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

Market. Everyone recognizes that trade wars are extremely negative to global stock markets. We are seeing the impact as low bond yields as well. The impact of the trade wars has started and we will see it in the quarters to come. He has been avoiding cyclicals in the short term. He is staying away from everything that is economically sensitive. Energy producers and resources are not his bag.

Market Outlook - Typical Trump is to, when it looks like a deal is coming, he will get something out of the weeds and force you to accept his terms. The new NAFTA looks fine. He doesn't understand diplomatic niceties (and doesn't care for it either). He doesn't blaming for some things he is doing particularly when dealing with China. US policy for the last 25 years has been to ignore the maleficence of China. They have been stealing hundreds of billions worth of research from the US. They have a security system to watch over they own citizens. They are not our friends or allies. They are competition. It is a bestial regime.

What ETF would you suggest for the Energy sector? XEG is his top pick tonight. It captures the big guys in the sector. He would also prefer XLE in NY. He would avoid the small ones on Canada for now. In the US they can get things built. Canada is kind of close for business in Energy.

Is there a Canadian ETF in Canadian Dollars that tracks the NASDAQ 100? ZQQ from Bank of Montreal tracks the NASDAQ and hedged to Canadian. you pay a little extra for that but it is a good product.

What option strategy has the best probabilities of winning? Options are used by people that wants leverage. He is willing to sell options to those guys. That is why he likes covered calls. 80% of the time people that buy options lose money anyways.

Market Outlook He likes to keep an overall portfolio that is market neutral. The FANG stocks has really driven the second half of this bull market since 2019. Canada's resource market has not favored well in this cycle. Over the past 20 years things are a little better for the TSX as the resource cycle flourished. He sees the regulatory environment being the big issue for Canadian energy stocks.

The fundamentals are pretty good. However, the political environment with US/China trade tensions, Mexico trade tensions, Brexit, may be causing some growth or expansion plans to be postponed. The trade tensions need to be resolved quickly or could start seeing some real harm, the recession may come sooner than later. These trade issues are very disruptive.

Market. There is always a story and always a worry. He views the trade stories as transitory, even if serious. For the long term investor to react too violently is a mistake. You should have set up a mix to get you through times like this. Trump does not want a weak US economy going into an election. If the trade war continues, the FED has shown they have the backing of the markets and so we could see cutting of rates as the trade dispute effects the economy. The markets are reacting as though it is a lose on both sides. Consumer products companies have to reinvent themselves. Valuations on these slow growers have been too high. It is because interest rates were too low and they increased dividends to create a yield to compete effectively with treasuries. One is a riskless asset and the other is a risk asset. You can't view them as the same.

US Banks. The industry is a little in flux because of the environment. The FED did a flip flop in January with interest rates. When you make these mistakes the market reacts. Now we are in a falling rate environment and it is not good for the banks. BAC-N is the most levered to mortgage rates. He lightened up on his banking exposure about 3-4 months ago.

Market right now. Great year for REITs. Global REITs are up 12% YTD, and Canadian ones are up 14% total return in line with the TSX. Driven by decline in 10-year bond yields, earnings growth has been pretty good, and lots of uncertainty in the market. Real estate benefits from being defensive in uncertain times.

10-year yield dropping below short-term. Especially for housing stocks, this is the boon that they need. With interest rates so low, there should be more buyers hitting the market.

How much leverage does the BoC have? Unless something dramatic happens, it should be steady state in Canada. The US is excited about a rate cut, but it's driven by trade uncertainty. If Trump fixes this in the next couple of months, and Powell was to cut rates, the market will do quite well. Economic indicators are very strong.

Performance of global REITs. Going back to Dec 31, 2002, global REITs have outperformed both global equities and global bonds. Real estate had a significant growth capacity compared to bonds.

What REIT sectors are grabbing your attention right now? Really likes 2 sectors, apartments and industrials. Bearish on retail. There's a significant under supply of rental apartments, especially in urban areas. Industrials, such as tower REITs and data centres, will benefit from the e-commerce revolution.

Should you buy a property or buy REITs? Separation between the two. Just because you own a cottage or house, doesn't mean you shouldn't own REITs. Opportunities for both in your portfolio. Three reasons to own REITs: 1) over the long term, global real estate has outperformed; 2) REITs can outperform even in times of rising rates; 3) many Canadian retail investors are underweight real estate.