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

Sell Canadian banks now, hold cash, then buy in the fall sell-off to buy the U.S. banks or utilities? Hard to predict where the market will go. He can't advise selling the Canadian banks. It's also too late to buy the utilities (bond proxies), because they're run up to record highs. A Canadian bank pays a good 4-5% dividend. Anyone who's held them for 20-30 years has done well.

We're at the end of the bull market. Valuations have peaked and earnings are flat...China does manipulate its currency to some extent...Powell calls the latest interest rate cut an "adjustment" which is an insurance policy, but time will tell if it works....He prefers the US over the Canadian market, because the American one is broader and Canadian is narrower....Most Canadian consumer stocks are actually international like Alimentation Couche-Tard.

The allegation of the Chinese government manipulating its currency China supports the Yuan by pegging it to an official rate. The only way to push it down is for investors to sell the Chinese Yuan and demand the US dollar. But Chinese has so many currency controls about converting, so there's no real free flow. Meanwhile, international participants are wary about betting against China's next currency move. China has huge reserves of USD and can buy up their own Yuan.

Gold outlook He's not a gold bug and he owns none. His issue is that gold often doesn't react the way it's supposed to, though it is currently (market uncertainty). Charts of 10- and 20-years show gold going up and down, so he'd rather buy dividend stocks.

Key sectors are starting to see a bottom, such as energy and pot stocks. Starting to see consolidation as well as companies that have failed. It's becoming difficult to compete.

Marijuana. Will start seeing more mergers and acquisitions starting in 2020. There are some hold backs by the state but he expects large multi-state and national operators to emerge.

A recession is probably off the table for the rest of 2019, but who knows in 2020? The global economy is slowing. especially by the tariffs. However, he's still seeing improving economic and market technical indicators.

Market. As long as everyone is staring at the potential recession issue, then the markets are pricing that in. You should worry when everyone is buying and there is euphoria. If a recession happens, stocks will not do that great. Recessions and bear markets are 1 to 2 years, but people should have a longer term view. The gains in the good times are many times what the losses are in the bad times. The percentage of trading due to ETFs is too small to create a problem in a sell off.

Canadian Financial Stocks. You only need to own two of the Canadian banks. They are so correlated. These are all companies driven by the Canadian economy. He would have no problem owning CM-T but BNS-T has more diversification.

Unprecedented times right now? From a market point of view, not unprecedented. S&P has consistently come up against its FMV and backed off, for the third time. Where history is being written is in the fixed income market. We've never seen negative interest rates before. There's a widening gap between stocks in low and high valuations. Tells us that a big chunk of the market is overpriced, and a big chunk that's cheap. The last time that happened, in 2000, the expensive part got hammered. In 2000, Amazon went from $105 to $5. The profitless prosperity stocks like Uber are vulnerable. Drama will spread to companies buying back stock like Boeing and Dollarama. Paradoxically right now, both the bears and the bulls can be right.

Gold. Don't negative interest rates imply that deflation is more the problem than inflation? What's the connection between gold and interest rates? The real question is what do negative interest rates imply? The value of currency tomorrow is going to be worth more than it is today, and this is if there's deflation. In deflation, gold was the place to be, as it was in the 1930s. Right now, he likes anything that sounds like gold. Stocks give you tremendous leverage. Most bang for your buck is the junior stocks, like GDXJ. But we are not in deflation. When ratio of total debt to GDP reaches 3.5:1, GDP stops, you have no demand, prices go down, and you get negative interest rates. But it won't last long, since the outcome is not good and governments stimulate like crazy. Either way, you have to own gold.

Utilities in a low interest rate environment. Utilities keep ratcheting upwards. As long as rates are falling, they keep being attractive. Emera, Atco are recommendations. Until we get a real reversal in interest rates, no change in the general trend. Buy them and be happy.

Best income ETF? Anyone trying to differentiate between income funds in this environment is just kidding themselves. He can't make a guess. As long as interest rates keep coming down, they're going to keep performing.

Market Outlook A scary open today, but it has recovered somewhat. Be cautious about reading too much into this. He likes the short and sharp adjustment -- a supportive sign of a bull market. The yield curve is now inverted. Previous recessions have been predicated by this. It is the dog days of summer, so this may be magnifying the impact somewhat. You can still find invest-able spaces in the market. We are back near the top of the forward P/E ratio for the S&P500, but are now showing some pullback for the latest high. Just be careful and watch global manufacturing PMI index. The US is barely holding the 50 bullish level. Only India and Australia are higher. There is probably another 6-12 months left in this bull run, he predicts.

Not every asset class, like gold, bonds and the US dollar, has been volatile this week, but actually strong. It's very difficult to invest for income now in an era of record-low interest rates--it's a race to the bottom. The low rates push investors to invest in stocks, especially retirees or those approaching retirement. The naive approach is to find the highest-yielding stocks, which is like getting a sugar high off sweets. You need to look at many other factors like sound business fundamentals in a company/stock.