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

Seasonal strength for REITs. Seasonality runs through the third quarter, but peaks around this time of year. Coincides with yields that find a low around this time of year. In the summer, you want to search for anything with a yield, like REITs, consumer staples, and utilities. You should take profits now.

What sector could you buy in October and hold until January or February? How about retail. Stay away from exploration and production, but refiners can do well. Technology. Focus on cyclicals that benefit from the consumer.

Market Outlook He does not understand why people are surprised that the slow in global trade is hurting the market. Global trade relative to GDP has been slowing for 5-6 years, outside of a recession -- the first time in at least 50-60 years. De-globalization is an entrenched situation now. The US does the least amount of global trade. As a generalization, anything that slows down global trade also pushes down commodity prices to the benefit of the US consumer. This is causing a global disruption in manufacturing and commodity prices. He thinks there is more downside yet to come. He recommends investing in quality (strong balance sheets and good cash flows). A favorable trade headline between China and the US would probably cause a symbolic relief rally in the short term. One third of the exports from China goes to Europe, making the US less important to China as they only import about 15% of China's exports.

How do remain calm on days like this? Own companies of quality. If the companies you own have strong assets and balance sheets and some prospect of growth you can ride through the volatility.

The best place to hide is staying where you are. Don't outwit the market when it goes sharply up or down. He's been selling gradually for the past few months to less risky stocks and not piling up cash. Look at wider issues, namely manufacturing issues. How much is down to the GM strike or Boeing, as well as Brexit, Trump's impeachment battle. It will be a lively quarter. Markets hate uncertainty and he's rarely seen this much--Brexit, negative yields, China, etc. Will US interest rates really have much impact? How much will bonds pay? Look at Japan: an aging population with little immigration--the economy declined. In October, Brexit and the election will resolve questions in the UK and Canada.

The 20-year, long-term S&P chart says we are in a secular bull market that should go to the late-2020s/early-2030s. Consider the 1940s-60s, and the 1980s-2000s which were bull runs with peaks and troughs. He sees upside into 2021. He was very bullish gold in April-May, but he's gotten cautious recently. There very well could be a pullback to May levels of $1,400.

WTI price Since 2018, we've seen lower-highs, the start of a downtrend. Mid-2018 WTI peaked at the end of that 4-year economic cycle. He's concerned about all oil in general. He's bearish. Worried it may fall and break support.

Confirmation: As a stock moves higher, you want to see volumes increase to confirm that move. Conversely, when a stock pulls back, you want to see volumes low. Non-Confirmation: The opposite takes place with rising stock prices, but lower volumes which indicates a lack of confidence.

When to get back into the market? As a tech analyst he tries to time the market. He looks at price action, volume and put-call ratio (as a sentiment indicator). Usually, in a year you have an opportunity or two to deploy capital at an entry point. August and June were temporary lows, and he expects the same low to come in mid/late-October when you can add some exposure. You can add, say, 10%, then deploy more later in the fall. The next few months into 2021 will offer a great entry point.

Markets plunged today in manufacturing numbers from the US--the lowest in a decade. He isn't worried because he's both long and short the markets and in fact, his stocks rose 0.5% today. For tech stocks going forward expect the same volatility we've seen the past 18 months. One area where tech and digitization will make big gains is real estate. Tech hasn't touched real estate much so far. One day, we can buy a mortgage online, for example.

Show Did Not Air. [Larry was off today and instead of a substitute guest, they simply started the 11:30 show a half hour earlier and made it a full hour in length. There was no Berman's Call today].

Market. ISM is a measure of how manufacturing is doing on an international basis. We were a hair below the threshold for contraction at the end of August but turning upward. History has show that the S&P usually goes up 17% within 12 months after this point on the charts. He thinks this is what is coming. US leading economic indicators are still rising so there is no recession imminent. US 10 year bonds have hit the bottom and will likely turn up. This bull market has a long way to go in terms of time and distance.

There are lots of noise these days with markets rangebound around the world. This may continues given that the trade war won't go away anytime soon, though he expects a resolution eventually. Re: Trump, this folly after four years is coming to an end. If the Republicans are smart, they'll get rid of him and Trump will be a footnote. As for the Democrats, Elizabeth Warren's ability to execute her agenda will have to go through the political process and won't be swift. After all, income inequality needs to be addressed in America--Trump himself tapped into that discontent. The biggest risk is staying out of the market. Despite volatility, stocks are where it's at.

Market Outlook You have to remain invested. We are capped on the upside with trade uncertainty, while the central banks are providing support. You need to consider a bar bell approach. You want to hold companies that will continue to benefit from secular themes, balanced against defensive holdings. He likes real assets like real estate and infrastructure. Worries of the US restricting flows into the Chinese markets is likely posturing. Negative interests are an abnormal environment and it is making defensive sectors like utilities more interesting.