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

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.

Costs associated with buying and selling ETFs. Management Expense Ratio (MER) is what people focus on. But the Trading Expense Ratio (TER) is often overlooked. It includes all the costs of trading, such as commissions. Sometimes you can see the TER expand to keep the MER low. Then there's the bid/ask spread, with the NAV in the middle, and can be a significant expense. But this is only a concern if you're trading rapidly. Finally, there are the tax expenses, such as withholding tax. So you have to balance all the costs for what's important to you.

Covered call strategy explained. Let's say there's a speculator, and they want to pay $1 for a stock, rather than $100, but they want the upside. But they have a date and time expiry. So they take the upside opportunity from you. In a strong bull market, covered writing will underperform. But for that, you're getting the premium. Covered writing generally works in gently trending up or down markets. Downside protection is somewhat limited. You have to understand what you're getting into with these, or you might bail without getting any of the returns.

Minimun volatility ETFs. Min vol ETFs do a better job than low vol ETFs at harnessing volatility and keeping the portfolio diversified. They do it through portfolio construction, rather than just looking for low vol stocks. Invesco has one each for Canada, US, and global. Posits that min vols are a superior way to harvest market beta.

Gold exposure. If you don't own gold, you either don't understand economics or you don't understand history -- quote from Ray Dalio. Minimum 10% to start, and then consider how you'd alter that allocation.

Market Outlook There are a lot of champions for a US Fed rate cut today. It is questionable whether it is needed or not, he thinks. Generally it will be positive, but for REITs, supply and demand for real estate is more important. The Canadian REIT space for rental apartments, industrial, and seniors housing are all doing well. He is less constructive on retail. Industrial has become the new retail, because of e-commerce and the warehouse requirements needed.

Industrial real estate The growth in e-commerce sales as a percentage of total retail sales is growing exponentially. The land zoning in the right area can be challenging. Getting the right property in the right location can be key to how over 90% of your other costs are managed. This means there is great value in the right industrial properties. Going back to 2011 the demand for warehouse space has more than doubled and will increase by another 50% over the next two years. Simple laws of supply and demand make this space highly valuable.