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

Are puts effective if a crash is imminent? If he could predict a crash, he would be super-rich. He doesn't think a crash is imminent, but a correction is happening now which is normal and needed. Yes, puts are effective if a crash is imminent. It's like buying insurance for your house, though puts are very expensive. It's not a bad strategy, but there are better ways to protect a portfolio, like owning bonds, gold and items priced in US dollars. Also if you trade puts, you need to constantly keep an eye on the markets and to buy puts when volatility is low, like two months ago (and not now).

A utility or pipeline to buy that isn't ENB-T. A utility offers better diversification than a pipeline, and is rate-sensitive and not commodity-sensitive. So go with a utility.

Market Outlook If you look at how the markets have been running this year, technology, consumer and some industrials have been leading things. If you think the market is a long term run you look for these sectors to continue to run well. News is making the market jittery and investor sentiment has been muted. Gold has been setting up for months as investors have been looking for safe havens in a zero or negative yield curve globally. Gold isn't rallying because of uneasiness about the market. He thinks equities are continuing to look attractive as well.

Year over year the market is hardly up? The market typically rallies 18-20 months and then you consolidate. Corrections come in timing and in price. Going back to 1950, market corrections during bull runs last about 9 months, where as the rallies averaged 30 months. He thinks this will take us higher until 2022. We are just pulling back on a short term correction.

Gold finally broke out, above $1,350, reflecting market uncertainty that he'd been expecting for a long time. The bigger picture are the dislocations in currencies; we're facing a paradigm shift, specifically a currency reserve shift and that is tied to high levels of debt. Remember that this debt is mostly priced in American currency....Labour is leaving China, but not going to America, which is the whole point behind Make America Great America...Gold will go much higher to asset debts....The markets will go higher. Money is flooding out of the bond market (earning negative interest rates) and is seeking safety---stocks.

A busy day today with new Trump tariffs and Germany's yield curve below 0% for the first time ever. The latter is not good for Europe's financial system and hopes the ECB changes its fiscal policy. Negative writes hurt banks and lifecos, hurting lending margins and crushing profit margins respectively. This is pulling our curve down too....This week, the US Fed cuts interest rates by 25 points, but the futures are pricing another cut in September. He agrees with Kudlow that the December 2018 hike was a mistake. Maybe a second cut is needed, too. 85% of the credit created since 2008-9 has been created by non-banks, so the Fed must be mindful of credit spreads and market-based lending conditions.

A recession is not coming ...because gas prices are down year-over-year, and there's never been a recession when that has happened. Recessions happen after gas prices double or more in the 12 months leading up to it.

Market outlook. Bullish on Europe, focusing on multi-national companies based in Europe with international revenue, more than a pure European play.

All global bonds have risen in response to an aggressive stance from Trump in the largest jump this year. We also still have an inverted yield curve.

Steepest weekly loss in NASDAQ and S&P500 since December, year to date. The FANG stocks have yet to return to where they were. The Fed rate cut is due to global slowdowns, especially in manufacturing.

His focus is to preserve capital, and thinks the market is richly valued. Though timing the money doesn't work, he is keeping cash. In 2008, investors took a long time for investors to make their money back, due to capital depreciation.

Market Outlook The US Fed Chairman warned there should not be more rate cuts coming. This was a singular cut based on current trade events, he suggests. There is now $14 trillion in debt globally that has negative yields. US tenures have rebounded 2 percent on the 10 year yield. If oil prices rise over the next few months, this could lead to higher yields and cause the market to slow. The US dollar may increase, which could weaken gold prices. Unemployment is at 50 year lows. The concern is over European and other global markets lapping back to impact US sentiment. From a technical perspective, there looks to be another 18-20 months of good markets ahead. Low inflation will backstop low interest rates to fuel the growth.

Today's downturn after Trump tariff comments. Indicative of environment we're in. Trade wars and de-globalization, the reverse of free trade. Gives you slowing growth. Trump wants a rate cut so he can play hardball on trade wars.

Asset class behaviour vis a vis inflation and growth. Certain asset classes do better in accelerating growth, such as equities. In slowing growth and rising inflation, it's like the 70s and where we could be headed. You can hide in gold and commodities. In most portfolios today, you see the ubiquitous 60/40 split. On a day like today when equities drop, and bonds rise, if you don't have balance, you could see a huge negative shift.

Gold vs. the S&P 500. A month ago, he suggested positions in gold. It was the beginning of a trend, which is tied to inflationary pressures and slowing growth. Lower left, upper right chart for gold. Versus a choppy flat S&P 500. That's telling you something.