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

Educational Segment. The US-China trade war There's no trade deal right now (though we'll see what happens at talks this week), and maybe Trump is backing off on his tariff threats and will fight with Europe over cars. Who knows? With his pressure on the Federal Reserve, we're headed to currency wars. In 1987, the US and Germany were in a trade battle about cars and the Deutschmark, a main catalyst in the 1987 crash. In the Russell index pver 5 years, the broad markets are riding, but fewer and fewer stocks are lifting the market. This is troubling. The Bloomberg World Index shows that only the US market is making new highs, not the rest of the world, and this is unsustainable. As stock markets weakened in 2015-16, the Eruo and the Yen weakened in tandem well in advance. This is weakening again now. He wants to see a strong Yen here (he doesn't like Japanese bonds or stocks). A trade idea is Invesco Currency Shares Japanese Yen Trust (FXY-N) that exposes Canadian investors to the USD which is good in a downturn and long exposure to the Yen, too. We're heading into currency wars.

Market Outlook The US Fed is likely to decrease rates by 25 points this week. Central Banks globally are trying to avoid having the economy sink into recession. He questions whether they have that power to delay it indefinitely. The business cycle is coming close to the end and he wonders if President Trump is trying to create a trade war ahead of the next election. The US 10 year treasury yield has dipped below 2% and could fall into negative territory. As long as we are below 2.7% yields we are in a financial "repression". He thinks we are already in recession and the bond yields are already telling us this. We actually need a recession.

Time to invest in Canada? He has been down on Canada for the last 4-5 years. He has sold the Canadian dollar. He does like software in Canada. The energy sector has been an example of wealth destruction. Investors should be using cash to pay down debt right now -- the best return in this market.

US dollar He thinks investors will flock to the US dollar when the economy slips. This could be accentuated following the next US election.

Bitcoin? He just does not understand how people trust bitcoin, where participants are people trading in the basement in their underway. He favours participating in blockchain technology instead.

Wait and see for Powell's Fed announcement on Wednesday 2 pm. At the end of May, there was some talk about a rate cut and now it's front and centre. These are unprecedented times. There's talk of a cut of 25 basis points this week with more, maybe, later. But we're sitting at low unemployment. If 50 basis points are cut, then bonds fall off a cliff and everyone will move into riskier asset classes (stocks). This will lead to a melt-up--and this is frightening. Think about how to be defensive....Beyond Meat is selling off after hours, because management is selling stock; BM is the first in this space with others launching soon, like Nestle and Maple Leaf Foods. They just did a second offering in order to stay ahead of the pack with R&D.

Should there be 33 holdings in a portfolios. Generally 30. If you have 10, then if one of those goes down, it will impact your portfolio. Remember to equally weight those stocks, selling off shares to return to 3.33%. Re-balance. Sell into an increase (strength). You don't get emotional doing this.

There are two markets. Bond markets are going down due to a likely US rate cut because of slowing world markets. Meanwhile, stock markets are hitting all-time highs based on hopes for a trade war treaty and rising growth. It's a paradox. Real growth is slowing. We'll see if there will be two rate cuts and if both are needed. Consumer sales are sluggish, merely OK. We have a manufacuturing recession globally. We have expensive defensive sectors like utilities and REITs (and you should sell them), but materials have too much negative momentum. You're stuck in the middle.

National Energy Board rejecting review of Coastal GasLink pipeline. Longer term if we can get a better price for the products we have in this country it's going to be great for Canada. Building new pipelines is going to create new jobs and create new opportunities. We just have to do this in the right way. Hopefully this will lead to a better economy for Canada.

Canadian Energy Sector. Fundamentally there are 2 issues. One is on the coast, probably a lot easier to put together, the other one really across big jurisdiction and having a lot of opposition. Even if we started tomorrow, it would take quite a while to build those pipelines, 3-4 years, and quite an undertaking. He prefers energy names outside of Canada at this time.

Market. If president Trump didn't engage in a trade war the world economy would be in a better place. There are definitively some challenges. Growth in the U.S market is very narrow. Many sectors of U.S economy are in recession as well. Growth is slowing, corporate debts are raising, other parts of the world are heading in recession. He suggests his clients more low growth, downside protectiton stocks. Watch fixed income. Some defensive stocks are quite cheap, telecoms for example, very cheap with big yield. You don't need to go on and buy Amazon at 53X forward earnings, at some point it's not going to work. The other broader issue is anti-trust issues in the U.S for big tech companies.

Why aren't energy prices higher? Seasonal factors affect the price. Prices haven't bounced because of imports/exports, the Iran concern hasn't played out, and trade war issues. Demand growth is not there, and we're heading to the end of summer driving season. In shoulder season, we're going to see significant builds in inventory. He thinks we're going to go below $50 in September or October, and that would be a fantastic buying opportunity.

Will solving nat gas issues propel stocks higher? Nat gas is an egress issue. More pipelines needed. Curtailment could solve it. We get higher prices in the winter, but the problem is, the price is just so low now.

Will electric car demolish oil & gas in 10 years? BP and Exxon have a lot on their website about this. Electric vehicle numbers are increasing. But energy is also consumed in airplanes, trucks, and in making plastics. Electric cars are part of the solution to extending the life of oil reserves, but oil will still be in demand 20 and 30 years from now.

Impact of central banks. Strong year for equity markets. Big catalyst for that has been central bank policy. They tightened in 2018, and global money supply shrank, so they had to reverse course, and markets rallied strongly from there. We're still trying to get back to normal. Challenge is that the economy can't grow without capital.