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

ETFs in a TFSA. Some have a phantom dividend, but you can't receive it in an TFSA. Yes, a phantom dividend exists and it will effect your ACB in taxable accounts, but not TFSAs.

Buy gold in a recession? Yes. It's traditionally a safe haven. And in a recession or downturn, gold will do pretty well. If things get really bad, gold could hit $1,550.

He respected Larry Fink, CEO of Blackrock, until he tweeted over the weekend that the ECB needs to buy stocks in order to stimulate the economy. This blows his mind, makes no sense. The Wall Street elite is saying, keep fuelling the stock market with liquidity. Japan tried this strategy and it has not worked; their GDP growth rate remains weak and flat. Fink is saying, Let's do more of what isn't working. In fact, it will drive up an asset bubble. Terrible, terrible policy.... Interest rates will stay low for a long, long time and this will stimulate the market and create a bubble.

Good vs. bad return of capital of an ETF--how to tell the difference? Call the ETF provider. The bad return happens when the underlying assets yield 3-4% but the the ETF pays 6-7%, because you're eroding your capital and they are giving some of your own money back. The good return happens open in the rapid-growth phase of an ETF. It pays the yield equal to what the ETF earned in that growth period as a return of capital. Caveat: there are lots of intricacies, so call the actual ETF company to find out about the distribution in a taxable account. If you're in a registered account, it doesn't matter.

Educational Segment. Indicator of oil demand A chart showing the long-term demand for barrels of crude oil: The current YOY growth/demand rate is the lowest since right before the last recession. Currently, oil is being boosted by supply constraints is okay, but it is not ideal. What is best is demand pushing oil prices up. The last few years, oil demanding has been moderating but now it stands at the weakest since the recession. The U.S. is the source of the strongest growth with forecasts of $55-75/barrel. The outlook to 2022-23 will see growing supply as demand is declining, rising from 11 million to 14 million barrels per day. Best-case scenario with the help of technology, then the U.S. could be energy independent by 2040 at 20 million barrels per day, which is current American demand. Also, if the futures curve keeps rising, it will be very interesting for the price of oil. So, he remains an oil bear: sell crude during rallies.

Trumps' latest tweet calls for cutting interest rates Unfortunately, trading today involves his tweets. His tweets are often conflicting. Trump wants lower interest rates to boost the market, but how many of his voters own stocks? He wants a strong US dollar, but criticizes China for devaluing. Expect more conflicting comments as we head into the 2020 election.

He's defensively positioned in the short-term, with 33% cash. The beta on his holdings are so high. In 2018, we had six corrections between 5-10%. He entered 2019 expecting volatility and it's worked for him. Self-driving cars: Waymo is the leader and pioneer, since 2009, which means they possess 10 years of data.) Tesla relies mostly on cameras to develop self-driving cars.

The key theme is the apathy towards oil stocks here and around the world. Oil prices rally one day by 4%, but the stock climb only 1%. But oil falls 6-8% on a macro headline or Trump tweet. The volatilty is soul-sucking. The oil price is up 22% this year, but oil stocks are flat or down 20-40%. A huge disconnect. Based on this disparity, oil stocks are trading all their lowest levels ever. Many oil stocks are trading at a 20-30% discount to a company's liquidation value. How did we get here? ESG concerns, capital flight and Trudeau won't build pipelines. Bottom line: there are no buyers of oil stocks. However, the pressure on oil companies to use their free cash flow (15-30%) is growing to buyback shares to fill this vacuum. He is championing this to all Canadian oil companies. That would jolt this coma. We are in uncharted waters with oil stocks. These oil companies are, in fact, more profitable today than when oil was at $75, because the companies have gotten leaner and more profitable. There is a massive disconnect between this reality and investor perception. The situation is horrible, frustrating. Inevitably (he doesn't know when), money will flow back into this sector, as history tells us. One positive is pipeline optimization, which increases capacity by 100,000s of barrels a day. The opportunity is there and eventually a catalyst will come to unlock this value. Meanwhile, oil investors must endure volatility.

Bills C-48 and C-69 and the future of Canadian pipelines Bill C-48 would've impacted only Northern Gateway, which was dead anyway, and so doesn't impact the Transmountain pipeline. Bill C-48 is another question that he's throroughly researched. He met with Enbridge and the upshot was that they feel they can never build another pipeline after this bill because they'd have to spend $500 million-$1 billion of shareholders money just to determine whether they can build or not. Currently and in the neart future, Transcanada and Enbridge can move 400,000 more barrels per day not by building new pipelines, but making existing ones more efficient. Crude by rail is the most expensive and most dangerous method to move oil, but we are pressured by environmental groups. Yes, investors are frustrated, but oil stocks are already discounted for the worst. Two scenarios emerge: a positive catalyst triggers international money to flow back into oil, or if we don't then oil stocks can turn into share buyback machines.

Lots of background noise, including Facebook's entrance into crypto and Trump, but having strategy is the most important right now. Having asset allocation, stocks and bonds, is to have a measured response. Last year's tax-loss selling is an example of when to take advantage of negative market sentiment.

Gold. Not a fan of gold, and doesn't see it going up in the future. Instead of gold, investors are running to the USD for security. Would prefer something that pays yield. Would only trade short-term.

Mixed data on the markets. Last week, Fed didn't pull back on expectations it was going to cut. But now PMI is pretty strong. Strong bounce today. Fed's highlighting that US manufacturing was weak. If you look through the data, they've guided that they're going to cut at least 25 basis points at the end of this month. Comes down to inflation expectations. They're afraid of the market having lower inflation expectations for longer.

US durable good orders vs. inflation. Fed's backed themselves into a corner. The trade war now has run longer than anyone expected. Trade war is hurting manufacturing but the domestic economy is pretty strong, and the consumer's in good shape. Trade policy has moved inflation expectations lower, and that's where they're going to try to cut that decline.

Hedge fund manager Ray Dalio's concerns about the economy and a depression. He's a thoughtful intellectual, but with decades of experience. Level of money printing in the next recession is underappreciated by people. How do you stimulate your economy when rates are already low?

Differential between WCS and WTI. Volatile for last 12 months, and will remain so. Problem is there isn't enough egress to get oil out of Alberta. As long as you have oversupply and problems with infrastructure, WCS will trade lower than WTI. Texas, for example, has built 3 pipelines in the last 2 years.