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

Will the TSX make a new high and is Energy part of it. The seasonals are quite positive. The TSX could make a new high but energy is very politically motivated; the NDP/Liberal coalition involves NDP not wanting any pipeline progress at all. He does not think the pipelines get built if Trudeau has to give in to the NDP and needs their support to govern for a longer term. We are not getting any price relief on Western Canadian Select any time soon.

CAD$ -- how best to play. Canada is 3% of the world. He is using the current strength in the US dollar to add to exposure to it. 90% of the time the Canadian dollar goes down when the US$ goes down. At the bottom of the next trough we will have the CAD$ at $0.70. He buys US$ into the strength that we may see in the short term.

Educational Segment. Market Risk and the 2020 Presidential Election. He thinks the market can't see the forest for the trees. There is a potential very big shift in US politics from the very nationalistic right-leaning Donald Trump to a Left but protectionist Elizabeth Warren. There is still a risk of Trump being impeached. She wants to rip Wall Street away. She is not a capitalist. He agrees with her view on climate. There are 16 million 14-16 year olds that could not vote last time. Gun laws and the environment are important and he thinks a massive amount of these kids are going to vote this way. The vast majority of Trump supports have deceased since the last election so he does not think trump can win. There could be a catalyst for a significant decline.

Market. Low interest rates can only do so much to keep markets high. Earnings seasons can be interesting. The big story for the last 9 months has been the pivot of the last 9 months where the US Fed has been supplying liquidity to the markets. Trade issues will not be resolved any time soon. September and October are the two most precarious months of the year and they are almost over. There are a lot of things that are pointing to cloudy skies for 2020 but today the market is comfortable having more liquidity and earnings still being okay.

5G has been in the news for the last number of years. There will definitely be companies that benefit from the adaptation of 5G. BCE-T has been rolling out fiber to the home and will benefit from 5G. AAPL-Q will roll out their 5G phone in the next year or so. The 5G roll out in the US will be slower because of the investment required in rural areas. CSCO-Q will benefit from 5G. They are rolling out more software as a service that connects through 5G networks.

There are some sectors where if you want to be invested you have to be in the US. He focuses his technology and healthcare in the US. With the S&P at all time highs, you want to be invested appropriately between Canada and the US and investors should not get caught switching at the wrong time.

The S&P hit a record high today, but after inflation and share buybacks there's actually a decrease in EPS, so the picture is not that rosy. He holds 10-20% cash, as the market is overvalued. The underlying economy is not that strong. The US Fed is rumoured to cut 50 basis points this week, so that's not good. Here, 47% of Canadians have to borrow to make ends meet. The market is rallying ahead of this expected cut--like an addiction--but what happens if it doesn't? What if we go to negative rates like Japan and parts of Europe? The lower the interest rate, the higher housing prices go. Remember that Trump comes from a real estate background and he's been pushing hard for lower rates.

Market Outlook US tech is the source of funds for the market over the past five years. The Index is now about 30% tech names. Post the last China-US meeting, when everyone got more comfortable, bond yields have risen again and the pressure has come off global cyclical stocks. If you thought 2020 would be a return to normal for global trade, it may be time to re-enter the prime global stocks again. He still likes Amazon, Google and Apple, but there are other options for growth now. Investment is shifting into value investing again.

European industrial was quite good. There's been a few misses. He feels tech is over sold. There's the political situation happening with Trump, and outlook of low interest rates in Canada and US. He would give a B+ for the market right now. The macro is also changing.

The street is expecting another rate cut. He's not sure if the market really needs it. The Feds probably doesn't want to do it, but there is a lot of pressure from the White House. Without the trade war, he would say that interest rates should be going up. He expects lower interest rates in the US but it would be the last one for a while.

The deadline for Brexit, October 31, created a situation where they got fairly close to an agreement. There's a catch-22 where now, you have to cut a deal and move on. Hopefully they will figure a way forward.

Market. Infrastructure is Industrials, energy and utilities. He has includes any stock that provides an essential daily service like cell towers, data centers, payment processing – names that have high barriers to entry, and are cash flow generators. Also railways, mid-stream energy processors, but no producers. Data centers are quite lucrative once you have them established.

Future of Wind Turbines. For on-shore wind the biggest hurdle is that turbines are getting bigger and soon aviation approvals will be necessary. With off-shore wind you don’t have FFA regulations but you are drilling into seabed with underwater cabling and this is the biggest hurdle to wind. He is very bullish on wind both onshore and offshore.

Big earnings day, Visa beats. Visa, Mastercard are great long-term, secular growth stories. They can fall off if there's a downturn in the economy, but they're fantastic names. Only recently passed 50% worldwide digital transactions, so lots of runway.

Big beat for Intel, top and bottom line. Good numbers, but Texas Instruments did not. So you have to be selective. De-escalation in US-China tariff wars, plus positive start to Q3 earnings have moved us less than 1% away from S&P all-time highs. Doesn't mean there aren't risks on the horizon.