Market Outlook If you have held good companies they are probably still doing well during the pandemic. You need to see companies that beat their cost of capital consistently, have a good balance sheet and can take on debt safely to build their business with good cash flow generation. COVID-19 has changed the way we look at businesses, with a move to more mobile strategies. The PE ratio of the market is in the top 10% of history, while the economy is in the bottom 10%. This is not like 2008. There will be unanticipated events in the world, so therefore most people should be cautious and patient rather than making big decisions in their portfolio right now. He thinks retail companies will suffer post-pandemic, especially smaller retailers. Oil and gas will also continue to suffer due to a slower growth in the economy. E-commerce companies will benefit.

US Bank stress testing? US banks may have a couple of difficult quarters. They are not expensive, trading at 10 times earnings and trading close to book value. They are well capitalized, and will not be allowed to increase their dividends. The big banks will get stronger as they can spend money on technology to make them more competitive and reduce their cost structure. The pandemic is pushing this move sooner. From a regulatory point of the view, the US Fed has done the right thing.

Market. They've made COVID-19 a real political hot potato. The market has not priced in Trump NOT being the president after the election. You should take a more cautious approach in managing your investment portfolio. Be cautious when things are a little illogical.

Negative interest rates. He does not think we will get to negative interest rates. That would be catastrophic. The Fed does not want to see negative interest rates. Interest rates will, however, be glued to zero for some time. In the next couple of years, longer term rates will tend toward zero.

Canadian Oil Outlook for Mid-Cap Sector. There is massive political risk because the current government does not support pipelines. Because of climate change, the world is moving more and more away from oil. The next decades will see less and less demand relative to supply. The sector is not investible but probably tradable.

ETF covering FANG stocks Exclusively? The big six names in tech are 30% of the index. You might go to the stocks directly. You may want to avoid FB-Q for now, for example. Cloud Computing ETFs might be a way to go.

Quantitative Easing vs. Debt Monetization. The difference is time frame. QE is temporary. However he thinks the Fed will never be able to unwind the balance sheet. Debt Monetization is permanent. Essentially they have to print money.

Educational Segment. The Fed's Stress Test. We are in a bear market – we are not in a 'V'. They don't want to tell us what's wrong. He compared the expansion of the Fed balance sheet vs. the SPY-N ETF on a chart. The two run closely and peaked about two weeks ago.

Market. Markets sold off indiscriminately in March and as markets rebounded, not all real estate entities are the same. Are the prices of buildings off 30%? What geographies should one be focused on: Residential rental, industrial warehouse space, and different classes within residential. He focuses on cash flows and their dependabilities. Yields have gone higher, making them more attractive, but he looks at cash flow because they can cut dividends. It has been a desired asset class for 15-20 years by pensions and institutions globally. We are in for lower for longer interest rates. Those real estate classes will capture inflation when it goes higher. There is a lot of capital sitting on the side lines waiting to get into real estate.

ETF for UK Real Estate. He is not familiar with such a REIT. He would look at SGRO in the UK. Its balance sheet is in good shape.

Market Outlook The market is very sensitive to news flow about COVD-19. Some of the states are reporting rising numbers and President Trump is also talking about putting in new tariffs. That is never good. Q2 was in lock down for much of the economy, so we should see some positive growth in Q3 and forward. She wonders if this will lead to consumer confidence and spending. The market will continue to be sensitive to news about a vaccine, she thinks. There has been a lot of positive news early on and hopefully in early 2021 there may be a viable vaccine candidate that can be widely distributed.

Canada downgraded to AA+ The reasons for the credit downgrade are not necessarily unique to Canada -- being COVID-19 related. The increases to deficits will be impacting companies around the world. The debt to GDP should be expected to increase. Going into this, consumer debt was high and the economy has been impacted by the exposure to land-locked oil production. Overall, she is encouraged that the rating agency sees the situation as being stable.

He's a long-term bull, but needs to see a COVID vaccine and a lower U.S. death count. He expects a slowdown after July 31 when PPP ends in the States, followed by weak demand there. During the pandemic sell-off, he recommended buying across the board. Since then, it's been overdone on the upside. He expects another pullback in the next few months, so investors should get ready and buy. Tax-loss selling at the end of the year will be another buying opportunity. He expects $50-60 WTI oil in 2021, and even higher after a vaccine is produced when oil demand will spike. However, he expects WTI to fall below $30 before this in the next couple months, because oil inventories are rising and the Saudis and OPEC have not met their oil production cutback goals. Expect supply-demand oil balance over the winter.

Market. P/E multiples are near record highs. Look at the last bull market. The S&P increased 16% annualized. There were some strong tail winds that don’t exist now. The market will probably be lack-lustre for several years. 40% of the upside in the last bull market was from multiple expansion. 25% of the gains were from pre-tax profit margin expansion. There were tax breaks contributing 10%. None of the factors contributing to these exist now. Consolidators should do well going forward. The economic pie is not going to grow that much. Disruptors should also do well. Both are taking more of a pie that is not growing.