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

OPEC will extend cuts. OPEC did what they had to do. They can't increase production or else prices fall. If they decrease, then US shale is around for a lot longer. They are caught in a vicious cycle. Slower economic growth hurts oil, too. Christine Lagarde will head the ECB, just announced. She's intelligent and can run the ECB, but she's a lawyer, not an economist. Will she understand the details? Then, again, Powell is a lawyer too and seems to be doing well. Likely, she will keep rates low and maybe do a round of QE though several nations, especially Germany, want higher rates. Overall, lower rates will help stocks.

He looks for under-the-radar stocks that show (the potential for) outsized growth. One sector he follows is cannabis, which has pulled back a lot since April and suspects it is nearing the bottom, so he's starting to buy again.

Oil sector Canadian oil and gas have been in a very tough space for the past three years. If you own these stocks, don't sell them. Sentiment is depressed, so when that sentiment revives, these stocks will probably move up fast and suddenly.

What do you see out there? Little flourish right at the end of today, which was encouraging. Most gains in the first half came at end of first quarter. In the S&P, we're reaching a top again that we saw last year. We're either going to break out with the volume, or fall 5-10%. He'll be watching the markets carefully next week.

Meeting between Trump and Xi Jinping. People are feeling confident, because they were buying rather than selling off. We'll see how it goes. They're short-term effects in any event.

The earnings season about to start. Right now, it's a bit of a technical mark because we're at the peak. Instead of looking at the indexes, look at the underlying industries. Bottom up stock picking is more appropriate right now than buying or selling the market.

What do you do with all the Fed headlines? Monetary and fiscal policy affect the markets. There's a lot of momentum in the economy. Not concerned about big interest rate changes one way or the other right now. Canada might be more of a concern because the differential has a bigger impact on our dollar. Our low dollar has really been helping our economy. A fine line to tread in Canada on interest rates. Canada has never faced a housing bubble as they have in the US.

Can investors put their brains in park for the summer? You always have to pay attention. There are some big trading moves. Continue to diversify. Don't let one position ruin your day or your year.

Market. There is a tremendous amount of concern around trade, the economy, news flows and there is incredibly defensive positioning in the market. In 2018 we came in hot and the rate hikes cooled expectations and we discounted some slowdown in trade. The fear at the end of the year was really over done and it was a bull market correction. We are now facing some positive catalysts: A friendlier Fed. There are concerns built into the markets. Defensives are roughly twice as expensive as they have historically been. Cyclicals are cheaper than they have been since 1980. He does not know of a bull market that has ended with everybody defensive and sitting on the sidelines. The market has discounted a slowdown. The pain trade is that which hurts people the most. People are positioned too far in one direction. This market takes out these highs with any measure. The pain trade is what the market can do to people on the wrong side of the market. Defensives are pretty expensive. Railroads or semiconductors are trading high. The market is not telling you that you are heading into recession.

Forest Industry, Lumber Producers. His strategy is to look for groups where earnings are starting to accelerate and we are seeing positive change. The forest products group has been difficult and is under-performing the group. Wait to see a turn before stepping in.

Cryptocurrency recommendation. They had a difficult year last year. He did not invest in them last year. It is not his focus. Recently we are seeing gold starting to lift along with cryptocurrencies, we are likely seeing a relative near term high in US currency. There are a lot of people who are big believers in cryptocurrencies. He thinks they have a place in countries where there is no stable currency, nor banking system where there may be a flight to cryptocurrencies. It looks like they are seeing another leg higher. It’s worth while looking at the space but he does not have a recommendation.

Central banks being accommodative. G20, US-China meeting, and OPEC coming up. We'll see what happens. Probably not much. Market seems to feel that any news is good news, and it's just waiting to march higher.

Global trade tensions are making the Fed cautious. If we don't solve the global trade problems, this is the optimal scenario, because we won't need to raise rates. As long as they're negotiating, that's good. Tensions have affected the economy, and Powell can continue to accommodate. Every negative piece of news is quickly counterracted with something positive. There's been enough negative economic news, plus stagnant inflation, to keep the Fed dovish.

Outlook for Canadian banks. If you assume we're late in the cycle, then banks are not ideal. But TD, BMO, and Royal are her favourites because they're across Canada and the US. You also have to keep an eye on credit. Doesn't subscribe to the shortsellers' views. They don't have the vulnerability they're accused of. But won't take much of a correction for people to pounce and say "I told you so".

Investing in the gold space. Plays both the metals and the miners. You own gold because there's a fair amount of inverse correlation between equities and the actual metal. Sometimes, in a volatile market, gold is a good offset. Frequently, when there's a major correction in the equities market, gold equities correct too. Still, if gold were to break out, you get a multiplier effect of 3x on the equities.