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

The market has performed well so far this year, despite volatile geopolitics. Fed interest rate cuts have fuelled the rebound in stocks, and consumer spending has helped. That said, a there's a growing chance of a recession in 2020. The US Fed and European Central Bank will continue to trim interest rates for the rest of this year. The US consumer remains strong, so any sudden decline or spending or confidence will mean a recession. Brexit and the Hong Kong demonstrations may add to volatility this fall. Expect volatility for the rest of the year. He's betting defensive by holding REITs and utilities for their dividends, and healthcare and tech for growth.

The energy market is broken: oil is up 24% year to date, but oil stocks are down 20-40%. Nobody cares. But in Canada, oil makes up 11% of our direct economy. There's a buyer's strike in the small/mid-cap space, a lack of fund flows. And yet, these oil companies are generating free cash flow yields of 20-40%. They could pay down debt or pay a 20-30% dividend or (recommended) both. The profitability of these companies is high. OIl companies should buyback shares. There's isn't selling pressure, but there aren't buyers. Many names are down 70-80% in one year, horrible. Oil investors have been bruised and remember it. There's a disconnect between investors and stock fundamentals. Stocks are trading at a discount to their liquidation value; the combined market cap and net debt is now trading at a 70% discounted value to that cash flow stream. It's like getting $6 billion for free in a company. To change this sentiment will be serious share buybacks and, when production growth rates of oil in the States massively decelerated--sentiment will change overnight.

Why does shale production keep increasing and when will it stop? U.S. shale will continue to grow for 4-6 years, he guesess, but what's important is the growth rate slowing to the point where DEMAND growth for oil exceeds the growth rate for US shale. US shale has grown because (say recent studies) companies are simply drilling their best rocks. Now, such companies are exhausting their inventory as investors want some of their invested money back through buybacks and shares. The year-over-year growth rate in shale is collapsing; he predicts below 1 million barrels/day rate by the end of 2019.

Why aren't we seeing more M&A? There's no perceived difference between quality and junk stocks, so they're all trading at a similar valuation. Also, in Canada there's board entrenchment--why would a CEO, who owns a ton of his company's stock that has plunged in value, want to fire himself by merging with another company? If he could, he'd raise private equity and buy a company like CPG-T, but the interest isn't there...But all it takes is one company to go private to trigger others.

Hasn’t been a quite summer. There’s a disconnect in the market. Fundamental data looks good, but there is negative sentiment and fear. He’s afraid that there might be a self-fulfilling prophecy.

It’s important to note that the last 5 times the yield curve inverted, it still took around 22 months before there was a recession. We should do green tech now while long term interest rates are attractive.

Consumer data from the U.S. looks healthy and they are ready to spend money. The U.S. should still grow even if the others lagger behind.

Vegan Investments. There is a vegan dividend paying ETF coming to market soon. It’s been filed and will be listed in the U.S.

Market. The markets are just bouncing on China trade news. America only really only has about 1% of GDP exposed to China and China really only has about 5% of GDP exposed to the US. That's what this is about. It comes at a time when volumes are light in the markets due to summer. Computers just keep triggering and that is why volatility is so high. The 10 year yield curve has inverted and spooked the markets. But low interest rates support the stock markets. The bull is crying 'wolf'.

We are in a sweet spot in the oil market. Two countries are down 5 million barrels at present. The stocks are ridiculously cheap. Oil consumption is flat. Oil stocks are cheap if we get to 70+ oil.

Owning royalties is usually a pretty good way to participate. You don’t have the exposure of operating the companies. However you will need a good oil price. If you felt comfortable that the price of oil was going to rise in the winter then it is a good place to buy these companies.

Technical analysis when the market can turn on a tweet. Technical analysis is no match against the tweets. His research shows that when tweeting picks up, so does market volatility.

What are you seeing in the markets? Trade talks, increase in volatility. Bit more noise to come. He guesses another month or so of this chop. US and China have to figure out something, and then the market will rally for keeps and we'll see the last of this volatility.

Technical signals used for buy/sell? Uses 200-day moving average, as it indicates the big trend you want to worry about. Lower highs and lower lows are two trends that tell you the trend is dead for now.