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A Comment -- General Comments From an Expert (A Commentary)
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Increase in Gasoline prices. The price is in US$ so as the Canadian dollar weakens, we buy oil at a higher rate. If we were able to get all our gas from Canadian oil, we would have carbon taxes etc.
Larry Berman CFA, CMT, CTAUnknown
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Educational Segment. Retirement ages. We have this massive unfunded liability. The liability is that as we age, the government owes benefits. If the US does not change what they promise, by about 2035, they will have to borrow money just to pay the interest on their debt. Canada is much better off than this, we have the Canada Pension Plan. But now we have many less people in a working age range, vs. past the retirement age, than when the program was created.
Larry Berman CFA, CMT, CTAUnknown
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Market. PMIs around the world have been down for 10 straight months, but have now turned. He thinks people will be quite surprised in earnings season. Base metals are one group that has showed strength, along with energy, and technology; and China is looking good. The low was at the end of December. Base metals are a good proxy for global growth. The US dollar is rolling over and this benefits the debt of emerging economies. As long as the US dollar keeps going down it means the pro-global growth trade is in effect.
Hap (Robert) Sneddon FCSIUnknown
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Where is Oil going? He had $54 as the line in the sand. We are well above it. Until it got through that, it was just a bounce. The next level is around $70. The producers often lead the commodity to the upside AND the downside. The producers know something about the direction of the commodity.
Hap (Robert) Sneddon FCSIUnknown
COMMENT
The Alberta election is tomorrow and we have a shortened trading week due to Easter. It looks like the Conservatives will win in Alberta, but Notley did an admirable job running the province. We'll see conservative premieres across Canada lobby Trudeau to build pipelines. He's positive about the Canadian economy, certainly compared to last December. He wasn't surprised by the sharp recovery. Now, it's uncertain: are we in a slow-growth economy or tiptoeing to recession? The answer: nobody knows....JP Morgan is more of a barometer for the US economy than Goldman Sachs...He expects Canadian bank earnings will be good, despite what an American short-seller thinks. The Canadian housing bubble has softened already, especially in Vancouver. Banks and financials are steady and safe. If you can take more risk, buy during market pullbacks.
COMMENT
What drives the price of gold? That's the most perplexing question he is asked about investments. He doesn't know the answer, but he owns gold and FNV-T, though the miners, which are risky. Gold moves inversely to the USD, so gold it's currently stuck at present levels. He's constructive on gold because the Fed has pivoted away from being hawkish, so interest rates won't rise and nor will the greenback.
COMMENT
General thoughts on preferred shares? Yes, he uses them, viewing them as alt-fixed income, meaning they're not as secure as a corporate bond, but they offer higher income prospects because they pay dividends, not coupons and so are better-tax in taxable accounts. But each preferred share has its pros and cons, and they are not deeply liquid, so the institutional money isn't there. They can be very over- and under-valued. But he buys-and-holds preferreds for the income.
COMMENT
Market Outlook. He thinks world growth is looking like 3.3% in 2019, but there are still a lot of clouds on the horizon -- including traded wars with China. But he thinks this topic will be dealt with positively in the coming months. He thinks US housing is improving too. Oil has moved back to $64 and the oil stocks and service stocks are gaining momentum.
Robert McWhirterUnknown
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Market. The announcement on Brexit that it is kicked out to the end of the year and then there are constructive comments on the US / China trade relations, which are the two biggest clouds over markets. The big test now is what the earnings will look like. Next week we will know if the market was overextended when it went down in December. We have to see decent earnings for markets to continue going up. Guidance is key and the markets might be somewhat forgiving. JPM-N is not performing as well as the US market. He has fully exited the US banks. He sees the earnings environment tougher because of flattening yield curve. Interest rates have collapsed over the last three months that that is not good for banks. Canadian banks such as CM-T could be down 10% because of slowing credit growth in Canada. You have to time it right in getting out of this trade.
Bryden TeichUnknown
COMMENT
Utilities. Pure plays like FTS-T have performed very well because interest rates have come down so much. You get a pretty stable yield but he has focused on energy utility pipelines because there is better value. ALA-T is on his list to consider and he would look at it.
Bryden TeichUnknown
COMMENT
What a difference 90 days makes. Boxing Day was despair, then it radically pivoted in January as the Fed went from hawkish to neutral. Beware that this can't last. Don't be carried away by fear or greed. The recovery has taken him by surprise. Remember than markets bottom with a W pattern not a V, so the market will retest its lows before finally making a once-and-for-all recovery. This cycle is long in the tooth, but market cycles don't run on a clock. There could be a soft landing like the late-1990's and could avoid an abrupt end. He's balanced between US and Canadian stocks.
COMMENT
Market Outlook Operating earnings for the S&P500 companies have been revised down for each of the last four quarters. This means analyst estimates are falling looking forward over time. It does not mean the end of the world. He would say the market is mixed with Brexit, being offset by better trade issues with China. He would build your portfolio from a place of conservatism. He is about 55% equities. He likes global medical devices and US software and mobile payments. He also thinks emerging markets are okay. The Fed Reserve is not full fledged dove, so he would be cautious.
Cameron HurstUnknown
COMMENT
Short Canadian Banks? The Big Short theorist is showing concern for Canadian banks, and he thinks you should pay attention to this. However, he believes Canada's oligopoly in the Canadian bank space makes it difficult for the same credit cycle melt down to happen here. It is difficult to short this.
Cameron HurstUnknown
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