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

Tech staples (that his company runs in a fund) vs. consumer staples The market keeps giving above-market multiples in consumer staples like Coke, because they're safe and defensive, but tech is growing 17% a year and is trading cheaper than the consumer staples. He thinks tech stocks are not expensive and should compliment utility stocks in a portfiolio. Also, he expects tech stocks like Google to pay a dividend in coming years. Tech stocks have huge runway ahead of them, namely in digital advertising, as well as in healthcare and financial services. Amazon and Apple are going hard into e-payments. They also have gobs of cash and little debt.

After the Dec. 24 low, the market ran ahead and corrected, but stayed above that--that was really positive. This has been a great week, but it will be a little harder. The VIX was up today. Copper and energy stocks aren't participating in the current rally. Bonds are overdone now, but the markets won't take off until copper (connected to China) and energy rev up. Keep an eye on the 10-year rate which influences all, including home mortgages. He doubts we'll see a rate cut from the US Fed in June. We're at a seminal moment. The 10-year yield could increase, likely gradually. The economic backdrop is not terrible; Canada's job numbers are strong and our rate could actually increase.

Gold Gold is hitting resistance now at $1,351, very much linked to the strong USD--the market is telling us to own gold. (Gold) producers usually lead the price of the commodity, both the upside and downside. We have a breakout now in those producers, so he predicts a breakout in gold itself.

Market. Portfolio management changes every day. There is always risk but that is where discipline comes in. Regarding talks with Mexico, there is no direction and people are looking for any headline to drive the market. There has been no deal all year and we have been just treading water on a deal all year. If we look at the global PMI index we are seeing weakness. We have seen the global economy slow down but it is not at recession levels. He is not avoiding economically sensitive stocks but is going a little more defensive as of late. We will see the bottom this summer in industrials. Resolving of the tariffs into the election should let us see rebounding in the fall. The US dollar has stayed strong all of this year but he does not see it as a huge headwind.

We've had a spectacular bounce since December, but based on what? Not much is happening with the economy, really. The hype in U.S. early this year was a shame--it wasn't based on fundamental growth. Powell is being "patient." However, things aren't as good as the US Fed's Powell lets on. A rate hike is out of the picture for now. Rather, he expects a rate cut and the stock will have a Pavlovian reaction. In America, Trump threatens Mexico with tariffs, then pulls back and the market bounces up and down--it's noise. Noise doesn't effect the fundamentals. What we need are earnings, and the fair market value of earnings lately are flat. No growth. What will drive markets? He doesn't know. The FAANGs were the big leaders of the last few years, but not anymore.

Preferred shares worth buying? Almost all preferreds are resets, which means every 5 years the dividend rate is adjusted according to interest rates. So, when the latter fall, then resets pay lower dividends. This is why preferreds are falling. Not a good outlook.

Gold The market rally is getting long in the tooth and we're starting to see weakness in Japan, spreading to Europe and the US Fed fears that may spread here. The US is carrying huge, expanding debts--fiscal stupidity. Gold could go a long way and he's waiting for it to break out as the world's central banks buy it. Once gold goes, it can really take off. Gold is so disliked as an investment that the junior gold companies have been ridiculously sold off.

S&P 500: more upside to come or is it overvalued? 3,080 is the current fair market value of the S&P, but the S&P almost never reaches above its FMV--its iron ceiling. The last time it nearly did, it took a deep dive. Earnings are flat, going nowhere. Meanwhile, Trump threatens tariffs. The markets could then fall. We could see Uber, Lyft and Beyond Meat slide first, and they could plunge hard.

Oil or lumber picks? No thanks to both. Will oil prices stabilize? Lumber: housing is falling out of bed and he won't even guess a bottom in housing. He started his career analyzing pulp and paper, so he knows how volatile (low) these stocks can get.

Market Outlook There may be some chance the US Fed may reduce interest rates. Although nothing has been said directly, recent comments were taken by the market to suggest a cut would be more likely than a rate hike. In the last month, the risk of rising trade war with China has increased. There seems to be a rotation toward defensive stocks. Try not to get distracted by the noise in the market. Now is not the time to bet big on a single investment strategy -- wait to see if growth will continue. Sometimes it is best to do nothing.

Market Outlook - The market has been desperate for positive news. He has never seen the list of worries so clearly documented. We need to position for the positive feedback eventually will arise. We had two big days in the S&P 500. Canada is having a rougher time because of oil correcting. He rejects the idea that what we are living right now is unique and has never happened before. He is positioned for a break out to the upside. Cash levels are low. The value story has been difficult for the last years.

Market Outlook Everything in the economy looks pretty good, there is just uncertainty about trade wars. Auto sales growth seems to slowing, despite lower leasing rates. A peak appears to have happened in the space, but it is not enough to cause a down turn in the market. They are waiting in the wings looking for short term opportunities to buy good long term companies.

A couple of tumultuous days, with upward momentum today. With the decline in interest rates, volatility has to be expected. Going forward, it's important to be diversified. Don't be 100% in equities. Everyone's focusing on the market, but global economy continues to slow down. Populist wave in Europe. Similar to the 1930s economic turmoil. Geopolitical shift driven by Trump, reflecting that the system isn't working anymore. So he's being more conservative with clients' money, positioning for volatility.

Allocation to precious metals. Producers are the better play than physical gold. You'll get leverage from the companies. Standard advice is to have at least 5%. But most investors have none. By having an overweight position, he'll benefit when the light goes on and the money really starts pouring in. If you don't own gold, you don't know history or economics.

The drama and volatility will last and be worse than the Great Depression? He'd agree. Once this change really starts to take place, it's never coming back. Having a new currency reserve is needed. Asia, US, and Europe will each have a separate system.