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

European growth. German demographics are terrible. No inflation, no growth. It's a problem globally that we don't see the inflation and growth that we used to. Bond market is reflecting this.

What is the US national debt? True number is 22.5 trillion. Size of economy as of Q4 is 20 trillion. Nominal debt to GDP is around 102-105%. Issue about unfunded pension liabilities can muddy the numbers. Difficult political environment in US, and this issue is a runaway train. Be mindful in the next 5-10 years, and what that can do to markets.

It's been a tough week for earnings (though some companies have done well). He's carrying more cash than usual and has been taking some shares off the table. We're seeing the end of the cycle. The dilemma for central banks is how to normalize rates, but be aware of the markets selling off swiftly when rates are raised, like last December. We'll see some misses in industrial stocks, because--for example 3M, they are dealing with a strong US currency and competition from Europe. He suggests buying European blue-chips at the current CAD exchange rate. Europe is not blowing up. If Brexit happens, it happens; Europe will survive it.

How to value insurance companies during climate change? Look at price-to-book. Also, how is the current valuation compared to 5-10-year averages?

Market Outlook In Canada, debt is running at 170% of income with investors. The US is only about 110%. This high household debt level does not leave much room for a family to absorb interest rate hikes. Unless Canadian start earning a lot more in income, he thinks there could be more defaults ahead. This have been build over the past decade. Unfortunately, there is no single government policy to deal with the risk. He thinks investor complacency at high levels, with volatility plummeting. Now another correction is likely coming.

Fixed Income vs. Equity? You should think of this over a long time period, depending on your needs for income. He is about 25% cash right now. To be defensive, hold cash -- not fixed income. You need to be aware that bonds can create as much risk as equity, depending on which issue you hold.

Market Outlook - The big names very strong after hours today. Earnings are in the growthy part of the market. That is what he needs to see to keep thins thing going higher. He needs to put there warnings: 1- We are at major resistance levels here, it is going to take a lot of energy to through to new highs, 2 - the small caps is still 7-8% off all time highs, 3- it bothers him and others that this has come so quickly. Don't quit yet. We are still in good shape.

Do you like the US Healthcare sector? He still believes in the sector. there is a lot of political rhetoric now so he would hold off for now. But He would look into names that held well in the last couple of months. United Health would probably his top pick in the sector.

It's been a strong Q1 with the S&P making a record high today. Investors were too negative in December 2018 and we've seen a 20% rally driven by new sentiment and lowering/flattening interest rates. But companies actually lowered their estimates heading into this quarter. Locheed, for example, reported strong this morning. Multiples are 16-17x forward earnings on the S&P. A China-US trade deal could drive more upside. The buying opportunities are getting tougher to find; it's a stockpicker's market. It's smart to take some money off the table, hold excess cash and wait for another pullback, possibly driven by another Trump trade war (with the EU).

The big question is: How long can it last? The rebound since December has been staggering. There isn't a balloon ready to burst, but a downturn will come. When? We're late in the cycle. Now are the good-ole-days. We're way below normal interest rate levels, but debt is high. These are the danger signals. He will be quicker to sell; he would love to take more money off the table. U.S. unemployment is at record lows which boosts spending, but also the Fed should raise interest rates. Trump is highly questionable, economically. He's had six companies go bankrupt. His tweets aren't the wisest things, but no one can contain him. How much is he getting done on the trade front? Our own trade deal with the US hasn't been signed yet. He creates more negativity than the positive; he thrives on discord, which is not the best way to do business.

Geopolitical dangers have never been higher, given the horrific Sri Lankan terrorist attacks over the weekend, and Trump continues to restrict the flow of Iranian oil. Geopolitics does impact world markets....MSFT and Intel report this week and have both broken to new highs. They will indicate whether the broader rally will continue. The S&P and TSX hit record highs, but he doesn't see a strong economic backdrop. Half of Canadians are a few bucks away from insolvency. He feels the economy is fundamentally weak. We're in for potentially decades of low interest rates.

How are daily stock fluctuations derived? A company's fundamentals. But also behaviour is having more and more an impact with extreme pessimism and extreme optimism that rarely reflects true value. Sometimes this means the noise (headlines) of the day. Also, algorithms are scanning headlines. Sharp fluctuations are becoming the norm.

Educational Segment. The price of oil Oil prices are moving up in Canada and America and rubbing against the 200-day average. Oil prices move in two ways. One is the supply push; the other is demand pull. When prices rise because supply is constrained, that's supply push, which is not a good way for prices to rise. The reason is ultimately economic output is going down--we're producing less. This is happening now in Alberta. The bullish move is the demand pull, where a growing economy propels rising prices rise which increases output to meet supply. This is good growth, but we're not seeing that now. Instead, we are in supply push. Sure, the price can still break-out, but there's resistance and that rise won't be sustainable. He'd rather sell into that rally.He doubts that the oil price will break out and he would sell during a rally. Now, it's a short-term rally driven by traders and speculators. He doesn't see $100 oil coming. Canadian oil stocks, though, are undervalued and need a demand increase.

The US market was a solid green to him for many years---until December 2018. It's now yellow. He's now raising cash, though the markets rebounded nicely since Xmas Eve. Data says that the global economy is slowing a bit. Geopolitics worry him in the States with the Mueller Report. Trump's threat to cut off Iranian oil is driving up today's oil price, but the world's biggest customer is China. Also, there's more oil supply than demand.

Where to start investing for a beginner? Buy an ETF of the S&P 500. Then, look at the top names within the S&P. If you use an iPhone, buy Apple. Buy around five stocks. Watch how news effects individual stocks.