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

Where is money coming out of equities going to go – bonds? He prefers to play it through TLT-N. ZTL-T plays it in CAD$.

Market. Last year we had a big sell off and people are going into the end of this year nervous. We are now waiting on some resolution of the trade deal. A lot of it is priced in. He thinks it sets up for a material correction in 2020. The economic data is looking better to stable, so we may be troughing on that front. For the market in general, it does not like election years in the US. The parties are so polarized now. Wall Street is turning a blind eye to impeachment. You have Brexit, Iran, and protests in Hong Kong. He is continuing to average down in the energy patch. He is trying to find stable management teams with conviction for their dividend.

Gold Miners. The ability to predict costs has been difficult. With positive news on trade, gold has stalled out. He does not own any gold miners right now.

We're running out of steam and will likely see a short-term pullback this or next week for who knows how long. But he sees a four-year cycle coming, bullish into 2021 with double-digit gains in 2020, then down to single-digit in 2021. Wait a week or two for a good entry point. He's bullish. He expects rate hikes starting in summer 2020 and into 2021, which will lead to a correction reminiscent of Q4-2018....Cannabis faces tax-loss selling following a tough year of losses; yes, more downward pressure is coming, but then weed stocks will go sideways that will lead to a breakout. He likes industrials, infotech and insurance.

S&P The chart shows a correction coming soon. It's literally a (Trump) tweet away. Around 2,900 is a buying opportunity.

Market Outlook He thinks we have been in the worst bear market in the energy space ever. He has been accused of being too bullish, but when the Trump Administration lied about putting sanctions on Iran back last October the market changed direction. Next year he sees US shale growth rates decelerating as well results start to plateau and companies turn to lower quality rock. The growth rate has fallen from 1.9 million barrels per day of annual growth falling to only 600,000 barrels per day for US production. Offshore global supply is also peaking, he says. By 2021 the market could be incredibly tight. Energy stocks could go up 100%. He hopes an increase in oil prices would bring back investors. Companies should not be valued at 70% of their reserve values. He thinks companies should become buyers of their stock from free cash flow. Believe in the oil price on the screen today and you will see share prices move up.

He’s reduced his equity exposure and switched to fixed income. The market is depending too much on the tariff war. They haven’t finished phase 1 and he thinks the Chinese will be a tough negotiator. The tariff war is a negative on the world economy.

Last year, the Santa Clause rally turned upside down. He considered last year’s sell-off a phoney since the market was looking for a bottom, and there were shorts that came in. The market recently hasn’t made a lot of progress until the the last couple months.

The oil sector is under pressure, and money managers have decided they don’t want to be in fossil fuel companies. There hasn’t been any rationale in the selling. Once we start to see a pick-up in the junior companies, the sector will pick up.

Market. He does technicals in the beginning and at the last and then do other stuff in the middle. The headlines in the business world are tough to use to give explanations. There are several things that say we are in a corrective phase. You can go sideways, you can fall or a combination of both. He thinks we are in a correction from a technical perspective. He thinks it is mild. From the 5th of November to the 20th studies have shown that this is a pause period in the markets. The market has discounted phase one of the Chinese deal. 75% of companies in the S&P had earning surprises and that is pretty good. We have some pro-cyclical rotation. This should last into the new year. He thinks we are going up and higher.

REITs. Is there a bubble coming? There is currency, then there is that risk in the US. If the Canadian currency goes up 7% then that is your first hurtle. You need to look for more in the investment. The Canadian market would be a better way to play the real estate market. The XRE-T broke out in August. It then came down a little and is holding here. You could look at BAM.A-T or BPY.UN-T. He would take half a position now and then watch it.

Aurora Cannabis missed estimates. There's a hangover in the sector right now. Straight decline from the highs. More issues down the road. Valuations are still elevated, so slowdown in sales is a concern. There are better opportunities out there than trying to call a bottom in a volatile sector. Charts are telling you the party's over.

BAM reported today. Manage half a trillion dollars in alternative assets. Alternative assets make sense in a low interest rate world. Depending on your strategy, you can choose from the Brookfield stable. For example, BAM works for the Canadian portfolio. He owns BPY in his REIT portfolio, and owns BIP in his US dividend growth fund.

Trying to get a phase 1 US-China trade deal. Consumer's been doing well, so the Walmarts and Costcos are doing well. Pullbacks on fears of no deal. Want to see a reacceleration of data. We're starting to build in an expectation of higher earnings. His concern is if there is no deal, so they've been peeling back a bit.