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

Moving averages are good to find an exit point. Looking for crossover of several moving averages could indicate its momentum.

Market. It seems like every week or month there is another notch taken off the recession argument and thesis. The quarterly results are not shooting the lights out but they are encouraging. You would have seen some kind of reduction in job numbers before a recession. Recession fears are being calmed. What if markets didn’t go down that much during a recession. Are you positioned for that? Tech and consumables are the most interesting in Canada.

Volume in the markets today on trade optimism. Any positive news is positive for the markets.

Different strategy to get through the end of the year vs. kickstarting 2020? Great year so far. Underlying fundamentals look pretty good. Little bumpy till the end of the year. Next year should be positive.

Will liquidity work its way through the system from January 2020 onwards? The 3 Fed rate cuts will start to move liquidity through and help companies. Any incremental positive on the trade side will be a huge positive. Hopefully momentum will carry through into 2020.

How are the earnings so far? Estimates are too high compared to actual economic growth. Disney, however, seems to be firing on all cylinders.

Market Outlook The market is telling you the summer was full of political bad news. The last six months the market is not down, where is all the gloom. The market is behaving as it should. Rates are as low as they can get, you are not seeing it help the economy. The psychology is positive right now. The Dow is following the previous bull market that ran 1982-2000 -- it has about 10 years to go. He doesn't expect a 20-30% plunge is coming.

Why are REITs selling off? REITs are falling off on the threat of bond yields rising again. If bonds go up, it will create competition and money will move to safer yields.

Canadian Economy The Canadian economy is disappointing because a large portion of the driving force is being held back from contributing fully (interviewer, "You mean oil and gas"). Hopefully now a minority government and the two main partners agree on energy to allow the correct legislation to allow the energy space to grow again. China has hurt us as well.

Too much of the market is liquidity driven and this worries him. But he doesn't follow the broad markets that closely. He's started to take interest in Alberta oil, which hasn't been this bad since 1989-90--he likes the Canadian oil space now when NOBODY does. Even a dead-cat bounce is overdue. Encouraging news is two First Nations bands have backed out opposing the TransMountain and possible moves for a First Nations band to own the TM. Canadian drillers have curbed drilling and turned into free cash machines. Also, there are too many competent people in oil for this sector to be still for much longer. About Encana: when a Canadian-named oil company has to move to the US, that says something. Overall, Canadian oil/gas companies are too competent and too unloved for too long that contrarian investors should start looking at these stocks. The industry is quite solvent. Also, the mid-eastern and American shale plays will be in 5 years long in the tooth.

Gold mining stocks On a 40-year gold chart, we are closer to the bottom than the top. Gold mining stocks are cheap, and when they recover, they REALLY recover. Don't take too many risks nor invest too much. Returns could take 12-18 months, so wait. Gold trades inversely to confidence in the USD. US debt is too high and current levels can't sustain. Gold stocks won't beat the USD but will do less badly in a downturn.

The markets have endured a lot of uncertainty and are now confident. It's been more of a psychological issue. We're sprinting now to the end of the year. Things are good and he expects people to take some profits. It's business as usual. Norway is a leader in ethical investing with their pension fund blacklisting companies for ethical reasons. Investors are catching on that ethical investing pays off and avoids investing in unethical behaviour and carbon energy uncertainty. As for Canada's Liberal minority government, he expects them to continue with the carbon tax as scheduled. Let's see how they work with the NDP, and a proposed tax cut for green companies.

Oil companies investing in green in Canada--the right approach? Investors invest in an oil company for oil. Those companies are generating a lot of cash flow, and he hopes they invest in green. But this is happening more abroad like Total, not in Canada. Overall, capex in green remains small in their overall cash flow. That's disappointing in Canada and could be more. Here, Suncor has the highest ESG score.

The market is pushing away bad news like Brexit or the trade deal, but is it pricing in too much good news? Global manufacturing has slowed down and US GDP has slipped, but QE in the US is keeping markets up, encouraging more liquidity. Japan is thinking of more QE. This environment is good for risky assets. But there's fatigue with IPOs that haven't been performing as well as expected, such as Peleton and Uber. If there are negative rates, it will be tough for pension plans.

Market. Trade with China: Phase I (he does not see a phase II and III). Most of the difficult things will not get solved easily in the next few years. The countries each have a different philosophy. Markets are excited but we are going to be no better off than three years go in trading with China. The tariffs will still be on. The market sees this as good because things are not getting worse. On the VT-N, we have not broken out on a world basis yet. The US is leading this and when you look at other world markets we are nowhere near this. We are in a large cap earnings recession. He will be surprised if we get any S&P earnings growth over the next year. This is an opportunity to lighten up on your portfolio. Markets increasing is about QE coming and a potential trade deal that won't move the needle. You want to get more conservative in the market, not more aggressive.