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

If not banks, maybe utilities? He would continue to hold Bank stocks. Utilities could suffer if we continue to have a "normal" market and interest rates begin to rise. He does not have a holding in Canadian banks, they hold US banks, insurance or mortgage companies. Yield 4.8%

Markets continue to go higher as long as there is advances in defusing trade tensions. The yield curve is now sloping positive, the Federal Reserve keeps adding to their balance sheet. Job markets are robust, and seasonality is good. Earnings are beating expectations.

The yield on the S&P 500 is around 1.9%. The 10 year in the US is 1.73%. When this happens, stocks usually go up as long as trade talks continue.

The multiple in the market is reasonable. They probably engineered a soft landing. If global PMIs pick up, maybe there could be 3 or 4 more years of this cycle.

Are interest rates going to zero? He doesn't think we would get to 0 but they will probably go down.

Market. EnCana, it is part of a slap in the face to Canadian energy. Even TransCanada pipeline has changed its name to TC energy. Canadian companies are shifting their operations south of the boarder. This is financial engineering and you have the same business and the same results and the same management team. It is a lot of wishful thinking. They are desperate as many energy companies are. ETFs cause a lot of fund flows to go into stocks that are into the indices. It remains to be seen if this gets their stock price up. He is not playing impeachment proceedings in the US.

Strategy to buy Large Caps with dividends 4+% instead of bonds. The bond market surprised everyone this year and performed shockingly well. Utilities and REITs have become expensive. If you have a long time horizon it makes sense to buy the large caps for dividends. Corporate bonds give you a much higher coupon and you can get a much shorter coupon than government bonds.

How long can this party continue? Day by day. Word "recession" is being thrown around. Third rate cut from the Fed this year. The US 10 year, which real estate tracks, is down over 90 bps this year. Real estate in US is up 27% this year. Lots of investors are rotating into defensive with yield, which is exactly what real estate gives you.

What does Fed rate cut mean for the Bank of Canada? Most analysts are saying it's only a matter of time before it has to cut. We're getting to that point, but not sure if it will be the next meeting or the one after. But it's hard not to cut when everyone else is. It still has a bit of room.

Are there any black clouds over the particular space of real estate? In North America, REITs look fairly valued. But looking out further, returns will be driven by earnings growth, and less multiple expansion. You're looking at a low double digit return, but still positive. Headwind is rising rates, and investors rotating from real estate into cyclicals. But that's a buying opportunity.

Continuum REIT IPO. This IPO should close in the middle of November. Really interesting opportunity. Most GTA-focused REIT. If you think the Toronto rental scene is hot, this is the best way to play it. Yield will be around 2%. Quality assets, good management.

What does Encana's being re-domiciled to the States mean for investors? It's concerning. Encana's explanation is more of a valuation call, so don't read too much into it. But oil stocks have been horrible, and people aren't stepping in because of our government. Still, Canada is one of the safest places to invest your money.

Market Outlook The Bank of Canada has left some room for further interest rate increases, despite keeping rates flat today. Western resources are hurting and they will have to deal with that eventually. If the US cuts rates, Canada will have higher rates than the US -- helping the Canadian dollar. This will hurt some Canadian company earnings, but we have come to live with currency in these ranges. Q3 earnings were pessimistic, but revenues have surprised along with earnings. 70% of reporting companies have beat their estimates thus far.

Canadian banks? It is not a bad time to buy. They have lagged, especially in Q3, but seem to be finding their stride. They have stable profits and good earnings trading at cheap PE ratios. TD has lagged, because of their Ameritrade share trade, when brokerages in the US went to zero commissions. He would still favour buying TD.

Cannabis? He is fortunate that they have not participated in the cannabis space over the past year. It is just too difficult to determine who will be the winners in this space just yet. A lot of companies will short on cash. ACB has a $200 million debenture coming due in March 2020, which will have to be refinanced as the strike price is well above current prices. Stay away from ACB. He would not buy anything in the space.