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

We're locked in a tug of war between a slowing economy and expectations for lower interest rates. US Fed Chair Powell meets with the Senate this week. Canadian oil stocks aren't attracting investors, because there is too much product that can't get out. Yes, some oil stocks are paying a high yield, but these may be too good to be true and unsustainable.

TRST has been punished this week for violating Heath Canada rules He doesn't own cannabis. The industry is unsettled, unclear where the value will be created and the regulations keep evolving. There's also the issue of corporate governance--who's on the board? He's seen some shady characters on the board of some cannabis companies (not TRST). Also, valuations are astronomical.

How are the markets? Markets are good, and so is the price of gold. So life is good.

Where is the price of gold going? Nice to see it break out after 5 years. It's going a lot higher. The global monetary and fiscal situation is a mess. The only way central banks can keep things going is by dropping interest rates and maintaining stimulus. Gold is moving because interest rates are moving down. It's what central banks are saying about the quality of the expansion, and it's not good, so they have to drop interest rates. All things come to an end. He's looking for the S&P to reach its calculated fair market value, he calculates it at about 3100, and we're at 3000 now.

Earnings expectations falling? A year ago, consensus for this quarter was a gain of 9%. Now it's looking for -2.9%. The bulls are saying 2019 will be soft, and 2020 will be a recovery. The expected earnings chart says otherwise.

Critical level for the S&P 500? Structural support level is 2550. If the market pulled back that far, you'd probably get a nice rebound from there.

Investing smartly and wisely. Massive disruption in retail driven by Amazon, and it's spreading. The rules of investing are changing. And if you don't grasp this and take advantage, your portfolio is going to get hammered.

Market Outlook The S&P500 finally breached 3000 points. A big round number has psychological meaning. The Fed is still hinting that another rate cut may be coming. He is giving his clients the message to keep a very balanced position. Global growth is slowing and global PMI is slowing -- not a great back drop. The NY Fed Recession Indicator is getting close to predicting another recession around mid-2020. The inverted yield curve is another signal. Investors should prepare for a recession within the next 6-12 months. In the interim, you can add real estate and be defensible.

Market. Trade tensions are starting to impact the US economy. The whole global economy is slowing and they see a rate cut at the end of July. It is a precautionary cut. The jobs number was strong last month, but if you look at manufacturing data, we are not expanding at the levels we were at 6-8 months ago. Things are softening. The housing market has stayed flat. We are in an extended bull market but the growth has been very slow vs. other cycles.

Every instinct tells him that the market will come off--correct--but not until the fall. We will skate along for the rest of the summer. Equities are strong because nothing will rock the boat. Until that comes along, we will skate along. Gold needs to pass $1,400 before he buys. The TSX chart is toppy, but it has a better chance of further upside than the American exchanges. With rates staying low, all is good for stocks. He is selling at these toppy levels in order to buy back later (when the market dips), like sell half.

Market. Central Banks with firing of the central banker in Turkey. There are parallels going on here. You have always seen techniques going on with truly overt government techniques. The government lowering rates is not going to work. You have this massive debt in the world and low interest rates, so we have to rethink policies on how to stimulate in the world. He likes that Trump makes it easier for businesses to do business. When you look at the FANGs, APPL-Q is not expensive. There is a the swath of hold recommendations so there is quite a bipolar recommendation developing.

GOLD. ETF or Income Fund. GLD-N is the biggest gold ETF and is the one he uses. There is an iShares one (CGL-T) to play gold with a currency hedge. He is fine with ETFs.

Educational Segment. We are at one of those magical market points where we are at a round number. We are nearing 3000 on the S&P. The psychology of the big round number… The DOW has been around longer. The S&P-500 is about 40% of the world in equities. So it is the benchmark of the world. The top is probably in but we made a new high here. The percentage of stocks lifting the market recently is shrinking and this is a sign of weakness. It is nothing to celebrate. Don't suffer from the fear of missing out.

Market. He has a more broad-based definition of infrastructure so it includes data centers, towers and some of the transports. He excludes pipelines. His stocks have under-performed global equities in growth in 2001, 2008 and 2015. Renewable energy costs are falling and especially in a place like India. It is a driving theme there – see the space where he would talk about past picks.

Renewable Energy in India. They have a lot of coal fired emissions. It is now economic to generate by solar panels. It makes economic sense. There is no variable cost to solar. A coal plant takes almost 48 hours to start up and it adds to the operating costs. Solar is 10% cheaper in India than coal. Solar power is still only 3.6% of generation in India.